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As the world is becoming more aware of the potential impact of 3D printing in medical/surgical workflow, tissue engineering, new products and procedures (and the startups behind them) based on additive manufacturing are surfacing. The bigger question to innovators, healthcare payors, and startup founders beyond the initial excitement of making things work: Is there enough long-term sustainable value of this new product, procedure, or startup?
Pricing of the said medical devices will be the single most important determining factor of this question. 
To a MedTech startup founder, in 3D printing or not, this question is even more existential as it will be the single most important factor to a company’s valuation. This becomes even more significant in light of the expensive process to bring either 510(k) or PMA medical device from concept to market, a reportedly 31 million dollars for 510(k) device, and 94 million dollars for PMA device, with FDA related cost up to 80 percent of the total cost. 
Therefore, a lot of skin in the game.
Intuitively, pricing too high will result in poor adoption, and pricing too low will make little financial incentives to long term survival of the procedure or startup.
However, pricing of a new medical device (and related procedure) is getting progressively complex because of several reasons:
- Comparable devices may not exist to set standards for new devices based on emerging technologies.
- Complex U.S. healthcare systems with several different and often co-existing reimbursement pathways. (Remember DRG, CPT code, RVU, HCAHPS?)
- Opaque reimbursement process involving individual negotiations between device companies and payors. One study even shows that the price difference of the same implantable device can vary up to twice. [Figure 1]
- Pricing is complex anyways regardless. The many factors contributing to the final price require careful evaluation starting from product development, clinical trial, manufacturing, market research, to salesforce development.
- All of the above are constantly changing. 
Having a pricing strategy expert may help, but it will be costly. While we don’t have quick answers, have deep knowledge about the following elements of your product could help you with your own pricing strategy:
1. Know your products:
- What kind of product is your medical device? (May check multiple boxes here) 
- Is it capital equipment (e.g. 3D scanner, CAD/CAM system)?
- Consumables (e.g. 3D printed Implants, stents)?
- Services (e.g. 3D printing service bureau)?
- Software (e.g. 3D printing-related CAD software)
- Does it meet unmet needs? For example, one unique benefit of 3D printing is mass customization, hence its ability to scale production of personalized devices. Another example is surgical planning tools, when a surgeon can significantly reduce intra-operative time with 3D printed patient-specific guides and anatomical models than other methods.
- How much does it cost to produce? This will include the cost of materials, infrastructure, and labor over time.
2. Know Your Comparables/Competitors
- Are there other products to market earlier than yours? (e.g. other spinal cages via conventional or even 3D printing process)
- How does your product compare to these in terms of production cost, clinical outcome, user adoption?
- Is there an existing code for reimbursement? Whatever is covering your competitor’s device can also cover yours. The pricing point will depend on the existing amount a provider receives for performing a procedure using the competitor/comparable device.
3. Payor Economics
- Who will pay for this new device? This could be hospitals, payors, surgeons, practice owners, or even patients.
- Is the incremental cost of the product to the payer balanced by the risk-adjusted NPV (Net Present Value) of the longer-term savings that the use of the product engenders? For example, decreased readmission or device replacement rate due to the more successful hip implant using 3D printed surgical guide.
4. Patient Economics
- Is there a better outcome for the patient that’s quantifiable? If so, how do you price that benefit in? For example, QALYs (quality-adjusted life years) for the patients can be included in pricing.
- There is a growing trend of outcome-based pricing strategies. 
5. Provider Economics
- Does it decrease Hassel factors? A Hassel factor is anything that prevents us from doing our work efficiently and effectively. Examples of Hassel factors include inefficient processes, bad policies, outdated procedures, lack of tools, and etc.  For example, prosthetists can now skip several steps to produce prosthetics with the help of direct 3D scanning of a patient’s residual limb for a quick perfect fit. Another example is frequently seen in dentistry, for example, the now more widespread use of Cerec CNC machine to produce a dental crown in office save time and money for both the dentists and the patients. The improved functionality and efficiency should be priced in.
- Does the product increase brand building for the provider (e.g. doctors, dentist, hospitals)? For example, it is now common that many U.S. Children Hospitals now have established 3D printing purpose because it is perceived as a higher standard of care in a specialty hospital with complicated cases. Large academic medical centers also invest more in 3D printing because it builds their brands as technologically advanced and is going along a trend towards more personalized and safer healthcare delivery system.
Bottom line, pricing is difficult but critical. It requires not only a deep understanding of the product/procedure but also where it stands in a complex value system and how payors, users, patients receive the new technology.
- Five Ways to Price your New MedTech Product
- Medtech Price Strategies: Who Is Going to Pay for It?
- Medical Device Pricing Strategy (Slides)
- Pricing in the Medical Device Industry
- An Overview of the Medical Device Industry
- Hassel Factor Index