The Market for New Diabetes Products and the Role of Third-Party Payors

Abstract

Diabetes devices and supplies ("Products") are paid for differently when used in different patient care settings, and when paid for by different third-party payors ("Payors"). Manufacturers of a Product need to understand the different markets defined by the Payors. Payors cover different population groups with different risks of experiencing diabetes. The Payors determine whether or not particular products will be made available to their eligible population. The Payors decide how much to pay for products that they decide to cover. Medicare is a good example of how product markets are determined by Payor decisions. Medicare makes national coverage decisions, binding across the United States, and permits local coverage decisions when there is no national decision. Manufacturers need to understand this process in order to determine whether to try to obtain national decisions or local decisions. Manufacturers also need to understand the payment methodologies used in different patient care settings in order to identify how they should market their Products in each of those settings.