Why MedTech Launches Stall: Align Regulatory, Reimbursement & Commercial Strategy Earlier

This is… Hello, and welcome to today's webinar on, Why Medical Devices Stall with Michelle Lott, Fernanda Nussbaum, and Renee Franz. I'm Sean Smith, MedTech Leading Voice, happy to host this, dynamic conversation today. A few housekeeping announcements before we get started. One… This webinar is being recorded, and the slides and the recording will be made available to all the registrants by way of email tomorrow. If you would like a certificate of attendance, please put your name, as it should appear on the certificate, along with your email, this is important, in the chat.

Use the chat function to communicate with me and with the speakers, but use the QA function to submit questions, because it's difficult for the speakers to monitor both the chat and the QA. So do us a favor, put your questions that you want them to answer live in the Q&A, and time permitting, we'll get To all of those questions. So, recording and slides available. Certificates of attendance, and then a few upcoming announcements. Let's see, in… Two weeks, we have a webinar coming up on… Yikes.

Register now for Beyond Human Factors, Identifying the Barriers to Real-World Use. This is essentially a qualitative research, Event, and, it's pretty interesting, deals with the unseen barriers to adoption by users, by patients, by clinicians. all stakeholders. Now, tomorrow is UWMED is Coming Fast, How to Turn Existing Documentation into Submission Ready Files. I'm gonna put the link, the registration links to all these in, and then the third one is next Friday, first in human clinical trials in Latin America, what med tech teams need to know before they expand, with, Julio Martinez-Clark.

So that'll be, interesting, first in human. trials. Beyond that, I don't have any more announcements. I will put all of these announcements in the chat, and without further ado, turn it over to Michelle, who has a special announcement of her own about a, Paid course that is fantastic. Michelle.

Yep, so we started with, the Quality Management System Regulation, QMSR, which, hopefully everybody knows that that went live February 2nd of this year. So I recorded a very detailed course, but it's broken down in, like, 15 to 20 minute sections, so it's not like you have to sit there and watch two and a half hours worth of stuff all at one time. It has quizzes built in as you go. And you get a certificate at the end to prove that you know and understand the QMSR. And then we dove deeper into a bundle of packages that were, based off of the top 5 issues in 483s that we think are going to be still issues under the QMSR, so…

So that you know what to expect. Sorry. You can find those on my website.

Thank you. Shall we get started?

Let's do it.

Sure. Sorry.

So… oh, go ahead, Michelle.

It's like, you could go ahead and advance the…

So… so yeah, so this is about why MedTech launches Stall, and really taking the time to align your regulatory, reimbursement, and commercial strategy early.

So, I'm Michelle Lugg. I've been in business over 20 years now. When I was in industry, I served as the industry representative on the FDA's Good Manufacturing Advisory Committee. And then I am also a master grief counselor, because that's usually when I meet people, is when they have a problem with an agency or with their product, so… Lots of emotions involved in that.

I'm Renee Franz. I've been doing med tech product development and commercialization for over 30 years. I have helped bring to market over 200 different medical devices, and it says, don't shoot, always the messenger, because I'm usually the one that has to deliver some pretty tough news to folks. And hopefully, by taking some of the wisdom we're going to share with you from this webinar, you'll avoid some of those pitfalls early.

Hi everyone, thank you for your time, for being here today. Fernando Nussbaum, I'm the Vice President of Client Relations here at TTI. I bring over 15 plus years of commercialization expertise. Been focusing primarily on helping medical device companies navigating reimbursement, payer policy, market access overall, really bridging the gap between clinical innovation and commercial success. And let me just kind of give you a brief overview of TTI, if you want to go to the next… slide, Renee. At our core, TTI is a boutique, strategic-focused CRO, and what really differentiates us is our focus on evidence generation to support, really, market access and reimbursement. Everything we do is centered around one single goal. It's really improving speed to patient, getting that device quicker out there to patients who need them the most.

We work with a wide range of med tech companies, from early-stage innovators to more established organizations, and a common theme we see in what the clinical and regulatory path may be clear, but the path to commercialization, especially the reimbursement, is often much more complex than what it appears. So, that's where we come in. Our team brings deep expertise across health economics, reimbursement strategy, and evidence development. And we help clients really design and execute evidence strategies that demonstrate both clinical and economic value of their technology.

So, this is a problem that I regularly see, is that this is a common smart steps to market. And companies are coming at me too little and too late. I have companies that come and say, hey, Michelle, we've done all our product development, we've done our testing, and we just need you to write the submission. But they didn't do the right things at the right times in this, and so, therefore, it gets really expensive. They don't call me when they should call me, because they think it's going to be expensive, but it's actually more expensive, because then you have to get in your time machine and reverse engineer all of this documentation that should have happened in the right place at the right time.

And then you can… obviously, there are regulatory things that are missed very early, but also there are key things for commercialization and, reimbursement that should all be happening together in lockstep, rather than in silos. And definitely not at the point that you're ready to put your product in for submission.

Yeah, and I would say we actually see the very, very similar pattern, frequently with the reimbursement, right? So… folks will really need to start thinking about, just a high-level strategy for the reimbursement, and that actually happens in early development of your product. So, to Michelle's point, sometimes folks think it could be expensive and all of that. But it's actually really not. It's very… it's very doable if you come in early and avoid any potential issues, downstream.

And so what I see in the… with product development eventually going to commercialization, is as soon as you have the idea, you need to be thinking about regulatory and reimbursement, and if you can, marrying them. And that's for a couple reasons. One. Regulatory and reimbursement strategy is critical if you're going to fundraise, especially if you're working with experienced medical device investors. As well as strategic partners that you may want to exit to. Also, if you can align your regulatory and reimbursement right up front, so you align, for example, your indications for use. You may not initially enter the market with all of the features that you want, but you can, in some cases, get to commercialization and sell your product.

And then start to build the tests, the clinical studies, everything that you need to eventually get to the point where you have all the indications for you. So, aligning those two, these critical areas early can help you with that strategy as well.

Agreed.

So, everybody thinks that commercialization, starts with FDA clearance and approval, because they think it's permission to market your device, and from the FDA, it is in a lot of steps. But they are concerned with your safety and efficacy of your product. And that, you also, once you get to market, then it's… that's where the real work begins, because then you have to stay compliant with the FDA expectations over the entire life cycle of the product. And then that leads to the evidence that's required for FDA approvals. It differs from the types of things that you need to demonstrate, that is reimbursable, and one doesn't necessarily support the other.

Yeah, and I… a very common phrase that I use with all of the clients is, FDA only gives you permission to market your device. It does not give payers a single reason to actually pay for the use of that device. So, you know, reimbursement is really the key to market access. Even if your device is approved, it's not covered. If it's not covered, or not necessarily paid the way it should, adoption will be very limited, and it will be a hindrance. So they were asking a different set of questions than the FDA, right? They're focusing on, does this improve patient outcomes? And just importantly, does it demonstrate economic value compared to existing options in the market today?

So really, the reimbursement considerations also impact every stage of the product's life cycle, just like we talked about. From early decisions in the design, to clinical trial design, all the way through commercialization. So that's something you should be considering often, thinking about it often. And this is why, really, unfortunately, early stages kind of come crashing down, you know, that wall of the reimbursements. investors really want to understand not just how can this be approved, but would it be paid for and adopted in the real-world setting. So very, very important to consider the reimbursement strategy as early as possible.

Right, and just, you know, taking that, into the work that I do, so I do a lot of pitches for companies, with investors early stage. These are the two areas that they, they always ask about. And when it comes to reimbursement in particular, you know, it's great if there's a code that you can fit into. Oftentimes because if you're bringing a really innovative device to market, there may or may not be. So working with someone like TTI to figure that out is really critical. But also, thinking about some sort of return on investment model that you can show the hospital. And that you can show the investor that you're showing the hospital is really key. Because again, if… you can have the greatest widget in the world, but if no one can pay for it, and you can't justify paying for it, nobody's going to buy it.

So, Renee, if you want to pop back a slide, somebody asked, where does the commercialization fit into this life cycle? Oh, skip a little bit to that.

That is such a good question. It actually starts right here, after you have the idea. And so, that… so the commercialization piece, right away, you're thinking about, okay, what are the actual user needs? I'm going to talk a lot more about that later in the presentation, how you really drill down into those user needs. And it sounds like Sean will also have a webinar in a couple weeks just talking about that. That's really critical. It's also important to spend time here, creating your business plan, your pitch deck. Understanding your market size, and not just saying, because a lot of people say, oh, it's a billion dollar market, that's not enough. You need to actually go into the details and be able to say.

hey, we believe it's a billion dollar market for these reasons, and present the total available market, the serviceable, attainable market, and the serviceable, obtainable market. And all of that work really starts here, because you have to pitch yourself to investors. So you always start with the end game in mind. How am I going to commercialize this device?

And Fernanda, somebody asked, what were the thoughts on the RAPID program that is proposed between CMS and FDA?

We actually… I would love to just… there's so much involved in that. I would love for us to… if you can reach out to me directly, let's talk about it, because there's… there's a lot to unpack.

Drift.

Good question.

Yep, great questions.

So, another important thing that affects your regulatory and reimbursement, and often where you kind of end up at odds with commercialization, is the substantiation of claims with actual data. You know, anytime you make a statement that this is… this device is twice as fast. Or improves this. Or just even something… I had the FDA push back on something that was even just stop snoring. It's like, okay, you can't say it fully stops snoring, because you have to have data to prove that it stops 100% of the snoring, so… And so the FDA will focus on those claims, and if they're unsubstantiated, especially in this digital world, there are sections of the FDA that just look at people's claims and internet sites all day.

As part of their job. So that could lead to your possibly reclassification, you might lose your reimbursement because of the claims, and then, If you change your claims, especially post-market, that's where a lot of people get in trouble.

Yeah, and I would say from a reimbursement standpoint. very much critical, right? Because payers are looking for consistency between your clinical evidence, your regulatory labeling, and your value proposition. If those are not aligned, it can raise tons of red flags, and the layer limit coverage decisions, to Michelle's point. So, we definitely, we encourage you to be strategic and very disciplined with your claims. Make sure that they're credible, consistent. And most importantly, backed by data, so it has to be backed by evidence, because that alignment is essential, not just for approval, but for the reimbursement and market adoption of your technology.

and to keep your product on the market without issues with the FDA. Michelle and I have a client where we came in and they had a device that they basically had a catchy phrase that said it could be used anywhere in the hospital. anytime. And as we started to dig in, we looked at the instructions for use, there were a number of contraindications as to where it couldn't be used in the hospital. So, you know, luckily, we jumped in, we right-sized their marketing so that it fit. the actual cleared claims with the FDA, so they didn't run into any problems, but it is important, if you've got… you're making claims right now, you've got a product out there, make sure that you've got the data behind them, and that you could substantiate it if you were ever questioned by the FDA.

All right, now let's take a step back for a moment, because when we look at the med tech landscape, you know, the reality is the road to market is filled with incredible ideas. and breakthrough technologies, you know, some of those technologies are designed to really save lives, reduce costs, improve quality of life. And off to provide faster, more efficient diagnoses with fewer resources, which is amazing, right? So on paper, everything looks like a clear win. So what's the problem with that? The problem is that reimbursement wasn't factored into early planning. And this is something we see over and over again, like we've been just saying, right? So companies invest heavily in innovation, clinical development, regulatory strategy, but reimbursement is treated often as an afterthought, right? Companies think, well, I'm just gonna go through FDA first, and then I'll think about reimbursement.

That's not how I should be.

Well, and Fernanda, I see people, in terms of reimbursement, think, oh, the value is obvious. Right. And then they get their clearance, and it's not obvious.

Exactly, exactly.

Well, and to take that, you know, even a step further, if you were to be thinking about, right in the beginning, after you have the idea, aligning regulatory with reimbursement, you may be able to align those regulatory claims In such a way, with reimbursable codes, that you set yourself up for success right out the gate with your product.

Exactly, and sometimes there are existing codes that could fit, you know, your technology, but when you look at the payment rate, which we're going to talk about what that means here shortly, it doesn't pay well enough. So, you don't want to utilize that existing code just because it's there, right? You don't want to pigeonhole yourself, because then you can't… you can then, you know, decide that you want a new code for your technology. Then it's too little, too late. So, that's why you really want to have somebody take a look at all of the possible, avenues for your strategy, and then, you know, make those informed decisions.

Okay. So, now that we've talked about why reimbursement planning matters, let's break down how reimbursement actually works. So at a high level, reimbursement is built on three core components. Coding, coverage, and payment. First we have coding. Coding is essentially how a service, a procedure, or a product is described and identified, right? So it's the language that is used To really track for how reimbursement is… it's, completed. Next, we have coverage. Coverage really answers the question of, would the payer actually pay for this? It's really the holy grail of reimbursement, because if you have coding and you don't have coverage, then you don't have reimbursement, right?

Finally, we have payments. That's the actual amount a provider or a facility receives for delivering the service. One important point here that you see at the bottom of this slide is all of these elements are really driven by the side of service. Very, very important. So whether your device is used in an inpatient hospital, outpatient setting, ASC, physician office. can completely change your reimbursement strategy, right? So, it will change the codes that are applicable to your technology, the coverage policies, payment levels. So, truly understanding where your product is going to be used is just as important as understanding how it works.

Okay. So… There are multiple coding systems, because healthcare, obviously, in the U.S. is very complex. Each one serves a different purpose, depending on what's being documented. So, why does coding matter? Really, it's used for tracking utilization, help establish reimbursement rates, and most importantly, it enables, really, the communication between the provider and the payer. So if something isn't coding… isn't coded properly, it's essentially… it doesn't exist from a reimbursement perspective. Another key point, coding actually varies, you know, like we were just talking about, on the side of service. So, there's many different ones, so you have to really understand how your technology fits into those.

And again, this is why coding really needs to be, you know, thought about it early, because if there isn't a code that accurately describes your technology, or you're relying on a code that is only sort of fits. You know, it creates really challenges downstream for both coverage and payments.

Amanda, I think this is a good place for Sean to launch his poll. Okay. If we can take a second here.

You can talk over it.

Okay. Sounds great. Now we can move on to coverage. Thank you. So, coverage really refers to a peer's decision to provide benefits for a specific product or service. In simpler terms, this really answers the questions of, will this be paid for at all? Both Medicare and private payers establish the coverage criterias, and their goal is to ensure that products are used appropriately, healthcare costs are managed effectively, so coverage decisions are not just clinical, they're also heavily, you know, economic motivated. So, there are a few… a few key requirements that needs to be met for coverage. First, the product must meet FDA clearance or approval. Second, it cannot be considered as experimental or investigational.

Third, it's a big one. It must be medically, necessary. And finally, it has to be appropriate for the patient and the treatment setting. So if any of these criteria isn't met, coverage can be denied. Now, this is obviously oversimplifying, and we see tons and tons of wonderful technologies out there today, especially, you know, anything that has the AI component, they're all labeled experimental or investigational, so claims are often denied. So there's a lot of work that needs to be done to establish coverage for new technologies, and you have to have somebody that can truly understand this space, to be able to help you and guide you through some of those things.

So, Fernanda, working, you know, working in the space of commercialization, well, product development and pitching to investors. How… how do you help support companies when they have… you're talking about AI and really innovative technologies, there isn't a… there isn't clear product code coverage. What type of service can you provide to help them overcome that?

So the only way you can overcome that is actually through evidence generation, right? So how… you have to be very strategic about how you're designing your clinical studies. You're really looking into the existing coverage policies right now, and understanding what are the gaps in those coverage determinations, right? And how you're going to overcome that. So, you know, again, really engaging with somebody that can see, just kind of lay this strategy for you, and understanding exactly how this works. I can't stress that enough, the importance of having those discussions very early on.

Okay. So, now we're going to be talking about the third building block, which is payments. As I mentioned, that's the actual amount a provider or facility receives for delivering a service or using a device. That total includes, you know, the amount the payer reimburses and what the patient contributes through copays or deductibles. Obviously, as we mentioned, payment is dependent on both coverage and coding, being in place. So, let's start with Medicare, because it really sets the foundation here. Medicare payments are publicly available, which makes them a useful benchmark. They're based on structured systems like DRGs for inpatient care, APCs for outpatient, or fee-for-service for physicians. And importantly, really, those rates are, updated annually through the rule marking process.

So, commercial payers like the Blues, Aetna, UnitedHealthcare, they all work very differently. Their payment rates are not publicly available, because they're based on individual contracts between the payer and the provider, and They may use similar structures, like the DRGs or fee-for-service, but the actual rate can vary significantly. So… One of the biggest challenges in reimbursement planning is that while Medicare gives you a baseline, your actual revenue will depend heavily on your payer mix and contracting environment. And again, this is why it's important not to assume that coverage will automatically translate into favorable payment for your technology, because you really need to understand both to assess the true commercial viability of your technology.

I'm sorry, I was reading the, the question. Oh, okay. He asked, if testing service is initially introduced to a market as a lab-developed test under CLIA, is there an opportunity for insurance reimbursement?

Could be. Could be. Now, we only specialize, you know, in medical device, but I do have somebody, that you can talk to when it comes to tests, and, but it could be.

So, and then somebody else wants you to repeat what you said about the rapid program again, please.

Yeah, no, I just said that there's a lot to unpack there, so please feel free to just reach out to me directly so we can have, you know, we can have a discussion on that. And I'll share…

We could probably have a whole webinar on that.

Yeah.

Absolutely, that's what I'm saying. I don't want to take up the time here today, but yes, absolutely, we can do a whole webinar on just that.

And maybe if there's some time at the very end, I don't know if there will be, but yeah.

Yeah, absolutely.

So, we're gonna move on to the next part of the R&R strategy, and if you have not figured out so far, we're not talking about rest and relaxation. So, choosing your right regulatory is more complex than one would think. There's a lot of combinations of requirements and exemptions that if you don't know what you're doing, you can make the wrong assumptions about how the FDA is going to regulate your product. This can change from anything that's easy as a walk in the park. for being, not only 510 exempt, but there are even codes that are exempt from the good manufacturing practices as well. But even those codes that have dual exemptions still have a basic set of requirements that FDA expects to see.

And those things get more complicated as your device, you know, moves up in risk classification. All Class 2 devices are, like, more like training, like, for a marathon. You have to do it, you have to do it consistently, and you need to be training for a while before you go and run the race. That is like a 510K program, which is the submission type for a Class 2 device. But there are Class 2 devices that are 510K exempt as well. So, then there are, devices that exceed the exemption status to fall within a 510 or don't have an appropriate predicate. Then that's a little bit more complicated. Then you're more like a de novo, which means of new. The FDA is going to scrutinize your product and your data in a lot more detail.

And with a lot more expectations about the proof of safety and efficacy, than a 510K. And then finally, a pre-market approval. This is for Class III high-risk, life-supporting, life-sustaining devices. This is more like training for the Ironman. You definitely need to know what you're doing before you get into it. And back in the old days, this was, like, 33-ring binders that were, like, 2 inches thick a piece. I know companies in, again, back in the day, that used to print their thing, organize it into their binders, pack it up in their trunk, and drive it to the FDA, because it was too expensive to ship all the data that needed to… to be… to prove, efficacy.

So… So, again, these different submissions types, you know, grow up by, exponentially by classification, from anything like a 1500-page 510K all the way up to that 3-ring binder example I just gave. In general, 15K review times are the clock, the formal FDA clock is 90 days, that's what they get measured against. In reality, these are more like 150 to 250 days when you get… go through your additional information requests and get all of those, resolved. The de novo clock time is 150 days, that's the formal clock for FDA, but in reality, these are more like, 400 pages, or 400 days or so.

And then the clock time for PMAs is between 700 and 900 hours, and or days, and then they've been averaging about 800. So you don't have to have a pre-approval inspection for, 510Ks. Generally, you don't for de novos, but if your de novo gets, denied and you have to turn in a PMA instead. Then you could, fall into that… that PMA category, where you have to have pre-approval inspection. And in general, the user fees are, over $6,000 for your 510K, a little over $430,000 for your de novo, and over $144,000 for your pre-market approval. And these are the small business fees that you can apply for a small business designation.

To get these. And then when you're done, with a 510K, you can say, hey, we've got a FDA-cleared device. You cannot use the term approval unless you have a pre-market approval, or that Class 3, because FDA says that these other classifications could also say granted a de novo, but neither of them constitutes an approval. And if you look… and so back to our, claims, that if you make claims that you have a pre-FDA approval, then they will consider your product adulterated and misbranded, unless you actually went through that PMA process.

And, you know, thinking back to that first slide that we showed you with all the different, things that you need to be thinking about from idea through to commercialization, and we had that one where it says FDA approval, and that sounds expensive to create the time machine, I can't emphasize enough how important it is to understand right up front how the FDA is going to classify your device. Because all the different testing standards, everything. That you need to be designing to in product development. needs to take into account what standards the device is going to be measured to with the FDA, and I can't tell you how many times some people come to us. It's happened, just recently, somebody said, hey.

I just… I have my device, I think it's a 510K, I've got my manufacturer, I'm making product, can you just now help me get the 510K? I want to be in the market in the next 3 months. it's just… it's just not possible. You need to really take this whole regulatory path very seriously, and establish what… how the FDA is going to view your device, and build that into what we're going to talk about later, a functional trace matrix.

Fernando, this might be a good one for you to chime in on how regulatory and reimbursement are linked, but, where does the IDE fit into these four pathways?

Yeah, so… You know, and I was actually answering other questions on the Q&A, and thank you for keeping them coming. We really appreciate it. But as we mentioned, you know, it's… it's incredibly important because different pathways on the regulatory will actually require different types of evidence for, reimbursement purposes, right? So, like, a 510K it's not going to be… the level of evidence is not going to be as rigorous as a PMA, right?

the same things. The FDA is not looking for the same look, they're just looking for safety and efficacy. Correct. Not… in that same data, you will likely not be able to use to prove reimbursement.

No, so reimbursement, they're more looking into, you know, the economic value of your technology. Clinical utility, which is how your technology is changing physician behavior. So things of that, so completely different than what FDA is looking for. Completely different.

So, you… between R&R, that perspective is that you have to avoid this regulatory vacuum, because you can't rob Peter to pay Paul, so to speak, like we just talked about with the dual, utility of the… of the data. You really have to think about your reimbursement strategy, if it's a drug, a device, or a biologic. All of these have different regulatory reimbursement pathways. I see a lot of companies think that they want to get a PMA because, it's preferred by payers, but it's dreaded by the manufacturers because of that level of burden. But it is more favorable to you in terms of payment. And then your 510K, is usually the, the, pathway, like Renee said, that manufacturers try to pick for themselves.

And without really thinking through their regulatory strategy and what their predicate comparison and their data is going to need to look like. And then, therefore, they won't have enough data, not only for the payers, but for the, 510K to demonstrate, safety and efficacy compared to, predicate. So, you really need to bridge this gap, you need to be thinking about this early, you need to be thinking about this often. These things do not need to operate in silos, or one at a time. I'm gonna do this, then I'm gonna do this, I'm gonna do that. All three, commercialization, regulatory, reimbursement.

Need to be happening, simultaneously. So, these are huge regulatory red flags, but I'm sure Renee and Fernando will tell you it's the same way across all three of these verticals that we're talking about. And that's unsubstantiated claims. We've been talking about that a lot, because all three of us have had customers and had experiences with, having both regulatory and reimbursement problems with unsubstantiated claims. unauthorized markets, not planning for what is going to be your global market strategy. Like, do… Canada needs to see different things than the FDA expects, EU expects.

You know, even different test data for even something down to the details of, electrical safety is going to need to be tested differently. That leads to missing documentation, your strategy is not aligned, and then, ultimately, you have unresolved regulatory impacts. Which is not addressed… not being able to address any additional information requests, or getting a non-substantially equivalent, declaration.

And just commenting on, particularly the unauthorized markets, for those of you that aren't really familiar with, let's say, getting your product cleared in the U.S. versus Europe, if you know you want to sell your device, for example, in Europe, that's one of your target markets. I mean, you should always initially outline what markets you're selling into, but just know, and Michelle, feel free to add to this, but it is much more complex from a regulatory perspective. to get into Europe right now than the U.S, and in fact, I had somebody ask me the other day, they said, well, we're cleared in the U.S, what's it gonna cost me? Maybe, I don't know, $75,000 to go get my clearance for Europe? And I said, absolutely not.

Fair enough.

Yeah, yeah, you… the… the medical device regulation, is in full effect now, and it is causing chaos in Europe. And so, I tell my… my investor colleagues that if… if somebody tells you that they're gonna, like, start in the EU, then they… that should be a red flag right there. Like, no, you're not… just the approval, or clearance, or whatever they call it, the designate… the CE designation. is… is going to run you well… well over $100,000 just for the fee to get it there. That doesn't count all the difference in expectation for biocompatibility, for reimbursement, for.

testing.

Exactly.

Yeah, and then your price point is lower in Europe, typically, too, so it costs more money to enter the market, and you get less money for your device, so it doesn't make sense.

That's great. And that's reoccurring, like, your technical file, depending on your tech-notified body, will get reviewed every 3 to 5 years, whereas the FDA, like, if you get clearance, you get clearance, and unless you make a significant change, you don't have to go back to the FDA on any kind of regular schedule. So, Fernanda, you have a question before we have, go to the next slide. How do indications impact reimbursement? I'm curious about how devices with general versus specific indications impact the reimbursement.

So, I need to understand a little bit more what type of indications. I mean, some of them, obviously, are much more complex, and, reimbursement may not be necessarily, you know. codes may not be available, or… it really depends on the type of technology that you're trying to introduce. So… and I think similar to what we were saying earlier. let's just, you know, it's always important to figure out what is the primary indication that you're going to be using for your launch strategy, right? And then, later on, as you add, you know, additional ones, then we can talk about what the strategy is going to look like. Does it need to be updated, or, you know, are you able to use an existing code, or do you need a new code?

Does that make sense? I think it's very similar for, you know, on your situation as well, on the regulatory side.

Yep, agreed. It'll all have to be substantiated. And, I'm gonna answer that and this next question with this response. How does the regulatory process alter if you're using a currently cleared device? As a predicate with a new indication. Well, that can really regulate, change your regulatory pathway and can throw you over into de nova land. So, on both of those situations, I strongly, strongly recommend you having a very focused pre-submission discussion with the FDA. Right now, they're currently still free. And the review time is 60 to 75 days, depending on if you want a written review or a meeting.

And then that is going to be the way to de-risk, like, specifically ask FDA, this is my predicate, this is why I feel like it's going to be substantially equivalent, and this is how I plan to prove that this new indication, which may require clinical data. doesn't, how it falls into this 510K paradigm. So… and then you've got to think, you know, the whole premise of the 510 is a concept called substantial equivalence, and there is a flow chart and a checklist that you go through about does that different indication raise new questions of safety and efficacy? So, you need to be very clear and very aligned with FDA about what they expect to see out of that new indication that the predicate didn't have, and why it doesn't constitute a de novo.

you could… you can add an indication to your own product and not fit in a 510K. So, alright, you can move. So…

Moving on.

to pop.

product development. So… so everything that we've been talking about so far, is really critical as you move into developing your products. So, we've been focusing a lot, and rightly so, on R&R, regulatory and reimbursement, but also, you know, you need to be thinking about Right after you have the idea for your device. your business plan, because that is what's going to help you actually raise the money you need to do your R&R. So some elements that you need to be thinking about, your market size and how you're going to segment it, and that can even include not just the countries that you want to go to, we're going to give some examples on why that's important. We already have, for example, looking at U.S. versus Europe.

But also, where care is going to happen. If you're assuming that your device is going to be used in a hospital versus in the outpatient setting or a clinic, that's really important to understand up front. what type of clinical strategy, you'll need, and that's, in many cases, dependent upon your regulatory and your reimbursement paths. That's why it's important to understand those up front. And then, what are you projecting for financials? That's really important for investors to see. Not just the, the dollar amounts as to what you believe you're going to, eventually hit, usually by year 3, year 5, but also, what's the gross margin on your product? That's important.

what are your competitors up to? Do you have any competitors? And then your overall, commercialization strategy, all of these elements roll up into that. And then finally, there's your exit strategy. Always start with the end in mind. Am I going to exit to a strategic partner in this space? Am I planning to grow this business organically and add product lines on? You need to be thinking about that. All, in the very beginning, because you're going to be asked those questions when you go to pitch to investors. So, from a commercialization perspective, these are the questions that are really important to ask yourself. They seem simple, but they're critical.

Here's the first one. Do the people I'm making this device for even need it? Here's an example. We had a company in the UK that had a mobile app. that could scan the skin and determine whether you might have cancer or not. It wasn't definitive. That was really helpful in the UK, where it might take a year or more to see a dermatologist, so it could help triage getting patients in for care sooner. But when they brought the technology here to us first, and had us do a voice of the customer, we went to dermatologists, and we went to clinicians. And said, hey, would you use this device in your practice? Because the company wanted reimbursement for it.

And they both said, well, if… can I use that instead of a biopsy? The answer was no. Well, there wasn't a need for it here in the U.S, because we can get in to see a dermatologist relatively quickly, so to have A mobile app that scans the skin and says it may or may not be cancer didn't have the same clinical need for the end users as it here in the United States as it did in the UK. So again, a really important question. A simple thing to think about is. Go out and talk to 10 different people that you think would use your device, whether it's dermatologists, cardiologists, whoever, and get them to,

Get them to evaluate it, and tell you whether they would even use it or not. The next question… oh, go ahead, Michelle.

I was gonna say, you know, you and I have worked on a product in the past where it's not just the question of, do users need it, but do you know who the right user is?

Yes.

And it was, you can explain, explain what that product did, and I'll chime in on the regulatory part. The one…

I've worked on a lot of these. Which one?

the Cox Maze.

Oh, okay, so, yeah, so that, that actually, definitely falls into, can the users even use it? So… So, if somebody, for example, has atrial fibrillation that can't be, you know, it can't be controlled with medication or even an endocardial ablation, they have something called a Cox-Maze procedure that a cardiothoracic surgeon will do. They crack your chest open, and they literally go and they make incisions along the heart to stop the irregular electrical signals from passing through. So, Michelle and I worked with this company, brilliant product, brilliant idea. It was designed to work remotely, so it popped up through the subxiphoid process, went into the pericardial space. It used fluoroscopy, so basically, x-ray, and this very unique technology that

held the catheter in contact with the heart while it burned it. And that's significant, because you think about the heart beating like this, and typical catheters would be bouncing off the heart, but this technology actually kept the catheter Essentially glued to the heart tissue while it was burning it. Well, great technology, they spent $65 million validating it, but guess what? The end users couldn't use it, because they had been trained, their cardiothoracic surgeons, to crack the chest open and get their hands on the heart and cut it. They were not trained to do remote fluoroscopy work. So, great product.

Who would have thought that cardiothoracic surgeons like to do surgery?

$65 million later, they find… they found out.

And the company that…

toy perspective, Michelle.

Yep, and the company that bought them shelved the pro- bought them to shelf the product, not to actually sell it. So that… that was an interesting one. But yeah, that was, that was a PMA. It was a fairly complex manufacturing procedure, that all… and… and it took, I can't remember how many… it was well over a year for the FDA to… to review and approve it. And then at the end of the day, to just put it on the shelf, and… Done.

Yeah. That was sad, too, because it was really brilliant technology that worked. So another question to ask yourself, is it appropriate for the target market? So here's an example of a product that we worked on for acute wet macular degeneration, and it was these radiation beads that would go behind the eye to basically help stop the pooling of blood that caused the blindness that would eventually occur. So, the target market was the U.S, but they did all of their clinical studies. and development in the UK. The problem was the procedures that they did in the UK were different than in the US, so it required different tools.

they would put the patient in the UK completely under anesthesia. Here in the US, we just use, like, a local, block, like a richer debutter block. And so. They designed it for… the UK, but their intended market was the US, so they had to go back through a whole redesign, right, Michelle? and regulatory clearance. Had they just started here in the U.S. and done their trials here and developed the product. knowing what the U.S. market needed, they would have been in a much better place. So, that same company also had issues with, can the product be made? This is such a critical thing to think about right up front. In this particular case, these radiation beads, came from, a specific half-life of strontium that you could only get from disassembled Russian bombs.

Well, unfortunately for them, there's a limited supply of these disassembled Russian bombs that had that strontium halflet, so to continue to make this product was not sustainable. So really think about that piece, before you even start. And then finally, is it at the right price point? I have seen absolutely beautiful designs, great ideas. I've been involved in projects myself. worked on a radio frequency handheld sealer for blood collection. Our price to make it was $2,000. We needed to sell it for $4,000, and the market said they wouldn't pay more than $1,200. So, was not a sellable product. So, these are really important things to be thinking about as you create this trace matrix. I know we're running short on time here, but this is… this is a tool, also called a functional trace matrix, where you can go in and identify

all the different user needs, so everything that we've touched on, including, but not limited to, because we don't have time to touch on everything, temperature range. So, why might that be important? So, you need to identify the temperature range that your device is going to be used in, but also stored in. So I have an example of a product that I helped implement many years ago across Canada. We implemented in the winter, we implemented province by province, and we got to the province of Ontario. And nowhere else in Canada had issues, but Ontario said when they went to do their mobile blood drives, where they plugged the AC power cord in the wall, all their power cords were falling out of the wall.

90% of their blood was collected on these mobile drives, and they couldn't collect blood because they couldn't keep the plugs in the wall. And we thought, what the heck, why isn't this happening anywhere in Canada? Or anywhere else in Canada? So I flew up and worked with our quality director, and the second I walked in, I noticed that the power cord was a different color. Everywhere else, and for the whole time I'd worked at the company, we used a gray silicone spongy cord, but this one was a hard ice blue. And what… what turned out happened is the purchasing agent wanted to save some money, and so randomly bought this new power cord. Engineering never evaluated it, nobody looked at the temperature storage range.

And in Canada, in the winter, it was negative 30 to 40 degrees Celsius, and guess what? That plastic hardened and shrunk so much, by the time they went in the morning to plug in at the mobile drive. The power cord wouldn't stay in the wall. So, something so small is identifying the temperature range can be absolutely critical to your product's success in the field. Michelle, did you want to comment on that?

Just, just a quick note, watching the comments, like, we're giving, like, our examples of people not doing it the right place at the right time, and calling all three of us too late for us to fully course correct Versus doing damage control. So, I just want to say that that's the context in which that we are presenting this information.

Thank you. Thank you. So anyways, there's… we do have this tool available to you. You will need to populate it and be thinking about these needs and many, many more, depending on the type of device you have and the environment it's going to be used in. But if you're interested in receiving this functional trace matrix. Put your information in the chat, and we'll send it to you after this. So, as Michelle said, we're really… the three of us are really… focused here today on sharing these examples with you to de-risk your go-to-market. Because if you're thinking about these things, and you're addressing them early on, you will be in a much better position to commercialize and actually sell your device, which is your end goal.

So, Michelle said earlier, you know, getting your FDA clearance, in many cases, a lot of folks think that's the end of the race, but it's just the beginning. And we wanted to share this slide with you from a venture capitalist who only invests in med tech. And he basically says, listen, here's risk on the left, time to money down here, on, you know, the right, and If you look at technical, clinical, regulatory reimbursement, as soon as you hit those milestones, early-stage entrepreneurs think from there on, the risk, it's all downhill. It's gonna be really easy. But if you look at people who invest in med tech all day long.

That's where they see the risk really just take off. And it's because it's difficult to sell and commercialize a device. Our market here in the U.S. is complex, but also, it's because in many cases. people didn't do the things that we're telling you to do down here during the technical, clinical, and regulatory. So if you do those things right from the beginning, your risk will be much, much, much lower than what we're seeing here on a VC's view of risk.

I think this, you know… from… I would speak from a reimbursement perspective, because it's just not a one-time activity. It really evolves as your product moves from early development to engineering to clinical validation, through regulatory approval, and ultimately commercialization. So, really, decisions are made. Each of these stages can really support or limit your reimbursement potential. So, key is to make sure that the reimbursement thinking is embedded into every single decision point, not, like, you know, really an afterthought. So, yes, I just shared my information there. Feel free to just reach out for a free consultation on anything reimbursement. Happy to help.

Great, and I think we have one minute left. I want to say thank you all for joining, and are there any last-minute questions we might be able to help answer for you?

There's one for me that I will type the answer… I will, respond in an email, about the de novo PMA pathway, and, like, what do you know about your competitor's commercialization? We can talk about that later, and we'll email them.

Okay. We also at Lean have a couple of free guides for you, if it's helpful. We have a regulatory pathway assessment. As you now know, it's very critical to understand what your regulatory path is, and then also a business market assessment tool, where you can actually input what you think your market size is, what the costs are going to be to develop your product, and what your potential Revenue could be.

Very helpful. Thank you. Thank you all, for your time, for speaking today, sharing your expertise with the audience. I encourage, all the participants to reach out to the panelists individually, connect with them on LinkedIn. Ask some questions, you know, they'd love to talk to you. I'd like to thank you all for participating today. It's very meaningful, and if you could take a moment to fill out the survey afterwards, we'd appreciate it very much. Hope to see many of you tomorrow during the, UTIMED call, and I look forward to many more exciting events coming up, with today's speakers and many more. Thank you all.

Thank you.

Thank you. Take care.