Senate Inquiry releases prostheses list pricing report


The Senate Inquiry report on ‘Price regulation associated with the Prostheses List Framework, which was presented to the Senate last week, agreed with recommendations that the pricing reform process ought not disadvantage Australian manufacturers.

In tabling the report, the Chair of the Community Affairs References Committee, Senator Rachel Siewert, echoed AusBiotech’s recommendations to the Inquiry.

Senator Siewert said (Hansard, 11 May): “We have to be careful. It is very simple to say, 'We've got to reduce the prices of prostheses,' but we also need to make sure that, for example—as the evidence was presented to us—Australian manufacturers are not disadvantaged by that.”

“We have some very innovative manufacturers and prosthesis device developers in Australia, so we need to make sure we are looking after those local manufacturers,” she said.

Also consistent with AusBiotech’s submission and responses to questions taken on notice were comments that savings delivered by reducing the prostheses pricing should have an ‘evidence base’ and a phasing-in process that does not replicate the prostheses reforms of October 2016, where the clumsy process was characterised by a short four-month timeframe and lack of consultation.

These arbitrary pricing changes presented significant challenges to the financial sustainability of Australian SMEs in the medical technology sector and their ongoing investments in R&D.

The Inquiry’s recommendations recognise the importance of stakeholder consultation in the reform process and ‘acknowledge’ AusBiotech’s comments that the current Prostheses List (PL) benefit-setting process should seek transparency.

The Report made 15 recommendations, including:

  • The Prostheses List Advisory Committee (PLAC), “develop and publish a formal work plan with defined agreed targets, activities, timeframes, indicators and outcomes to assist stakeholders to better understand and participate in the reform process.”
  • Better coordination between the TGA and the PLAC, including health technology assessment processes to enable a concurrent application for listing on the ARTG.
  • The nature and cost of services associated with a medical device on the PL be disclosed separately to the cost of the device.
  • Where the Commonwealth decides that a prostheses registry is needed, the Parliament should ensure that the registry is legislated for and collection of data is made compulsory.
  • Legislation for the compulsory provision of private hospital and day surgery data to the Independent Hospital Pricing Authority (IHPA).
  • Action is needed to reduce the prostheses costs and that savings should be delivered as soon as possible and have an evidence base.
  • Guidelines and a schedule of proposed targeted reviews to enable stakeholders sufficient time to prepare.
  • Further analysis and consultation be undertaken to determine the most appropriate benefit setting model or models, including investigation into the introduction of outcomes based categorisation of items on the Prostheses List, and the option of the government purchasing devices directly.
  • IHPA data on the differences between prostheses prices in private and public hospitals be released and used by PLAC.
  • Investigate rationalisation of the PL reduce its size as an important element in reviewing and reforming the benefit setting process.
  • Investigate the impact of the 25 per cent market share requirement and its role in distorting the market.
  • The mechanism for the reimbursement of medical devices not currently eligible for inclusion on the PL, including non-implantable devices and implantable devices not requiring hospital admission.

The committee did not make a recommendation to international benchmarking as a model of PL reform process.

The full Hansard where the Report was tabled can be found at: Senate (Hansard) 11 May 2017 and the Report can be found online.