The medical technology industry is a wonderful industry. It produces countless innovations to solve unmet medical needs and improve people’s lives. As a 20-year industry veteran and a self professed pricing geek, I wonder about the future of pricing in the industry.
It’s a delicate balance. On the one hand, companies need to get paid a fair amount for the clinical and economic value that their solutions create. They also need to earn a fair return so that there is the economic incentive to develop and launch new innovations. However, price also plays a role in patient access to new technologies and the care patients need. So, pricing is a complex topic that medical technology companies need to think through carefully.
Looking out to the future, there are a number of big trends facing the industry that will make pricing, value quantification and evidence even more important than ever. While you could probably have a long and healthy debate about all of the trends, I tried to summarize 7 that will be particularly important:
(1) Accelerating cost containment by many stakeholders being driven by demographics and other factors
(2) Scarcity of resources and skilled healthcare workers
(3) Convergence of devices, drugs, diagnostics and informatics to create new solutions
(4) New business models
(5) Transparency of prices, clinical data
(6) Continued movement of setting of care from more costly to less costly
(7) Personalized and evidence-based medicine
These big trends will make an already complex pricing decision even more difficult. The trends also mean that pricing mistakes by medical technology companies will likely have a much bigger impact in the future.