ABSTRACT Health economic evaluations of pharmaceuticals and subsequently medical devices were introduced in the early 1990s and have since developed into a standard decision-making tool for payers to appraise the value of new health technologies. To the prosthetic and orthotic industry, health economics is still a new concept that may help overcome the limitations and restrictions of the current reimbursement system by driving the discussion with payers and their coverage decisions from a purely price-based to a value-based perspective. However, to move the industry in that direction, manufacturers would have to make substantial investments in qualified staff and research funding. This article gives an overview on how iterative health economic modeling could be implemented and how it would transform current research and development processes of prosthetic manufacturers. It would add another aspect to decision making, allowing to identify the most cost-effective option among several potential development projects, or even to terminate development of devices that have no chance to ever be cost-effective. The adoption of health economic methods would probably also have a dramatic impact on the manufacturer community and the marketplace as a whole. Bigger companies that are able and willing to afford the cost to generate clinical evidence and health technology assessments would probably introduce fewer innovations that are supported by better evidence than today. Smaller companies that are unable to absorb the cost would likely have to cooperate or focus on products that fit in the limitations of the current reimbursement system. As a result, we would probably see fewer innovations and many more me-too products. However, that situation would underscore a challenge that innovative manufacturers are already facing today. Payers demand high-quality evidence for new devices but tend to extrapolate the benefits demonstrated for the predicate device to similar, yet-unstudied components. That puts innovative manufacturers that invest in clinical and health economic research at a business disadvantage against technology followers. Therefore, policy makers are advised to hold individual components to comparable standards of demonstrated performance when making decisions on coverage and reimbursement.