Government rejects insurer push to abolish Prostheses List but price reductions remain on the horizon

MedTech News: The Medical Technology Association of Australia (MTAA) has welcomed the Government’s decision to retain the Prostheses List as part of its Budget night health announcements on reforms to private health insurance.

Despite the high-level detail in the Budget announcement, MTAA remains cautiously optimistic ahead of Wednesday’s post-Budget briefing of key industry stakeholders by the Department of Health.

While retaining the Prostheses List is good news for the medical devices sector, the reforms are pointing to price reductions of medical devices with little effort directed at holding the private health insurers responsible.

The Hon Greg Hunt MP said during the post-Budget webinar / Q & A “What we’ve seen is that there’s a mismatch between the public price and the private price of medical devices. We’ve already been able to bring down prices within the sector on a fair and reasonable basis.

“Our principles are there. Firstly, value for money for the sector, for patients and for those who are engaging with private health. Secondly, we want to make sure that patient and doctor choice is unaffected – the clinical choice determines the choice of prosthesis.

“If we have a four year agreement with MTAA, and we bring in the hospitals and private health insurers to have a comprehensive partnership, then we can progressively bring down the price of prostheses in the private sector towards the public sector.”

MTAA CEO, Ian Burgess, said stakeholder industry groups were ready to see positive Prostheses List reforms that ensure patients continue to have access to the best life-saving medical technologies with no out-of-pocket costs.

“MTAA has put forward the most comprehensive proposal for positive Prostheses List reform with improvements that are delivered in collaboration with industry via a new MTAA-Government Agreement.

“The Budget announcement has ensured the Department of Health is well resourced to engage in broad consultation during the Prostheses List reform process. MTAA looks forward to working with the Government to ensure the future of the Prostheses List and also the Budget commitment to new streamlined pathways for listing devices is delivered,” Mr Burgess said.

Private Health Australia CEO Dr Rachel David said “The current Federal Government regulatory system which determines the price private payors must pay for commonly used medical devices is broken. The fee-per-item system of over 11,000 items is unwieldy, has no controls on volume, and is highly inflationary.  High fixed prices for commonly used, generic technologies have enabled transfer pricing, secret rebates and kickbacks, and upcoding to the extent price has become totally uncoupled from the value of these items.

“It is now urgent that changes to the current pricing regime be made well in advance of next year’s premium round to ensure the 14 million Australians who rely on PHI will benefit from this measure. Without change, more people will give up private health insurance as premiums rise, putting extra pressure on our public hospital system.

“The cost of medical devices is one of the largest drivers of premium increases in Australia. Currently, the price of medical devices in Australia is at least 30% higher than in countries such as New Zealand, France and the UK. For example, the exact same stem item used in hip replacements costs more than $4,000 in Australia, whilst in New Zealand and the UK it costs just $1,800. In some cases, such as cardiac stents, private health insurers pay up to 5 times as much for the exact same medical device.

“Australia shouldn’t have to pay 30% more than other countries for the same medical devices. The current medical device regime keeps premiums high and ensures that big multinational medical device companies make much larger profits in Australia compared to other countries,” he added.

Despite the campaign of falsehoods led by corporate health insurers, the MedTech industry has repeatedly delivered savings to ensure the sustainability of the private healthcare system. It has been MedTech innovators that have been the sole financial contributor to keeping private health insurance premium increases to their lowest level in 20 years, and on track to deliver savings of $1.1 billion.

The Budget contained $23.1 million over four years from 2021-22 (and $2.1 million per year ongoing) to modernise and improve the administration of the Prostheses List. It is essential that, during this period, the Department of Health engage across the whole sector to ensure the final reforms best support patients and clinicians.

Doctors, private hospitals, medical technology companies and patients remain committed to Prostheses List reforms that ensure the patient access and surgeon choice guarantee is retained.

Other Health Sector specific highlights from this year’s Budget included:

• Access to a 17% tax rate for MedTech innovators for income derived from patents held in Australia via a Patent Box tax regime. This has been an advocacy priority for MTAA, and now delivered after seven years of work,
• $6.0 million to extend the National Partnership Agreement, Encouraging More Clinical Trials in Australia, and removing barriers for conducting clinical trials, and
• $36.0 million over four years from 2021-22 (and $1.6 million per year ongoing) to expand the Health Products Portal to provide a single digital channel for industry to manage applications to list products and services on the Pharmaceutical Benefits Scheme, Medicare Benefits Schedule, Prostheses List and the National Immunisation Program