Tips for International Healthcare Companies Looking to Break into the U.S. Health Innovation Market
The U.S. health innovation landscape is among the largest globally, making it an attractive target for international companies. However, navigating this landscape can be complex and confusing to those who are unfamiliar with the U.S. healthcare system. From regulatory approval to how new products find their way into clinics and are paid for, understanding the peculiarities of the U.S. health innovation market is key. As such, here are some tips for international companies thinking about entering the U.S. healthcare market.
1. Do not underestimate the hurdles to securing adequate payment for your product.
The U.S. healthcare system is a complex mix of private insurance payers and government programs, with the most important players being large commercial insurers and the Centers for Medicare & Medicaid Services (usually simplified to CMS or Medicare). Providers will be hesitant to prescribe novel therapies if they are insufficiently paid for their efforts, which in turn will have a detrimental impact on the market potential. Existing payment structures may not be sufficient to cover the cost of a new technology, leaving companies with no profit margin. Companies need to develop a reimbursement strategy that aligns with wider payer coverage and clinical workflow. Important insurance terms to understand are out-of-pocket expenses, annual out-of-pocket maximum, annual deductible, copayment, coinsurance, and covered benefit.
2. Develop a fundraising strategy and be prepared to tell the story of your product.
If you will be fundraising for your U.S. market entry, engage early in talks with investors and understand what they want. Some investment groups specialize in international companies or companies at a certain development stage, such as pre-seed. Do your due diligence in market research and financial forecasting to allow for transparency and straightforward talks about the business case. Investors want to see a clear path to a business opportunity within the U.S. market. Take the time to make a good pitch deck that is focused on what is most important to the investor and makes information easy to access, as investors are often people who have a lot of demand for their time and attention.
3. Demonstrate the fit of the product for the U.S. market.
Investors will need to know that your business model development as well as product development have been informed by customer discovery, i.e., you have validated your assumptions about what the product should be and how it will enter the market, through interviewing clinicians and other stakeholders in the U.S. and observing clinical workflows. They also need to know that there is robust clinical research that has been conducted in line with regulatory standards and can be applied to the ethnically diverse U.S. population. Ensure that the clinical study population aligns with the product indications by choosing the appropriate study patients. For example, if your product will be primarily used by elderly patients, be sure that your clinical evidence includes studies with a population over age 65.
4. Understand U.S. competitors and U.S. healthcare landscape.
With the vastness of the U.S. market, there is an inertia that makes it difficult for the healthcare system to incorporate change, even more so if the product is disruptive. Thus, any new product entering the market needs to show a significant advantage over the current competing technology. The value proposition may differ by stakeholder and may demonstrate improved patient outcomes, time savings or cost savings, preferably all three. As such, companies should conduct both a competitive analysis and cost-benefit analysis of the U.S. market to demonstrate value.
5. Ensure that your regulatory strategy is on track.
Having a clear regulatory strategy is essential for ensuring future product market success. Regulators want to know that companies are selling high-quality, safe, and efficacious products. A starting point is understanding your device classification and premarket notification options and as an international company, you would need a U.S. Agent who would act as the communicating body between the manufacturer and FDA. While the U.S. regulatory pathway can be arduous, the FDA goes out of its way to educate innovators on the steps they need to take. Take advantage of these educational materials and review past webinars that lay out information in a digestible format. Below are a few resources to help you get started with regulatory strategy:
Ultimately, breaking into the U.S. market involves a significant amount of effort, and extensive knowledge of the intricacies of the U.S. healthcare system. For an international company just getting started, this can feel like a daunting task. The Simbex team has expert consultants and educators who are here to help with a proven Commercialization Methodology, built on decades of experience helping companies achieve their product development and business goals. Our commercialization services include Business Model Development, Regulatory Strategy, Reimbursement Strategy, Market Assessment, Competitive Analysis, Fundraising Guidance and much more. We love working with international medical device and wellness companies to help them strategize their U.S. market launch.
About the Author:
Through our experience in developing and commercializing our own medical devices and consumer health solutions at Simbex, we’ve learned firsthand that navigating this landscape can be complex and confusing processes.
Stella Mo, author of this article and recent graduate from the University of Toronto, brings a strong background in neuroscience and medical device product commercialization. As a Simbex Commercialization Research Analyst, she is eager to help develop and commercialize new medical device ideas at Simbex. In her free time, Stella enjoys trying new foods, being active, and exploring the city around her.
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