Threat to innovation: Health Department’s PL reforms spark industry backlash

MedTech News: The Department of Health has unveiled stakeholder feedback on the alignment of charges for supplying medical devices with corresponding Prostheses List (PL) benefits.

Under current regulations, the Private Health Insurance (PHI) Act does not restrict charging above the PL benefit listed in the Medical Devices and Human Tissue Products (MDHTP) Rules. This can lead hospitals to bear additional expenses, potentially passed on to patients as out-of-pocket costs.

Stakeholder feedback from consultation Paper 8b largely opposed this measure, expressing concerns over its impact on medical device supply to privately insured patients.

Medtech companies questioned the necessity of such measures, citing minimal reports of patient out-of-pocket expenses for PL items. However, some companies admitted to supplying devices to public hospitals at prices exceeding current PL benefits, attributing this to declining PL benefits amid rising manufacturing costs and increased regulatory expenses.

Manufacturers selling through third-party distributors emphasised their lack of control over market prices, especially when competing with overseas manufacturers. They highlighted instances where profit margins are jeopardised due to pricing dynamics beyond their influence.

Several stakeholders indicated reluctance to introduce new, technologically advanced medical devices to the Australian market if manufacturing costs outweigh PL benefits. This dilemma often arises when newly developed devices surpass existing PL-listed devices in technology but receive inadequate PL benefits.

These concerns underscore doubts about the value of private health insurance, particularly regarding access to cutting-edge medical technologies expected by consumers investing significantly in insurance coverage.

Medtech companies argued for a focus on clinician choice and selecting devices that optimise clinical outcomes, rather than fixating on minimal PL benefits. Stakeholders also stressed the need for greater consideration of innovation, manufacturing, and development costs, particularly affecting smaller, innovative firms operating at early-stage profitability.

Key criticisms of the proposed measure included sponsors’ objections to disproportionately severe criminal and legal sanctions for charging above PL benefits. Suggestions for a more effective approach included developing a reporting mechanism to investigate and resolve alleged cases of excessive charges, avoiding punitive measures.

This feedback highlights ongoing tensions between regulatory oversight and industry innovation in the medtech sector, prompting further dialogue on balancing investments with technological advancement in healthcare.

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