Will the numbers work for the buyer? Health economics in medical device market entry
When a hospital considers a new device, the clinical team asks whether it helps patients. The finance director and the procurement unit ask a second question: what will it cost us, and what will it save? Health economics is the discipline that answers that second question in a form a payer can check. A device company does not always need a full economic model, but it always needs to know which economic question its buyers will ask, and when.
Three questions, three types of analysis
In practice, buyers ask for one of three things.
A hospital business case compares the cost of the care pathway with and without the device. It counts the price of the device, operating time, length of stay, complications and follow-up visits. This is what a department head or a procurement unit needs to justify the purchase.
A budget impact analysis estimates what adopting the device will cost the payer, such as a region, over the next few years, given how many patients will be treated. Regional decision makers use it to plan their budgets.
A cost-effectiveness analysis compares the extra cost of the device with the extra health it brings, usually as a cost per quality-adjusted life year (QALY) gained. National health technology assessment bodies use it to judge whether a new method is good value for the healthcare system as a whole.
Where it matters in the Nordic countries
The Nordic countries use health economics more formally than most of Europe. In Sweden, TLV carries out health economic evaluations of medical devices for the regions. It expresses results as cost per QALY gained and takes a societal perspective, so costs outside healthcare can count as well. Norway's Nye metoder system assesses new methods in specialist care before the regional health authorities decide whether to introduce them. In Finland, the Council for Choices in Health Care and the FinCCHTA network bring cost into national and hospital-level assessments, and in Denmark the regions receive recommendations from the council of SundK.
Most purchases, however, are decided in public tenders. EU procurement law requires public buyers to award contracts to the most economically advantageous tender. That can be judged on life-cycle cost and on quality criteria, not only on the purchase price. A supplier who can show the total cost of using the device over its lifetime has a stronger case than one who only quotes a unit price.
The new EU joint clinical assessment does not change this. Under the EU HTA Regulation, joint assessments cover clinical domains only. Cost and economic evaluation remain non-clinical domains that each country assesses on its own.
How health economics fits into market entry planning
Health economics is not a separate project that starts after the market choice is made. It depends on the same information a company needs to choose its markets in the first place:
Clinical value: how the device performs compared with what hospitals use today. This is the effect any economic analysis starts from.
Patients and care pathway: how many patients are treated, in which hospitals, and how. This gives the volumes and the resource use.
Prices and payment: price levels of competing products, tender practice and the reimbursement route. This shows how much room there is for the device's price.
Buyers: who holds the budget and who decides on the purchase. This tells which economic question will be asked, and by whom.
A company that has this information for a market already has most of the inputs for a first economic estimate. It also knows whether its buyers will expect a simple hospital business case or a formal cost-effectiveness study.
What HealthChain adds
Our Market Entry Snapshot ranks target countries and explains how reimbursement, procurement and tenders work in each, with competitors, price levels and a recommended sales channel. As part of this, we show where health economics will matter: who the buyer and the budget holder are, which type of economic evidence they are likely to expect, and which local data will be needed. This often changes the order of countries in a launch plan, or shows that a clinical study should also collect cost data.
When a project needs a full economic model or an HTA submission, we work with independent health economists and keep their work connected to the market choices and to the arguments distributors will use with buyers.
If you want to know whether your device's price will make sense to European buyers, book a 30-minute call.
