1. Evolving Practices in the Assessment of Medical Devices An Industry Perspective Adrian Griffin | April 2016

2. 2 The Medical Device Sector in Context Pharma Industry Medical Device Industry Products Rel. Prop. of HC spend Companies Systems spend roughly 2x as much on drugs than devices The FDA approved 1,453 drugs (to Dec ‘13) - EUCOMED reports more than 500,000 medical devices Innovative drug industry dominated by large & medium companies - MedTech comprised mainly of SMEs: EUCOMED report >25,000 Life of a branded medicine can be ~8-12 years – Commercial lifecycle of a device ~2-3 years REALITY for Devices: More products; shorter ROI window; chasing less HC spend

3. 3 Complexity of Medical Device Pathways In Europe, and elsewhere Regulatory Always HTA Sometimes Reimbursement More often by procedure (DRG) Procurement Local not national

4. Context of HTA in Decision-Making Pharmaceuticals compared with Medical Devices PharmaceuticalsMedical Devices WHY Inform Pricing or Reimbursement No ‘routine’ Reimbursement Decision WHEN ASAP after Regulatory Approval Varies

5. 5 Recognising the differences in HTA application between drugs and devices Regulatory Approval Reimbursement Coverage (DRG) National ContractLocal procurement Regional ContractCoverage (DRG) Local procurement HTA Local HTA Hospital HTA Local procurement

6. 6 Which Medical Devices have HTA Evaluation? 2014: 365 National HTA reports published in Europe Reports were published in 12 European countries 80% of in 4 Countries - FR, ES, UK, and 51% of reports were published in France 365 HTA reports were published in 2014 286 (78%) looking at medical devices 28 (8%) looking at IVDs 29 (8%) looking at imaging equipment 22 (6%) others Statistic based on Synergus database http://synergus.com/hta-update

7. 7 HTA influence Procurement influence Disconnect between evaluator and purchaser (1) Challenges with Traditional HTA of Devices Price falls on old technology as suppliers compete for smaller market Price difference between old and new increases, so relative value of Innovation falls Traditional HTA methods suggest disinvestment from new technology HTA puts downward pressure on price of innovation, so relative C-E improves against old technology Innovative Technology assessed by HTA as clinically and cost effective Innovation replaces older technology; “disinvestment” from old to new

8. 8 Disconnect between evaluator and purchaser (2) Challenges with Evidence Extrapolation HTA seeks to evaluate all technologies by the methods / rigor applied to drugs –Demand evidence of value before adoption; seek certainty of benefit & value But users procure devices like commodities; –Demand discounts, price/volume agreements, low barriers to entry for competition –Guaranteed ‘exclusivity’ period 5 years data exclusivity in US 10 years in Europe ‘Me-too’ products (not generics) have to cross similar evidence hurdle –Provides opportunity for return on innovation Eco-system incentivises evidence generation Pharmaceuticals –There is no “data exclusivity” Innovator generates evidence for payer Purchasers take evidence from the first entry and extrapolates to class ‘Me-too’ products have lower hurdle - drive competition on price –First mover disincentive Eco-system undermines the incentive for evidence generation Devices

9. 9 Opportunities Redefine procurement –Value based, rather than price –BCG/EUCOMED project underway Support use of local (hospital) HTA where decisions are made –European AdHopHTA project Recognise evidentiary contexts –Devices - Outcomes often accrue after use –Drugs – outcomes often accrue during use So routes to evidence may well (logically) differ

10. 10 Examples of Change Medtronic Biosense Webster (J&J) St Jude Medical Tyrx Mesh sleeve for cardiac Implants: Medtronic to cover cost of infections if infection rate is not lowered compared with rate in procedures without it Thermocool catheter for AF: discount on devices used in a repeat procedure if a patient initially treated with those products returns within a year Quadra heart rhythm device: %age rebate for a device if revision surgery is needed in the first year after implant due to problems with the company’s Quartet lead wire

11. 11 Thank You