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This document discusses the need for medical device companies to conduct deep due diligence when assessing new products given the evolving U.S. healthcare system's new focus on comparative and economic effectiveness. It outlines key clinical and economic questions that must be answered through compelling data to demonstrate improved outcomes and reduced societal costs. It differentiates between "me too" products that need prove parity and "innovative" products that could see exceptional opportunity but require rigorous studies. It recommends connecting with clinical and administrative communities and developing cost models to realistically assess new products under emerging public policies. External support from consultants is also advised.

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Addressing the New Realities of Tomorrows Healthcare Environment Deep Due Diligence for New-Product Assessment
Contents A New Focus 3 The Rationale 4 Answering the Clinical Questions 5 Answering the Economics Questions 6 Case #1: Me Too Product 7 Case #2: Innovative Product 8 Steps and Resources Required 9 Need Help? 10 Trilogy Associates 2
A New Focus Accurately assessing the opportunity presented by a prospective new product has always been important Now, as the U.S. healthcare system evolves, a new focus will become critically important to suppliers: Comparative Effectiveness This means your new product must be at least as clinically effective as the prevailing method(s), preferably more so But this also means your new product must be at least as economically effective, preferably more so If you fail either of these future tests, your new product wont be cleared to market or wont be paid for Trilogy Associates 3
The Rationale This new focus is being driven by a pending new emphasis on procedural value: Clinical Performance + Societal Cost As a supplier you will be required to demonstrate Improved clinical outcomes, and Reduced societal costs by means of compelling quantitative data, perhaps including the findings of clinical trials Details are just now being formulated, but you ignore this pending U.S. government initiative at your peril Trilogy Associates 4
Answering the Clinical Questions Who will use the product, and for precisely what purpose? Can you access and convince the user? Will it improve clinical outcomes? Can you prove it? Who will benefit? Patient? Practitioner? Institution? Society? Is the procedural transition manageable? Can you overcome medical momentum? Can you reduce medical error and/or reduce incorrect diagnoses? What evidence do you have? Trilogy Associates 5
Answering the Economics Questions What are the real net costs to the institution, practitioner, insurer, patient, and society? Are any of these costs (especially societal costs) less than the prevailing accepted alternative(s)? Are your cost models credible and defensible? Can your projection of societal costs survive scrutiny? What changes in insurer reimbursement policies are in store? Can your new product actually influence these changes? Trilogy Associates 6
Case #1: Me Too Product Questions can be answered rather easily, as parity with prevailing method(s) is likely Commercial opportunity and supplier impact likely to be marginal (but perhaps tactically important) Significant risk of reduced coverage or reimbursement amounts if an innovative alternative product becomes available Trilogy Associates 7
Case #2: Innovative Product Definition: An innovative product yields better clinical and economic outcomes for society Questions will be difficult to answer authoritatively, as rigorous studies may be required Commercial opportunity and supplier impact likely to be exceptional and strategically important Little risk of reduced coverage or reimbursement amounts More generous reimbursements may be achievable Trilogy Associates 8
Steps and Resources Required 1. Awareness and accurate interpretation of the moving target that is U.S. healthcare public policy 2. Familiarity and experience with a wide variety of medtech markets and product classes 3. Connections to relevant clinical communities to initiate in-depth dialogs with physicians for assessment of a products clinical benefits 4. Awareness of healthcare cost structures and connections to administrative communities for the development of rigorous societal cost models Trilogy Associates 9
Need Help? Trilogy Associates can support your deep due diligence work in realistically assessing the promise of a planned new product We can efficiently address all these and other requirements consistent with the new realities of tomorrows healthcare environment Contact: Joe Kalinowski 919.533.6285 jk@trilogyassociates.com http://trilogyassociates.com Trilogy Associates 10

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  • 1. Addressing the New Realities of Tomorrows Healthcare Environment Deep Due Diligence for New-Product Assessment
  • 2. Contents A New Focus 3 The Rationale 4 Answering the Clinical Questions 5 Answering the Economics Questions 6 Case #1: Me Too Product 7 Case #2: Innovative Product 8 Steps and Resources Required 9 Need Help? 10 Trilogy Associates 2
  • 3. A New Focus Accurately assessing the opportunity presented by a prospective new product has always been important Now, as the U.S. healthcare system evolves, a new focus will become critically important to suppliers: Comparative Effectiveness This means your new product must be at least as clinically effective as the prevailing method(s), preferably more so But this also means your new product must be at least as economically effective, preferably more so If you fail either of these future tests, your new product wont be cleared to market or wont be paid for Trilogy Associates 3
  • 4. The Rationale This new focus is being driven by a pending new emphasis on procedural value: Clinical Performance + Societal Cost As a supplier you will be required to demonstrate Improved clinical outcomes, and Reduced societal costs by means of compelling quantitative data, perhaps including the findings of clinical trials Details are just now being formulated, but you ignore this pending U.S. government initiative at your peril Trilogy Associates 4
  • 5. Answering the Clinical Questions Who will use the product, and for precisely what purpose? Can you access and convince the user? Will it improve clinical outcomes? Can you prove it? Who will benefit? Patient? Practitioner? Institution? Society? Is the procedural transition manageable? Can you overcome medical momentum? Can you reduce medical error and/or reduce incorrect diagnoses? What evidence do you have? Trilogy Associates 5
  • 6. Answering the Economics Questions What are the real net costs to the institution, practitioner, insurer, patient, and society? Are any of these costs (especially societal costs) less than the prevailing accepted alternative(s)? Are your cost models credible and defensible? Can your projection of societal costs survive scrutiny? What changes in insurer reimbursement policies are in store? Can your new product actually influence these changes? Trilogy Associates 6
  • 7. Case #1: Me Too Product Questions can be answered rather easily, as parity with prevailing method(s) is likely Commercial opportunity and supplier impact likely to be marginal (but perhaps tactically important) Significant risk of reduced coverage or reimbursement amounts if an innovative alternative product becomes available Trilogy Associates 7
  • 8. Case #2: Innovative Product Definition: An innovative product yields better clinical and economic outcomes for society Questions will be difficult to answer authoritatively, as rigorous studies may be required Commercial opportunity and supplier impact likely to be exceptional and strategically important Little risk of reduced coverage or reimbursement amounts More generous reimbursements may be achievable Trilogy Associates 8
  • 9. Steps and Resources Required 1. Awareness and accurate interpretation of the moving target that is U.S. healthcare public policy 2. Familiarity and experience with a wide variety of medtech markets and product classes 3. Connections to relevant clinical communities to initiate in-depth dialogs with physicians for assessment of a products clinical benefits 4. Awareness of healthcare cost structures and connections to administrative communities for the development of rigorous societal cost models Trilogy Associates 9
  • 10. Need Help? Trilogy Associates can support your deep due diligence work in realistically assessing the promise of a planned new product We can efficiently address all these and other requirements consistent with the new realities of tomorrows healthcare environment Contact: Joe Kalinowski 919.533.6285 jk@trilogyassociates.com http://trilogyassociates.com Trilogy Associates 10