medical device reimbursement in canada

Medical Device Reimbursement in Canada

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How to navigate the Canadian medical device reimbursement system to meet your compensation targets



• Canadian reimbursement opportunities

• Healthcare system and coverage • Provincial plan and other payers • Health Technology Assessments

• Procurement rules and regulations



Challenges in Canadian Healthcare Today 1. Defining Effective Health Interventions 2. Financing Healthcare 3. Providing Cost Effective Care /Interventions



Market Access Hurdles in Canada

Traditional Hurdles

Safety Efficacy Quality

Economic Hurdles

Cost-effectiveness Affordability



Market Access Hurdles, cont’d.

Technology adoption economic hurdles

•Canada Health Act •Competition for budgets

•Higher product expenses/costs •“Siloed” funding mechanisms



• Universal access to healthcare: All Canadians covered • Aging population: Increased rates of “lifestyle” diseases • Key challenges :

• Extended wait times leading to limited access to services • Financing deficit



Canada’s Medical device sector market generated over $6 billion in sales in 2009 and has experienced a sustained growth of CAGR 4.9% since 2005

Canada is the 9th largest healthcare market in the world

The medical device sector consists of approximately 1,500 firms: manufacturers, global companies and local distributors, and employs over 35,000 people



1MM

1.2 MM 13 MM

8 MM

.752 M

1 M

.516 M

.138 M 4.2MM 3.2 MM

•Population: 34 mil.

•10 provinces, 3 territories

•530 hospitals nationwide



Healthcare is funded primarily by the Canadian government through a public insurance program, provided through

public and private services.

Source: various articles, and government publications



Source: various articles, and government publications

Publicly Insured Services (aka Medicare)

•Hospitals

•Physician services

•Access to other institutions

•Limited number of other healthcare providers in certain circumstances

Provision of these services is mandated by the Canada Health Act.



• The Canada Health Act is federal legislation applicable across the country. • The law is overseen by Health Canada and is enforced by the federal

government through its power to reduce or withhold fiscal transfers to non-complying provinces.

Source; various articles, and government publications




Canada’s national health insurance program is designed to ensure that all residents have reasonable access to medically necessary hospital and physician services

on a prepaid basis.




Canada has a national program composed of 13 interlocking provincial and territorial health

insurance plans, with certain common features and basic standards of coverage, stipulated through the Canada

Health Act.



•Administration of healthcare is primarily a provincial responsibility.

•Provincial health ministries are responsible for administration, management and delivery of healthcare services.



Provincial/Territorial insurance programs must fulfill five principals:

1. Public Administration: operating on a non-profit basis as a public authority

2. Comprehensiveness: program must cover all insured health services provided by hospitals, physicians or dentists

3. Universality: all insured residents must be equally covered

4. Portability: residents can keep their coverage if they emigrate/travel outside their home provinces

5. Accessibility: residents have the right to reasonable access to medically necessary services unimpeded by fees or extra billing



The following barriers to reimbursement often challenge medical device manufacturers in the Canadian market:

• Highly fragmented reimbursement system across Canada • In spite of high healthcare spending, access to medical devices

and technology in Canada ranks below other OECD countries*

* Source: Conference board of Canada, An International comparison of health care system, 2007

•Highly fragmented reimbursement system across Canada

•In spite of high healthcare spending, access to medical devices and technology in Canada ranks below other OECD countries*



Hospitals and GPOs

70% of market

Regional healthcare authorities

Third party payers

Medical device reimbursement segment

Patients

Business is awarded through RFP and tender



In most cases the principal payers are the provincial and territorial public insurance groups that influences the purchasing decision through their

reimbursement policies.




Federal Government: Regulator

Provincial Government: Administrator

•Professional Fee •Technical Fee

•Coverage •Payment to Physician

•Hospital Budget •Drug Plan



What’s Next ? So, you have an amazing technology, robust clinical data and

peer-reviewed papers. You have your licenses, understand the healthcare system and

have a presence in Canada. Then what?



• Adoption and diffusion of technologies are controlled by budgetary caps

(federal, provincial and/or regional) • Provincial governments directly or indirectly influence:

– who can purchase the medical technology – where it can be installed – how many healthcare professionals will be accessible to operate the

technology

Source: Health Technology Assessment in Canada and the G-7 Countries: A Comparative Analysis of the Role of HTA Agencies in the Decision-Making Process



Important: Provinces are not obligated to provide services not listed in the Canada Health Act, and such services are affected

by provincial policies:

•Physiotherapy •Dental Coverage

•Prescription Medicines •Vision Care



If you are a medical device manufacturer and the

device that you sell is not covered through the

regional reimbursement plan, your chance of selling to hospitals and other end

users is significantly diminished.



• Hospitals are autonomous institutions, usually non-profit organizations that are generally governed by local health authorities

• Most hospitals are governed by a board of directors that has legal and management responsibility for the hospital and is accountable to the provincial health ministry for the use of provincial funding

• The system is publicly funded but delivered by private actors - Hospitals



Budgets Hospitals receive an annual global operating budget as a lump sum from the

government based on factors such as:

•Past allocations

•Characteristics and size of population served

•Priorities

•Expertise



• Special program funding may be available for new or expanded programs, and for specialized high cost services and treatments

• Hospital Research Fund: possible source of funding within the hospital as well as Hospital foundation, mainly for capital equipment

These budgets will be used by early adopters to have access to

new technology and drive uptake, which will help get full coverage and reimbursement



• Most hospitals are now part of large purchasing groups and firms that represent close to 35% of healthcare facilities.

• Physicians still have significant influence in the

adoption of new and innovative technologies, but are not involved as much in the purchasing decisions for commoditized equipment and supplies.



New and innovative technologies

Commoditized equipment and supplies

Patients

Public tender/ procurement rules

MoH/ Regional Health authorities/Hospitals

Medical device Manufacturer

Economic rationale program and/or HTA



Hospital Economic Rationale Clinical outcome / clinical utility

Value

Demonstrate operational and financial impact



Economic Rationale

Government relations

Policy makers

Medical associations

Healthcare networks

Government agencies

Stakeholder relations

Advocacy group partnerships

PR campaign

Media story

Story / Briefing Hospitals MoHLTC and Agencies Patients

Sales & marketing Early adopters, KoL’s and centres of excellence….

Hospital & Regional health

authorities

Materials management



• Health Technology Assessments (HTA) are conducted by many agencies across Canada

• Assessment can vary across jurisdictions due to needs: – Different provincial/regional priorities – Data requirements

• (e.g., clinical, cost effectiveness and societal outcomes) – Timeliness – rate of innovation/obsolescence – Clinical champion initiates process for product reimbursement



Provincial Initiatives

Federal Initiatives •Canadian Agency for Drugs and Technologies in Health (CADTH)

•Ontario: Ontario Health Technology Advisory Committee (OHTAC)

•Quebec: L’Institut national d’excellence en santé et en services sociaux (INESS)

Hospital Initiatives



New products/procedures need to be justified clinically and economically.

•Government/hospital/health authorities may request HTA reviews

•Early adopters or clinical champions may also initiate the HTA process

•Positive HTA reviews can increase the chances for successful reimbursement



What happens after the assessment – how do technologies get adopted?

HTAs need specific information to help answer critical questions about performance

benefits at the institutional level:

• How will this innovation help to improve patient care in my hospital? • Reduce costs?

• Decrease waiting lists? • Improve efficiency?



About 65% of Canada’s population is covered by third-party health plans. These plans cover and pay for services such as:

•Dental •Physiotherapy

•Chiropractic •Vision Care

•Long-term Care •Prescription Drugs



•Some private insurers will reimburse select medical devices

•Insurers will require lots of information from physicians and manufacturers

•If device needs to be used within an acute care facility, it most likely will not be covered



• Whether or not manufacturers may charge patients directly for devices (such as implanted devices) depends on whether the costs of the devices themselves are covered by provincial health programs

• In the past, many device costs were paid by hospitals out of their global budgets.



• Hospitals are now stocking only certain devices, and provincial governments are in some cases stating that patients may not pay privately for more expensive alternative devices

• In addition, in some provinces there are

programs that subsidize the cost of certain patient devices



• Rules cover the purchase of goods and

services using public funds and are aimed at ensuring fair, open and competitive procurement practices in the broader public sector

• Apply to GPOs, Hospitals and to the

broader public sector.

Provincial Regulations



• RFP/Tender mostly for commodity products or accepted

procedures and devices: – Stents, Catheters, scopes, gloves, wound closure

• Criteria:

– Clinically acceptable – Value – Budget impact



Large Group Purchasing Organizations (GPO) can purchase up to 35% of devices sold in Canada.

•Contract opportunities are posted on a fee-based public procurement website or electronic bulletin board

•Registration is required with electronic bulletin boards and GPOs

•Provide response to RFP



Summary

•Technology alone does not sell—it is the manufacturer’s responsibility to provide and promote adequate data to decision-makers

•Cash is KING

•Be patient

•Reimbursement generates revenue

•The faster you can move your products through regulatory and reimbursement approval, the longer you generate profit

•The Canadian reimbursement market is fragmented



• A good thorough analysis of your position and complex strategies are required.

• Manufacturer may have to develop different strategies for the same

product in each jurisdiction.

• The ultimate consumer of a medial device is the healthcare facility and the payer is the Government.

• Product strategies should demonstrate benefits to helping hospitals

address government priorities.



Thank you for your time. Additional resources

Emergo Group webinar on Canada’s medical device registration process: http://www.emergogroup.com/resources/videos-canada-approval

Regulatory chart outlining the Canadian medical device approval process: http://www.emergogroup.com/literature

Link to major Canadian medical device regulations: http://www.emergogroup.com/resources/regulations-canada

Stephane Taillefer Senior Consultant Emergo Group Canada Consulting, Inc. [email protected] Canada office: +1.604.909.1265

http://www.emergogroup.com/resources/videos-canada-approval

http://www.emergogroup.com/resources/videos-canada-approval

http://www.emergogroup.com/literature

http://www.emergogroup.com/resources/regulations-canada



mailto:[email protected]



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fraseramerica.org/researchandpublications/publications/6818.aspx Madore, A. (2005). Private Health Care Funding and Delivery under Canada Health Act. Parliamentary Information and Research

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http://www.cvca.ca/resources/statistics/

medical device reimbursement in canada

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