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Reimbursement of Medical Devices in Australia and outlook 2017

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Apr 11 2017
Categories : Uncategorized
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Author : admin

Introduction

The medical technology industry in Australia was estimated to be 10 billion AUS $ in 2012,with an expenditure (excluding related services) representing 3.3% of total health expenses. It accounts for19,000 employees and over 41,000 registered medical devices (Ispor 2016).
The industry is growing fast. Indeed, the Compound Annual Growth Rate (CAGR) was estimated to be 9% per year until 2017 at least and the current transition toward the digitalization of health showingencouraging and increasing investment in the sector. It has the particularity that almost all the local production is exported while the largest majority of products used in the country are imported (The Canadian Trade Commissioner Service 2012).

Health leadership body involved in the medical devices’ industry regulation, registration and reimbursement processes

1. Overview

Figure 1 below, summarizes the entities involved in the decision-making process regarding medical devices industry in Australia.

Acronyms (by alphabetical order):
ACMD: Advisory Committee on Medical Devices
DoH: Department of Health (Australian Government)
ESC: Evaluation Sub-Committee
HESC: Health Economics Sub-Committee
HTA groups: Health Technology Assessment groups
IHPA: Independent Hospital Pricing Authority
MBS: Medical Benefits Scheme
MoH: Ministry of Health
MSAC: Medical Services Advisory Committee
PASC: Protocol Advisory Sub Committee
PLAC: Prostheses List Advisory Committee
TGA: Therapeutic Goods Administration

2. Regulatory process for registrations and market access

a. Registration
Allows commercializing the medical device in Australia and can be summarized in the following steps:
1. Where possible and mostly for new technologies, the applicant meets with the DoH to discuss the intended product.
2. Eligibility assessment can be undertaken by the DoH based on PASC clinical expertise and covering required registration submissionsto theTGA.
3. Protocol setting by the PASC to guide the assessment of the product. In normal circumstances, it will contain basic information, any detail about the clinical added value and cost-effectiveness evidence and its elaboration takes around 8 months and involves the applicant, independent contracted HTA group, clinical experts and the public.
4. Evidence evaluation that involves HTA groups, ESC, MSAC and DoH as the final decision maker.
5. In case of device/service approval, DoH is responsible to implement the changes: e.g. Integration of the newly registered medical device to the Medicare Benefits Schedule.

b. Market access

In order to be subject to reimbursement by the Private Health Insurance (PHI), implantable devices should be listed in the Prostheses List (PL). There are two different listing processes, based on whether the similar device is already in PL or not:
1. If yes, an application of non-inferiority should be submitted to PLAC.
a. This process is straight forward as the application requires the submission of information claiming substantial equivalence to a comparator product that is already on the PL. The allocated benefit for the subject product in this regard will also be equivalent
2. If the device is innovative and with an application concurrently and sometimes initiated at different times to the TGA, the application to PLAC should contain claims of superiority. In this case, the process is tighter and longer (over 1 year) and often involves HESC reviewing the application.
Only implantable devices are included in the PL. Other external devices are not.
The Independent Hospital Pricing Authority (IHPA) is the official body that regulates the medical devices prices in the public sector. It defines the ratesfunded by the Government,through the National Efficient Price (NEP) in the public hospitals and the National Effective Costs (NEC) for any other health care facility such as rural hospitals.

Who pays for medical devices?

Implantable medical devices are free of charge for patients under the public hospitals and they are funded by the Government (except for some surgical procedures); while in the private sector they are mainly reimbursedby PHI, based on the benefits defined by PL. In PL, the implantable devices can be:
1. No-gap devices: for which only one benefit is defined and has to be refunded by the PHI.
2. Gap-permitted devices: for which there is currently one listed value listed
About 47% of the population has a subscription to PHI that takes in charge health expenses in private hospitals as well as forother complimentary services such as dental care, optical services and physiotherapy (Ispor 2016).
PL is crucial to access to medical devices reimbursement. For instance, private hospitals cover 90% of gastric intervention related to obesity treatment and other interventions’ demand such as knees and hip replacement interventions increased by 67% and 40% respectively between 2001 and 2012, making the private sector of great support to the public sector allowing patient to access its services at affordable prices generally(The Canadian Trade Commissioner Service 2012).

Challenges and perspectives

There are many current challenges in the reimbursement framework for medical devices in Australia. Indeed, there are differences between public and private hospitals as well as in the prices between both (in the cardiac devices between both) that may lead to unbalanced access and health disparities. Additionally, the big medical devices companies are advantaged, making competition very limited; the PL’s benefits are reduced for some categories, increased for others and discouraging innovative devices making its re-examination necessary; there is no capitalization of health payers on the Clinical Registries data; and duplicate regulatory processes such as the safety evaluation by the PLAC as well as the TGA makes the legal processes longer and ineffective.Finally, the PL has not been updated for a long time to respond to the several changes in health needs of the population and trade such as the increase of chronic diseases, ageing of the population and inflation of 2.8% annually (Medical Technology Association of Australia 2015).
The legal reimbursement framework and PL should encourage more competitive and sustainable pricing and at the same time ensure that patient has access to safe, adequate and cost-effective products from PL. Efforts to improve transparency and simplify the regulatory processes are also awaited.

Conclusion

There are positive and encouraging steps forward for the medical device industry regulation. In 2016, extensive updates in the PL has been initiated and an online application platform called the Prostheses List Management System (PLMS) has been launched, in order to simplify administrative procedures for the purpose of improved efficiency and accuracy. This is at least one step in the right direction.

References

(The Canadian Trade Commissioner Service 2012) https://www.enterprisecanadanetwork.ca/_uploads/resources/medical-technology-and-the-australian-healthcare-system-profile.pdf
(Ispor 2016) https://www.ispor.org/HTARoadMaps/AustraliaMDD.asp#_ENREF_4
(Medical Technology Association of Australia 2015) http://www.treasury.gov.au/~/media/Treasury/Consultations%20and%20Reviews/Consultations/2015/Competition%20Policy%20Review%20Final%20Report/Submissions/PDF/Medical_Technology_Association_of_Australia.ashx

http://www.health.gov.au/
https://www.tga.gov.au/committee/advisory-committee-medical-devices-acmd
http://www.msac.gov.au/
https://www.ihpa.gov.au/who-we-are
https://www.ihpa.gov.au/what-we-do/national-efficient-price-determination
https://www.ihpa.gov.au/what-we-do/national-efficient-cost-determination
http://www.pc.gov.au/research/completed/efficiency-health/efficiency-health.pdf
http://www.health.gov.au/internet/main/publishing.nsf/Content/iwg-phi-pros-ref-os
http://www.health.gov.au/internet/ministers/publishing.nsf/Content/health-mediarel-yr2016-ley057.htm
http://www.emergogroup.com/blog/2016/07/corrections-australian-governments-prostheses-list-have-reimbursement-implications
http://www.health.gov.au/internet/main/publishing.nsf/Content/prostheses-list-pdf.htm
http://www.health.gov.au/internet/main/publishing.nsf/Content/prostheses-list-pdf.htm
http://prostheses.health.gov.au/wps/portal/plmscontent/!ut/p/a1/nZDLTsMwEEV_hS6ytMZx3MRZpggJlUpFKqiNN5VfUFex42IXUb4e5wPKa3Yjzdw5c4DDDrgX7_ZVJDt6MUw9r_fl-hbfLyle4ape4O7uYf382DLCNgS2wIErn0I6QB8GF2_U6JPxqcDxEpNxBZbnaL2J8WCGUGAhx3OaBsPbeDQqTftBWQ192balLKVGiqkG0UpTJJgUSLeEUiNr3czrDNRnIHylOvwr3u8T-nyiuZpBCGz-yLz8CSo_ZY-nE–yysneR4Ldv1wG51h1Qf7z6cVtu9nsCy4ydtY!/dl5/d5/L2dBISEvZ0FBIS9nQSEh/

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