New Publication: Headroom Approach to Device Development

In the latest issue of the International Journal of Technology Assessment in Health Care is an article on assessing the commercial value of medical devices, co-authored by OHE’s Amanda Cole.

The (open access) article summarises the headroom approach, which was the subject of Amanda’s PhD (Chapman, 2013).

It is well known that the development process and lifecycle of a medical device are very different to those of a pharmaceutical product; these differences have important implications for both the developer and the health care decision-maker tasked with assessing its value to patients and the NHS (Chapman, 2014).

The headroom method provides a framework to support product development decisions, by grounding these in the potential reimbursement value of the device.

The article, co-authored with colleagues Alan Girling (University of Birmingham), Richard Lilford (University of Warwick) and Terry Young (Brunel University) describes how the headroom approach can be used at different stages of the development cycle.

At the very early stages, it can act as a “reality check” on the device’s economic viability, by defining the maximum (value-based) reimbursable price which sets a ceiling on production and development costs. Later, the method can be used at development reviews, with the concept of uncertainty (and the ability to revise decisions) introduced using a real options approach. Finally, it can have a role to play in pricing decisions.

The authors outline the various uses of the headroom approach and how they have been applied so far, before suggesting where additional methodological development could help contribute further to the health technology industry and ultimately the health service.

All authors of the paper worked on this research as part of the MATCH program (EPSRC Grant GR/S29874/01).

References

Girling, A., Lilford, R., Cole, A., & Young, T., 2016. Headroom approach to device development: Current and future directions. International Journal of Technology Assessment in Health Care, 31(5), pp.331–338.

Chapman, A., 2013. The use of early economic evaluation to inform medical device decisions: an evaluation of the headroom method (Doctoral dissertation, University of Birmingham).

Chapman, A., Taylor, C., & Girling, A., 2014. Are the UK systems of innovation and evaluation of medical devices compatible? The role of NICE’s medical technologies evaluation programme (MTEP). Applied Health Economics and Health Policy, 12(4), pp.347-357.

Posted in Drug Development/R&D, Health Technology Assessment, Innovation, Pricing and Reimbursement, Research, Value-Based Pricing | Tagged External publications