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Today’s healthcare provider must depend upon very expensive equipment to function and grow their practices and leasing is a common means of financing. As medical technology is eve

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

r changing and new equipment enhancements are developed, renting equipment is a logical choice for a variety of reasons. Medical equipment leasing can keep their balance sheet int

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

act, as monthly equipment lease payments can be classified as operating expenses. This would also allow the provider to benefit from tax deductibility.

According to industry resea

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

rch, over $3 billion of medical equipment was leased last year in the United States. In its simplest form, the lessor purchases the equipment and then rents it to the lessee. At t

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

he end of the lease term, the lessee has the following choices:

· Buy the equipment
· Re-lease the equipment
· Rent new equipment
· Return the equipment

The worth o

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

f medical equipment does not come from owning it, but rather from the results of its use. With renting, there are no large down payments so the lessee’s capital reserve remains int

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

act. Equipment is also more easily attainable than from bank financing, which requires extensive documentation and even personal guarantees. Most any piece of medical equipment ca

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

be leased, including CT scans, surgery tools, lab testing machines, x-ray machines, heart rate monitors, and sonograms.

Other benefits from leasing medical equipment:

Flexibility

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

: As the provider’s practice grows and equipment technology increases, leasing allows for the owner to easily add-on or upgrade their package. It is important to build in upgrade

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

features at the inception of the lease. Also, installation and maintenance, and other services can be added to the lease.

Speed: As opposed to bank financing, leasing can provide

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

the needed equipment in a matter of days. Typically, a one-page lease agreement is executed and approval can occur in a matter of hours. It often takes bank loan committees sever

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

al weeks to approve an equipment loan.

Tax Advantages: An operating lease (also known as a true lease) generally allows the lessee to write off 100% of lease payments made during

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

the year. The equipment write-off is tied to the lease term, which can be shorter than IRS depreciation schedules, resulting in larger tax deductions each year. The deduction is al

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

so the same every year, which simplifies budgeting.

Keeping equipment “state of the art”: As mentioned previously, structuring an add-on or upgrade provision in the lease is criti

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

al due to the ever-changing technological advances in healthcare. Adding these clauses in the lease agreement lessens the peril of being stuck with outdated equipment. Maintains

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

capital reserves: Leasing allows you to buy the equipment and tools you need today while spreading out all the payments over time. This provides you with a cash reserve for day t

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

o day expenses. Since a true lease is not a long term obligation, it will not show up on your balance sheet, so the company will be more attractive to a conventional lender when or

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

if one is needed in the future.

A physician starting a practice or even acquiring one can benefit from entering into an equipment lease. Purchasing a medical equipment package ca

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

n cost several hundred thousand dollars and put the provider behind the eight ball from the very beginning. Not only can elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

50/">medical equipment leasing alleviate that dilemma; it also provides budgetary, tax, cash flow, and upgrade benefits that can allow the provider to flourish for years to come

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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