The Hidden Bias in Reimbursement: Why First Movers May Have It Easier
"That inferior technology or service has had widespread coverage for years. Why is it so hard for us to achieve U.S. coverage when we're a better solution?"
In the world of medical device, we often assume that innovation speaks for itself. Develop a breakthrough, prove it works, and watch the market embrace it. But for those navigating the U.S. reimbursement landscape, the reality is more nuanced—especially when it comes to how payers set evidence thresholds for coverage.
What many innovators don’t realize is that first movers may have an easier path to coverage than their successors. And the reason isn’t technological superiority; it’s a subtle nuance of payer decision-making centered around comparative evidence.
The Reimbursement Catch-22
When a completely novel technology emerges, payers must compare it against the current standard of care—which, in many cases, is outdated, inefficient, or even nonexistent. This means that the first company to introduce a disruptive innovation often faces (relatively) lower evidence requirements for coverage because the comparison can be quite stark:
The first robotic surgery platform? Compared to open surgery.
The first transcatheter valve? Compared to high-risk open-heart surgery..
The first AI-driven diagnostic? Compared to manual, often inconsistent clinical judgment.
The first heart assist system for those over age 65? Compared to sending patients home with no alternative but palliative care.
In these cases, the evidence bar is relatively low because payers may not need lengthy studies to justify that the new technology is better than the problematic status quo.
But here’s where things get complicated: once the first-mover secures coverage, the playing field shifts.
Subsequent Innovators Face a Higher Bar
The next technology in the space—whether a refined version, a cost-effective alternative, or a complementary solution—is no longer being compared to "nothing." Instead, it’s being assessed against an already-covered technology that met the earlier, lower evidence bar.
For the second (or third) company entering the market, payers no longer ask, "Is this better than the outdated standard?" They now ask, "Is this significantly better than what we already cover and pay for?"
This creates an ironic reality: the first technology secured coverage with moderate evidence because it was being compared to a weak alternative. The second technology, even if superior, now requires substantially more evidence to justify incremental improvement.
The Double Standard in Evidence Expectations
This dynamic plays out in many sectors. The first approved device in a category often enters with limited comparative data. Subsequent devices must demonstrate superiority over the first-approved technology, not just the outdated standard. Early AI-based diagnostics may receive coverage based on their theoretical value. Later entrants must prove not just efficacy, but superiority over the first-approved AI model. The first laparoscopic procedure in a field may get broad adoption. The second technique, even if it improves on the first, may struggle to justify its need for incremental coverage.
This is why medtech innovators are often blindsided when payers demand more real-world evidence, more comparative data, and longer follow-up than what the first market entrant needed.
What Should MedTech Companies Do?
If you’re developing a technology in a field where an earlier innovation has already secured reimbursement, you need to rethink your evidence strategy:
Anticipate comparative requirements early. Don't just prove efficacy—plan studies that differentiate your technology from covered alternatives.
Engage payers before finalizing clinical trials. Get input on what evidence will be required so you’re not blindsided by coverage denials later.
Leverage payer skepticism strategically. If existing solutions have gaps or limitations, make them explicit in your positioning and data collection.
Consider parallel market access strategies. If direct reimbursement will be challenging, explore alternate routes like value-based contracting, hospital procurement, or CMS innovation pathways.
Final Thought: The First-Mover Advantage Isn’t Just About Market Share
We often talk about the “first-mover advantage” in terms of branding and sales. But in reimbursement, it takes on a different meaning: the first company may benefit from a lower evidence threshold, while later entrants face tougher scrutiny.
If you’re working on the "next big thing" in medical device, don’t assume you can follow the same reimbursement path as the first mover. Your evidence burden will likely be higher—and if you don’t prepare for it, you may find yourself stuck in a reimbursement dead zone.
Nicole Coustier is a medtech startup advisor and U.S. reimbursement consultant.
