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What not to overlook in your reimbursement strategy

Posted by: Ryan Amin on September 12, 2013

Most startups overlook three areas when developing their reimbursement strategy, according to Scott Howell, head of patient access at Genentech.

At a Life Science Ventures Summit hosted by the Kauffman Foundation, Howell gave an overview of strategies to tackle reimbursement issues (0:05:20-0:27:45).

The first critical area Howell addressed was the value proposition of the product. Howell said it was assumed by most that value for payers is evaluated by clinical trials and the success of outcomes. However, he said payers also look for economic value. "Their role as an intermediary is much more of a financial role; they are acting on the behalf of individuals and employer groups trying to help people figure out how to finance their healthcare and keep it affordable," said Howell.

Taking a product to market involves pricing, contracting and distribution strategies.

  • The basic pricing strategy for entrepreneurs is figuring out the highest amount they can charge to maximize revenue. Howell warned entrepreneurs to be aware of certain price increase barriers and regulations that can throw off the strategy.
  • Contracting can offer benefits of payers enabling access to some products and encumbering access to other products to increase revenue.
  • Distribution gets more important over time, but setting up a long-term strategy is key, according to Howell. Distribution strategy works based off multiple trade-offs and balancing: Control and access of product, handling or dispensing restrictions, and patient and physician services by distributors.

The third focus of Howell's talk is patient assistance support. "The fault position is that 'This is nice to have and I'll think about it when I am a bigger company,'" said Howell. The U.S. healthcare system and high consumer cost for targeted therapies can make a patient access strategy non-effective. A reimbursement support strategy like assistance phone lines or co-pay support can make patients more comfortable committing to the service.

Weekly Wisdom from Kauffman is a regular feature on eMed highlighting helpful advice from the Kauffman Foundation.

Category:  Execution  Ideation  Tags:  Entrepreneur, Reimbursement, Execution, Ideation, Startup, HealthIT

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