Coming to America
While watching this movie might not be very helpful to a medical device company that wants to launch its product in the US, it will make you laugh. However, there are some truths in the movie that are worth noting. Coming to America with little preparation and knowledge can wind up in some precarious situations. The culture is different, and many of the rules, processes, and things that make the transition easier may not come naturally.
For a medical device company contemplating launching in the US there are some things that are obvious. Regulatory compliance with the FDA is essential to sell any medical device in the US and this includes having an appropriate QMS (Quality Management System). There are numerous resources on this topic, and this of course is one area that we focus on.
Many companies look at this hurdle as the first one to overcome in preparing to launch in the US. While it is necessary, it’s rarely the first step.
Let us consider what the end goal is. In 100% of all our clients, the primary goal is to sell their product in the US. Gaining regulatory approval does not mean success in the market. So, what are the questions that need to be answered and how should we consider accomplishing that?
First question: Is there a market?
Just because the device might have been successful in other markets, or even because the device has a benefit to the patient, does not necessarily mean it will be purchased in the US market. There are multiple aspects to consider. It’s not as simple as “the surgeon will want this.” That could be true, and it’s important to have a champion that wants the product. This is usually a physician, nurse, or, in some cases, administration that makes their life easier. But it’s unlikely the champion is paying for the device. So, one has to always look at the economics of a purchasing decision. What value does it bring to the purchaser? Is it replacing something else?
Customer discovery should always be at the forefront of the process. We generally put together a group of all stakeholders and determine who wants the product, who doesn’t want the product, and possibly most importantly, what are the healthcare economics around the utilization of the product.
Second question: How big is the market?
There’s also the question of how big the market is. Is it an existing market or an emerging market? Emerging markets take much longer to penetrate usually, but it also means the market hasn’t been penetrated. In existing markets, one has always to consider the possibility that while there might be a big market, it’s already saturated, and the available market is only a replacement market. This can happen when there’s good reimbursement and replacing a device that may only be a few years old offers no return on investment to the hospital. This goes back to understanding the economics of the purchase.
Always evaluate the market thoroughly before going through the expense of getting cleared by the FDA. If there is no market or the market opportunity is very limited, it may not be wise to pursue it.
Third question: Is there reimbursement?
This is usually key to being able to scale sales in the US. There are often early adopters without reimbursement, but this usually doesn’t amount enough to establish stability in the market. Reimbursement is paramount, and if reimbursement does not exist, it’s likely that it will need to be pursued. There’s an article on the Reimbursement Strategies here (https://www.rivesconsult.com/post/reimbursement-strategies-for-early-stage-medical-devices)
Reimbursement often has some very specific language on what qualifies for reimbursement, and this can be important for any regulatory filings. The regulatory claims need to be aligned with any reimbursement that will be pursued.
We had one client come to us with claims of “prevention.” Prevention is not reimbursable, but early detection is. For this reason, we recommended changing their marketing stance to “early detection.” No changes were necessary for the device, only how it was positioned in the marketplace and the language that would be used for filing with the FDA.
Fourth question: Who are the leaders in the field?
Particularly for early-stage innovative devices, we always recommend working with leaders (KOLs) in the field. These leaders can often help with everything from reimbursement to clinical trials, but they can also be part of a medical advisory board. This is a good article on the importance of a medical advisory board. (https://tincture.io/how-to-build-an-effective-medical-advisory-board-in-seven-steps-59eb92e794ce)
We always recommend embracing these leaders. They’ve spent their career in the area where your device is relevant, and they can be of tremendous value in not only helping you launch your product but also in advising on the ongoing development of the product. They can also help point out pitfalls and obstacles you may have in successfully gaining market share.
Fifth question: What are the indications for use and intended use?
This will be a primary part of an FDA application. If there is reimbursement, this must be aligned with how likely it is to get reimbursed. We always stress the importance of considering this very carefully, including the possibility of limiting the indications for use and intended use beyond what one may consider the broadest market. Let’s say, for example, the device tends to have a bigger effect on more older adults, perhaps 65 and older, but there is also some evidence that it can have a good effect on anyone over the age of 40. A study to include the whole potential patient population may be significantly larger and more expensive and must be weighed against the market sizes. In some cases, it makes sense to enter the market with narrower indications for use and intended use and then add additional studies and do a subsequent filing with the FDA to expand these later.
When working with the FDA, it is important to have someone with experience and a good relationship with the FDA. Many people see the FDA as a barrier to entry, and while to some degree that’s true, the FDA is not trying to keep companies and devices from entering the market. They are only ensuring that they are safe and effective, with an emphasis on safety. If a device has an additional risk to patients, those risks will need to be outweighed by the potential benefits to the patient. In our experience, the FDA has been very open and easy to work with, particularly with early-stage innovative companies.
Another aspect of working with the FDA is understanding some of the subtleties in the language used. Two phrases may appear to have the same meaning, such as being cleared or approved by the FDA. However, being cleared and approved are two different things to the FDA. A 510(k) application is cleared to market, and a PMA application is approved by the FDA. Another often misunderstood word is labeling. Many think this is the label that goes on the device, but to the FDA, labeling is everything about the device, including instructions for use, the operator’s manual, safety requirements, storage requirements, training materials, etc. Subtle wording in indications for use and intended use can make significant differences not only in reimbursement but also how one can market the product.
Sixth question: Do you need a clinical trial or usability study?
Oftentimes, one of these is necessary for FDA clearance. Usually, the KOLs can assist with this, or in some cases, if there is the need for a large clinical study, such as a PMA application, employing a CRO can help. One thing to note, though, with CROs is they are not working to build a relationship with KOLs. Their job is to get a clinical study accomplished. So, it’s important to understand this and manage expectations. Another very important aspect of working with a CRO is being sure you have the right CRO and staying on top of monitoring or overseeing their process. A CRO that’s too big for a company or set up for therapeutic trials is probably not the right fit for an early-stage innovative medical device company. We recommend interviewing and getting quotes from multiple CROs and interviewing them before making a decision on who to work with. Our company decided to hire an expert who had run a CRO previously to do this for our clients.
Seventh question: How are you going to get your first five sales?
You will never scale a business if you can’t get the first five sales. So, what does it take to get those sales? Who is your champion? Who or what are the obstacles to getting the sale? Selling into hospitals is complex, and the bigger the hospital system, the more complex it tends to be. On top of that, you’re a new vendor, and purchasing is not thrilled about qualifying and adding vendors. Are you connected to the hospital network? Is patient information part of the data connected to the network? Another hurdle with IT in the hospital to address.
One of the biggest challenges for new innovative device companies can be a change in workflow. If the device is truly unique and is not replacing another device, there is almost definitely a change in workflow. This can be a barrier to entry and has to be handled appropriately. We often use the analogy of changing workflow in a healthcare setting, which is a little like steering an iceberg. It can be done, but it isn’t easy, and it takes time. Change in workflow almost always comes with some resistance, and one must understand what that is and how to overcome it.
We generally recommend getting these first sales directly. You need firsthand knowledge from some different institutions about what it’s going to take to achieve sales. Channel distribution can be effective down the road once you have the formula for a successful sales transaction.
Eighth question: What are the resources necessary to launch?
What kind of personnel will you need in the US initially to sell, train, and support the product? Most clients from Europe that have been successfully selling in the EU have a pretty good handle on this. But if one has not been selling or is selling very early in selling in another location, then it can be more difficult. The sales side is fairly simple, particularly if a soft launch is the plan. The service side can sometimes be more daunting as it often needs the expertise of engineers within the company. How will service calls be handled initially and ultimately resolved? How much additional staff is needed to accomplish this?
What are the hours of needing to have customer service support? In use, we generally recommend from 8 am Eastern time to 5 pm Pacific time Monday through Friday for devices that are not used in emergency situations. For devices used in emergency situations, support may need to be available 24/7.
Once these questions can be answered at least to a reasonable level of certainty, a financial proforma can be refined for resource planning.
Ninth question: What did I not think about?
This is one of the most important questions. The first eight questions will probably seem somewhat obvious and necessary to launch a medical device in the US, but what are the things needed to execute it that have been overlooked? These are often the details that can be critical if not addressed. Many of the details have to do with some basic aspects of selling medical devices in the US. First, there is the issue of having an Initial Importer by the FDA. This is similar to the function of a EU representative in the European Union. One solution is to set up a subsidiary for the parent company, but there are other solutions involving outsourcing this to companies based in the US. What is optimal in terms of manufacturing? Importing in the US can be expensive and needs to be considered.
Also, there are HR (human resource) requirements and compliance for HR. These can include certain legal requirements, such as having appropriate workers comp insurance to paying and withholding required taxes.
Some other items that must be considered are liability insurance, which protects the company should anything go wrong. Hospitals are also generally required to purchase the product. They want to be sure they are protected should anything malfunction. Logistics and planning on how to ship, receive, and install the technology, as well as have timely training. Other taxes and registrations are required for both sales tax, medical device tax, and possibly import taxes and duties.
Summary:
I’d love to say this is a full, comprehensive list of everything that needs to be considered when planning to launch a medical device in the US, but it’s not even close. It is a good high-level overview of the main areas that need to be considered and hopefully is helpful to anyone on the journey of Coming to America!
Subscribe Now to the Bio-Startup Standard
Notify me for the next issue!