Department of Health halts PL changes as industry warns of device viability

The Department of Health has received the final evaluation report into the Prescribed List (PL) reforms from the Nous Group, but the report has yet to be publicly released.

The PL reforms have reshaped the medical technology funding landscape. During the reform process, over 50% of devices listed across Parts A, C and D of the PL were subject to benefit reductions. Since 2017, the medtech industry has delivered more than $3.2 billion in savings to private health insurers, with the average cost of medical devices falling by around 15%.

Yet despite those savings, significant tensions remain over the future direction of the PL and who ultimately benefits from the reforms.

Avi Rebera led the reforms during his tenure in the Technology Assessment and Access Division at the Department of Health before returning to the Therapeutic Goods Administration (TGA). Brian Kelleher, Assistant Secretary of the Private Hospitals Branch, subsequently stepped in and has confirmed that he is not pursuing a radical overhaul of the PL, including abolishing the scheme.

While the major reform package has concluded, several unresolved issues continue to generate concern across the medtech sector.

One of the most immediate challenges is a current hold on the listing of new devices in Part C, covering insulin infusion pumps, implantable cardiac event recorders, remote cardiac monitoring systems, and cardiac ablation and mapping catheters. As a result, medtech companies must rely on ex-gratia decisions from health insurers or determine whether private hospitals can absorb costs through cross-subsidisation. For Part D (General Use Items), although patient and industry advocacy succeeded in retaining the category on the PL, medtech companies are unable to make funding submissions for new innovations.

Beyond the listing freeze, further financial pressure could emerge through proposed PL group definition changes.

These changes were initially described as ‘administrative’ by the Department of Health, failing to acknowledge their substantial impact on patient access, healthcare sustainability, and industry viability. Private hospital submissions noted that it could restrict access and choice, with some products potentially falling outside PL coverage or being downgraded to lower benefit groups. This would make it financially unsustainable for manufacturers to continue supplying these devices.

The regrouping and definitions change is expected to hit the orthopaedics sector hardest, with potential revenue losses of up to $30 million. One example raised by industry indicated that the benefit for an orthopaedic item could fall from $1,200 to $300. Medtech companies have raised serious concerns about commercial viability and the real risk of market withdrawal, including orthopaedic plates, soft tissue anchors and humeral shoulder devices.

Industry stakeholders argue that some of these concerns could be addressed through more transparent communication between the Department of Health and the medtech sector, particularly regarding decisions made by the Expert Clinical Advisory Groups (ECAGs).

The consequences also extend beyond the private sector. Changes to PL pricing flow through to state hospitals via recalculation of the weighted average public price (WAPP), meaning benefit reductions affecting the private health sector can also have pricing implications for public hospitals and the medtech sector.

In response to growing industry concern, Kelleher halted the planned 1 July implementation of the PL group definition changes pending further dialogue with the sector.

Ultimately, the question is whether the PL savings will flow through to patients, or whether they will be absorbed into private health insurer profits and management fees. So far, the evidence appears to suggest the latter.

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