Medtech companies voice concerns over proposed cost recovery arrangements

MedTech & Diagnostics News: In a recent analysis of the Prostheses List (PL) reform consultation, concerns and suggestions relating to the proposed new cost recovery arrangements were highlighted.

Stakeholders expressed several concerns, including uncertainty regarding fees, the absence of fee waivers for niche products, the need for support for small to medium companies, and the requirement for transparency and accountability from the Department of Health and Aged Care.

One major area of concern expressed by respondents was the uncertainty surrounding fees payable for variations to listings, including amendments to Australian Register of Therapeutic Goods (ARTG) details. Respondents noted that some variations may not require advice from committees or external experts. They also emphasised that amendment applications are often made to keep billing code details up to date. However, stakeholders pointed out that high fees associated with variations might discourage sponsors from promptly updating ARTG details, urging the consideration of lower fees for such cases.

The Department clarified that amendment applications must be submitted under specific assessment pathways and will be charged the relevant fees. It is expected that most applications related to variations of existing listings will fall under Tier 1.

Medical device companies further proposed that fees should be waived for niche products serving small populations with high clinical needs. However, the Department clarified that no broad fee waivers based on financial unviability criteria will be implemented for all applications. Interestingly, applications related to human tissue products on Part B of the Schedule will be exempt from cost recovery fees and the need to request fee exemption or waiver.

Respondents from medical device companies expressed a lack of information regarding device systems, particularly those involving a combination of devices with different risk classifications. Stakeholders recommended subjecting system applications to a single clinical or economic assessment fee. The Department agreed with this suggestion, stating that reduced fees would be applicable when multiple billing codes form part of one system and the assessment can be conducted together.

To address the impact of the new cost recovery arrangements on small to medium companies, sponsors recommended a phased introduction of substantial fee increases. However, the Department clarified that no temporary fee exemption or phase-in approach is currently proposed for this group of sponsors. The new cost recovery proposal aims to ensure consistency with the Australian Government Charging Framework and Cost Recovery Guidelines, which mandate that non-government entities using PL services pay the minimum efficient costs.

Medical device companies recommended developing key performance indicators (KPIs) in collaboration with stakeholders for the new PL application arrangements. These KPIs and metrics could be published three times per year to provide transparency and accountability. The Department noted that the publication of KPIs relating to assessment outcomes is out-of-scope of the cost recovery arrangements.

A review of the cost recovery arrangements is scheduled to be conducted by an independent, external reviewer in the financial year 2024-25. Furthermore, the Department commits to periodic reviews of all existing and potential charging activities within the PL application and listing process at least every five years, ensuring ongoing scrutiny of government activities and processes.

It is worth noting that several issues raised by stakeholders, such as risk sharing arrangements, were beyond the scope of Consultation Paper 6(b) and were not included in the analysis. While the Department acknowledges that a policy on risk sharing arrangements is not within the scope of cost recovery consultation, it has committed to considering the operationalisation of risk sharing within the Prostheses List context.