Accessing the US market
For some UK & European MedTech companies, who are already achieving revenues from their home markets, expanding into the US market of over 340 million people is the next logical step.
For others, frustrated by slow and complex NHS procurement mechanisms, the US offers the prospect of a more responsive and lucrative market, where public and private payers are more willing to reimburse innovations which diagnose or prevent more serious (and costly) medical procedures.
But, where to start? Market size and appetite for innovation also comes with complexity: you must navigate US-specific regulatory, reimbursement and corporate questions all at once. How do you engage with the FDA? How do you get your products reimbursed by the likes of Medicare, Medicaid, or large private insurers such as Kaiser Permanente. Where, when and how should you establish a US legal presence, and manage tariffs, sales tax and other corporate considerations?
Getting Regulatory Approval – the FDA
Just like in home markets, the key starting point is to determine the class of your device, as this drives the regulatory pathway and evidence requirements. However, unlike the UK or the EU, there are no rule-based definitions in the regulations to help determine which class of medical device you have.
The first practical step to finding which class of device you have, is to identify the class of similar, competing, devices which are already on the US market.
If, for example, competing devices on the market are class II, to achieve regulatory approval, it is highly likely you need to demonstrate your device is substantially equivalent to one of these competing products on the US market (known as a predicate device). This is referred to as a 510(k) Premarket Notification. The study you conduct should show similar, or improved, performance, compared to the predicate, in terms of intended use, safety and effectiveness.
On the other hand, if competitors’ products are class I, there are fewer hurdles to being able to getting regulatory approval and launching your product on the US market, and, generally, no need to demonstrate substantial equivalence to existing products.
The highest class of medical device, class III, are the highest risk and naturally require more evidence and so a more involved process, known as Pre-Market Approval (PMA), with greater scrutiny, is required before market entry is feasible.
If there is no obvious, equivalent predicate, for novel, low and moderate risk devices, you can make a De Novo Request. Other options include a pre-submission meeting, to seek advice, or a request for classification, known as a 513(g).
For software and digital health products, further questions arise: whether your product is considered a medical device by the FDA at all or whether it might be considered a general wellness device, or clinical decision support software.
Getting Reimbursed
There are similarities in the starting point for getting reimbursement for your product.
The recommended first step is to identify whether similar, competing, products are already being reimbursed.
If you identify that similar products are already being reimbursed, the next step is to identify the appropriate reimbursement codes for example CPT, HCPCS II, ICD-10 and DRG codes), check the coverage conditions (and restrictions) and identify the existing reimbursement rates from appropriate payers (commercial insurers, and/or Medicaid/Medicare). If these all align to your expectations, the final step is to persuade healthcare providers to use your (FDA approved) product, rather than competing solutions, so that your product can be procured and reimbursed using existing codes, coverage and reimbursement rates.
If, on the other hand, the reimbursement rates for similar products are not high enough, you’ll need to provide evidence to coding bodies and convince them of the benefits (health and financial) of your device, so that a new code can be generated.
Alternatively, if there are no similar products being reimbursed, no matter how much a clinician likes your product, if there is no reimbursement code associated with it, they cannot be reimbursed for using it.. So, once again, you’ll need to approach the coding bodies for a new code (or persuade them to provide coverage under an existing code) and provide evidence to justify the creation of a new code.
Once there is a new code in place, the payers (insurers and Medicare/Medicaid) also need to be convinced, so that they will provide coverage and sufficient reimbursement. This also requires evidence. Evidence that your product has better outcomes, or is more cost effective, or easier to use, or more efficient, just like the evidence you need in your home market.
Establishing a US presence and managing corporate, tax, and trade issues
Alongside regulatory and reimbursement planning, international medtech companies increasingly need to consider how and when to establish a US legal presence. While it is possible to export to the US without creating a US entity, customers, payers, investors and partners often prefer – and sometimes require – a US‑domiciled counterparty for contracting, data protection, and liability reasons.
Key questions include:
- What type of US entity should you set up?
- Many foreign health tech companies choose to set up a US corporation (often a Delaware C‑Corporation). This provides a familiar framework for US investors and partners,
- Some companies, particularly those seeking investment, perform what is known as a “Delaware Flip”, where the new US entity holds all of the shares in your existing UK company.
- The optimal structure depends on your ownership, investor expectations, double‑tax treaty position, and whether you plan to raise US capital in future.
- When should you set up a US entity?
- Setting up a US entity facilitates the opening of a US bank account, the leasing of premises and is also required in order to hire staff (although employment law is State specific).
- Setting up a US entity also aids investment as US Investors will much prefer to invest in a US entity, particularly pre Series A investments.
- Where should the entity be formed and operated?
- Incorporation in Delaware is common due to its flexible corporate law and familiarity among US stakeholders, but for many companies the practical question is where management, sales, and logistics will actually sit, and how that interacts with state corporate tax, employment law, and sales tax. Despite being incorporated in Delaware, there is no requirement to be physically located there.
- How should you manage tariffs, customs, and logistics?
- Physical devices imported into the US will face customs classification, tariffs, and potential country-of-origin issues; early planning can reduce surprises and inform decisions about whether to ship direct from Europe or hold inventory in a US warehouse.
- What about sales tax and other indirect taxes?
- Unlike VAT, US sales tax is imposed at State , with thresholds based on revenue, or transaction volumes in each State. Even when selling in the US remotely, medtech companies are liable for sales tax, so it is important to collect sales tax at the outset and to ensure invoicing and pricing reflect State-specific rules.
- For purely digital or service-based offerings, the tax and regulatory treatment can vary significantly by State, so aligning your commercial model, contractual structure, and tax approach early can avoid costly re-work.
In Summary
Breaking into the US market is no longer just a question of “getting through the FDA” or “finding a code”; it is a multidisciplinary challenge that blends regulatory strategy, evidence generation, reimbursement planning, and corporate structuring. Getting the right support with these inter-locking processes, from identifying the right FDA pathway and reimbursement strategy to clarifying when and how to establish a US entity, and how best to align your commercial, tax, and trade decisions with your growth ambitions, can make the difference between a successful market launch and a failure.
If you are exploring the US market – whether to complement to a European business that is already performing, or as an alternative to slower domestic adoption, get in touch with us to discuss where you are on the journey. Together, we can help you prioritise the right steps, avoid common pitfalls, and fast‑track your progress towards sustainable US revenue.
