Australian Reimbursement
The true costs (and benefits) of market entry
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Hosted by Brandwood Biomedical 21 April 2015
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Australian
Device
Reimbursement:
The
true
costs
(and
benefits)
of
Market
Entry
4
Australia
•
Australia has a universal health coverage system
known as Medicare
•
Free public hospital system
•
Subsidised pharmaceuticals
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Systems
• Almost half of all Australians have private health
insurance
• More than half of all elective procedures are performed
in private hospitals
• The Private Hospital system is a very important and
Many Pathways
• Unlike regulatory approvals, medical device
reimbursement does not follow a single pathway or deal with a single agency
• Medical device reimbursement can be extremely
complex
• All agencies ‘upping the ante’ in terms of clinical and
economic evidence
• In some cases multiple strategies must be employed
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Three
HTA
Agencies
•
Medical Services Advisory Committee
(MSAC)
•
Prostheses List Advisory Committee (PLAC)
•
Pharmaceutical Benefits Advisory Committee
How to access the Private System
Background
• The Australian Medicare system pays doctors to perform
procedures in private hospitals
• Private Health Insurers pay both hospitals and doctors
for procedures performed in private hospitals
• Insurers are only obliged to pay if the procedure is
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MSAC
•
MSAC
is
the
Medical
Services
Advisory
Committee
•
Advises
the
Minister
of
Health
on
the
safety,
effectiveness
and
cost
effectiveness
of
new
procedures
•
MSAC
recommends
whether
new
procedures
Medical
Benefits
Schedule
(MBS)
•
A
list
of
procedures
for
which
Medicare
will
pay
a
benefit
to
Doctors
or
other
health
professionals
•
Includes
both
in
and
out
‐
patient
procedures
•
Forms
the
basis
of
the
Australian
reimbursement
system
•
While
the
MBS
has
an
uncapped
budget,
there
is
always
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MSAC Applications
• An MSAC application is very complex and time
consuming. Can take several years.
• Often are not successful • Several stages
• Very bureaucratic and the final decision to fund a
MSAC cont.
MSAC makes a recommendations on ‘safety, effectiveness
and cost-effectiveness’ then the Department of Finance will
determine whether the new procedure if ‘affordable’.
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Evidence
and
Economic
Requirements
• Evidence requirements have been adapted from the
pharmaceutical world (PBS) – often unrealistic in device world
• Preference is for meta-analysis of randomised controlled
trials - often an impossible requirement in the real world
• A full economic model, that is completed to an extremely
high standard
• A full budget impact analysis
• A submission will be subjected to an extremely rigorous
MSAC
Application
An MSAC application will require the services of a number of professionals, which may include a librarian, a
statistician, and an economic modeler, and someone to represent your company to the Department of Health
They are major undertakings that should not be entered into unless you are very confident of your clinical and
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New
Procedures
in
the
Private
System
• Remember - Insurers are only obliged to pay if the
procedure is included on the Medical Benefits Schedule (MBS)
• The MBS is how doctors get paid, but also underpins the
AR-DRG system to some extent.
• If your device involves a new procedure than a new MBS
Prostheses List
• List of medical devices used in
surgical procedures
for
which health funds
must
pay a benefit in a private
hospital
• Issued twice a year, February and August.
• Exhaustive and complex application and price setting
procedure.
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Prostheses List Criteria
• Must have a ARTG number
• The procedure must happen in a hospital
• Must have an MBS item number for the procedure
The product should:
(a) be surgically implanted in the patient and be purposely designed in order to:
(i) replace and anatomical part; or (ii) combat a pathological process; or (iii) modulate a physiological process
Is
it
a
Prostheses?
Prostheses Not a Prostheses
Radio-active Beads Tissue markers for radio-therapy Pacemakers and Implantable
Defibrillators Cardiac ablation catheters
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Clinical
&
Economic
Requirements
• Can claim ‘substantial clinical equivalence’ with an already listed device – fairly
straight forward
• 2 years of clinical evidence for devices requiring ‘durability, all high risk devices,
mobile load bearing devices (arthroplasties) or new devices using novel technology or design’
• If a device is considered ‘novel’ or you would like a higher price must go through
‘benefit validation’.
• Information that is requested includes
overseas pricing, cost of goods,
public sector pricing, shipping costs
• Can also use conventional health economic analysis such as cost-minimisation,
Assessment
of
Evidence
•
Evidence is assessed by a panel of specialist
physicians
•
Very opaque process
•
Inconsistent at best
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Prostheses List cont.
• Inclusion on the Prostheses List is very valuable for
medical device companies
• Guarantees a price for their device in private hospitals • Doctors don’t need to think about price when choosing a
Prostheses
List
cont.
• Prostheses List applications are very time constrained • Should think about making a submission as soon as TGA
submission is in
• Applications are more difficult if the device is ‘novel’ or if a
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Not a Prostheses?
• This can pose challenges for suppliers in the private
sector
• Will depend upon the nature and the cost of the device • Higher cost devices will have to demonstrate their
economic and clinical benefits to the hospital
• Perverse economic incentives exist if competing with a
Public System
• Devices can be sold into the public system as soon as
they receive TGA registration
• However the public system is financed by Activity Based
Funding (ABF) – DRG funding
• This means that in order to be successful devices must
be able to demonstrate their clinical and economic benefits
• Generally sell to public system by competitive tender • Any device that is able to demonstrate improved clinical
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New
Technologies
and
Procedures
• No good system for accommodating new technology in
Australia
• Some new technology grants in some states but competition
is fierce
• AR-DRG system is clunky and takes about 6 years to release
a new AR-DRG – however no barrier to new technology in the public sector if you can get the hospital to pay for it.
• Catch 22 for new procedures - AR-DRG system is
Cost Models
• Cost Models can be used by suppliers when no formal
reimbursement is available
• Extremely useful for demonstrating value • Very effective marketing tool
• Cost of developing the model can be recouped with
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Strategy Advice
It is always a good idea to get reimbursement advice before entering the market, particularly in Australia
Sometimes your device may not be commercially feasible. A good deal of time and money can be saved by doing
