Senate Inquiry on prostheses pricing urged to consider implications

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AusBiotech has made a submission to the Senate’s Community Affairs References Committee Inquiry into the ‘Price regulation associated with the Prostheses List Framework’, urging the Inquiry to carefully consider the impacts of pricing reforms.

AusBiotech members are concerned at a perceived lack of recognition of the direct and indirect impacts from prostheses benefits reform on Australian innovation, research and development, manufacturing and importation in the medical technology sector.

Members support a reform process that fully considers the broader implications of modification of the Prostheses List (PL); concerned that the Australian medical technology industry will be collateral damage in pursuit of minimising cost if a well-constructed and considered reform is not achieved.

The AusBiotech submission notes that the biggest opportunity for cost savings is in reducing red tape and redundancy across the PL application and evaluation processes.

AusBiotech concludes that value-based pricing model is the most suitable method for establishing benefit for innovative products, however, any changes to the model should be phased in over reasonable timeframes and managed sensitively, so as to allow sponsors time to adapt.

While less than 15% of reimbursements paid by private health insurance are for products on the prostheses list, the opportunity to make any substantial cost saving to private health insurance is minimal.

The submission went on to say that Australia’s private and public healthcare systems are different and the prices of prostheses in each cannot be directly compared. Likewise, international healthcare systems are different to the Australian healthcare system and therefore cannot be directly compared to infer benchmarks Items outside of the current criteria for inclusion on the PL should be considered in the broader heath care context, to provide costs saving and/or improved care. This would involve revising the inclusion criteria for the PL to allow products that don’t currently fit the criteria.

The Committee, headed by Greens’ Senator Rachel Siewert, will address terms of reference that include: the operation of relevant legislative and regulatory instruments; the cost of medical devices and prostheses for privately insured patients versus public hospital patients and patients in other countries; reforming the reference pricing system; and the case for adoption of mandatory price disclosure and value-based pricing.

The Senate Inquiry’s Terms of Reference, can be found online.  The Committee is due to Report to the Senate by 30 March 2017.

Members wanting to see the full submission prior to the Committee’s acceptance and publication should contact Deputy CEO, Lorraine Chiroiu ( 03 9828 1400).