2016 saw significant activity in the Prostheses List and private health insurance space. There was much media attention on the cost of devices included on the Prostheses List, a review into Private Health Insurance, an Industry Working Group established and overall considerable political pressure for the then Minister for Health, Hon Sussan Ley MP to ‘act’. The end result was a 7.5 – 10% cut in the prices of cardiac devices, hip and knee prostheses and intra-ocular lenses.
The Prostheses List is a pricing mechanism for implantable devices that is unique to Australia. Private Health Insurers must pay a specific benefit for devices that are included on the Prostheses List over and above any other payment to a private hospital for a patient admission. This is an arrangement that is supported by most stakeholders but there is criticism of both the prices that are paid and the anachronistic nature of the definition of ‘prostheses’. As technology advances and less invasive technologies become available, significant perverse incentives are enabled by the out-dated definition of a prosthesis as an implantable device. The current arrangements mean that less invasive technologies which are not implanted struggle to compete against devices that are implanted – often to the detriment of both patients and payers.
2017 will continue to see changes and reform to the Prostheses List with a number of reviews and inquiries underway
- A Senate inquiry into ‘Price regulation associated with the Prostheses List Framework’.
- Professor Phillip Clarke from the University of Melbourne is conducting research on behalf of the Prostheses List Advisory Committee (PLAC) into possible pricing models for Prostheses including price disclosure, tendering, external reference pricing and market based strategies
- PLAC is intending to conduct a ‘targeted benefits and category review’
- PLAC is intending to ‘Review the criteria for listing’.
While there has been a huge focus on the price of prostheses which has caused considerable anxiety for some manufacturers, a review of the listing criteria is very welcome. The medical device industry has lobbied unsuccessfully for many years to change the definition of a prosthesis. Many highly deserving single-use devices that clearly deliver superior clinical outcomes for patients have been disadvantaged by the outdated definition. Some examples include coronary pressure wires, ablation catheters and electromagnetic beacons for radiotherapy
PLAC has signalled its intent to consult in its review of the Prostheses listing criteria. This is an important opportunity for sponsors of non-implantable technologies to have a say. The type of consultation that will take place has not been announced as yet, however sponsors should be ready to file a submission when an announcement is made. It is clearly time for a change and this represents the best opportunity for long-overdue reform.
Brandwood Biomedical can provide advice and prepare submissions to government reviews and inquiries that are important for your business.
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