Medical technology for a healthier australia. Medical technology in Australia Key facts and figures Medical technology for a healthier Australia

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Medical technology in Australia

Key facts and figures 2011

Medical technology for a healthier australia

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Suggested Citation

Medical technology in Australia: Key facts and figures 2011, Occasional Paper Series: Sydney. Medical Technology Association of Australia (2011). National Library Number: 978-0-646-56489-0

Medical Technology of Australia Limited www.mtaa.org.au

Email: Reception@mtaa.org.au

All correspondence: PO Box 2016, North Sydney NSW 2059. Disclaimer

Every effort has been made to ensure the accuracy, correctness and reliability of the information provided in this paper. MTAA does not claim that the information is free of errors. Copyright © 2011 Medical Technology Association of Australia Limited (MTAA)

To the extent permitted by law, all rights are reserved and no part of this publication covered by copyright may be reproduced or copied in any form or by any means except with the written permission of MTAA Limited.

Acknowledgements

MTAA acknowledges its members for contribution of data to this booklet. The information within this booklet has been obtained from a variety of sources. These include MTAA members, the Australian Bureau of Statistics (ABS), Australian Institute of Health and Welfare (AIHW), Therapeutic Goods Administration (TGA), Australian New Zealand Clinical Trials Registry (ANZCTR), Medicare Benefits Schedule (MBS), Access Economics and state and territory government websites. In some cases where direct data are not available extrapolations have been made (and noted where this is the case).

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Contents

Acknowledgements . . . .2

Introduction from the CEO . . . .4

1. About MTAA . . . .5

2. What is a medical device . . . .5

3. Differences between medical devices and pharmaceuticals . . . .6

4. Pharmaceuticals and medical technology . . . .6

5. Healthcare funding in Australia . . . .7

5.1. Medicare . . . .7

5.2. Pharmaceuticals . . . .7

5.3. Private Health Insurance . . . .7

5.4. Consumable medical technology . . . .7

5.5. Implantable devices . . . .8

6. General health trends in Australia . . . 9

7. Healthcare expenditure in Australia . . . .9

8. Changing the Australian healthcare system . . . 10

9. Challenges facing the Australian healthcare system . . . 10

10. International health expenditure . . . . 11

11. Value of the global medical technology industry . . . 11

12. Value of the medical technology industry in Australia . . . . 12

13. Imports and exports of medical technology in Australia . . . 13

14. The medical technology landscape in Australia . . . 13

15. Employment in the medical technology sector in Australia . . . 14

16. Medical technology listed on the Prostheses List . . . 15

17. Medical device listings on the Australian Register of Therapeutic Goods (ARTG) . . . . 15

18. Research and Development (R&D) . . . . 16

19. Regulation of medical technology in Australia . . . 16

20. Medical technology and clinical trials in Australia . . . 17

21. Timeline of Australian medical technology inventions . . . . 19

22. Historical advances in medical technology . . . 20

22.1. Cochlear implants. . . 20

22.2 Pacemakers . . . 20

22.3 Insulin pumps . . . . 21

23. Emerging medical technologies 2010-11 . . . 22

23.1 Cardiovascular/Vascular . . . 22 23.2 Oncology . . . 22 23.3 Gastrointestinal . . . . 22 23.4 Pulmonology . . . . 22 23.5 Nursing . . . 22 23.6 Neurology . . . . 22 23.7 Women’s Health . . . 23 23.8 Surgical . . . 23 23.9 Imaging . . . . 23 24. Value of Technology . . . 23

24.1 Implantable infusion pumps . . . . 23

24.2 Cochlear implants . . . 24

24.3 Insulin infusion pumps. . . 25

24.4 Bariatric surgery . . . 26

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Introduction from the CEO

The medical technology industry is characterised by a high level of innovation. A typical medical device is replaced by an improved version every 18-24 months.

The Australian medical technology industry produces a diversity of medical devices, medical consumables, hospital equipment and medical imaging equipment. It includes disease screening technologies, therapies, equipment and supplies - everything from expensive, complex capital equipment (x-ray machines and MRI scanners) to consumable items (bandages and syringes), implantable devices (orthopaedic hips and knees, cardiac stents and pacemakers) and highly evolved technologies (robotic surgical devices).

Medical technology has an essential role in managing the health of Australians and is relied upon by billions of people globally to alleviate pain, injury and disability. Medical devices support patients along the continuum of care, moving from independent living at home, home living with assistive medical technologies, to complex surgical procedures and emergency and trauma care. Rapid innovation and advances in the development of medical technology between 1990 and 2000 has led to an increase in life expectancy of 3.2 years, a 15% decrease in annual mortality, a 25% decline in rates of disability and a 56% reduction in hospital days1. The global medical device market is dynamic and growing.

Growth of 4-5% is estimated over the next few years with the global market expected to reach $312 billion in 20112.

Medical technology in Australia: Key facts and figures 2011 has been developed by the Medical Technology Association of Australia (MTAA) to provide a snapshot of our industry and the healthcare environment in Australia within which it works. I hope that you find it interesting and informative. MTAA intends to update the data on a regular basis to ensure the currency of the information.

Anne Trimmer

Chief Executive Officer

1 www.advamed.org.

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1. About MTAA

MTAA is the national association representing companies in the medical technology industry. MTAA aims to ensure the benefits of modern, innovative and reliable medical technology are delivered effectively to provide better health outcomes to the Australian community.

MTAA represents manufacturers and suppliers of medical technology used in the diagnosis, prevention, treatment and management of disease and disability. The range of medical technology products is diverse with items ranging from familiar items such as syringes and wound dressings, through to high-technology implanted devices such as pacemakers, defibrillators, hip and other orthopaedic implants. Products also include hospital equipment, surgical equipment and diagnostic imaging equipment such as ultrasounds and magnetic resonance imaging machines. MTAA members distribute the majority of the non-pharmaceutical products used in the diagnosis and treatment of disease and disability in Australia. Our member companies also play a vital role in providing healthcare professionals with essential education and training to ensure safe and effective use of medical technology.

2. What is a medical device

3

A ‘medical device’ is any instrument, apparatus, implement, machine, appliance, implant, invitro reagent or calibrator, software, material or other similar or related material:

a] intended by the manufacturer to be used, alone or in combination, for human beings for one or more of the specific purpose(s) of: diagnosis, prevention, monitoring, treatment or alleviation of disease

diagnosis, monitoring, treatment, alleviation of or compensation for an injury

investigation, replacement, modification, or support, of the anatomy or of a physiological process support or sustaining life

control of conception disinfection of medical devices

providing information for medical or diagnostic purposes by means of in vitro examination of specimens derived from the human body and

b] which does not achieve its primary intended action in or on the human body by pharmaceutical, immunological or metabolic means, but which may be assisted in its intended function by such means.

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3. Differences between medical devices and pharmaceuticals

4

Medical Devices Pharmaceuticals

Primary use Treatment and diagnoses Treatment

Therapeutic effect Effective by mechanical and/or electrical action Effective when absorbed and metabolised

by the body

Delivery environment Often delivered in hospitals (public and private) Usually administered in community settings

Potential market Specialised medical devices may only be of use in a small

number of patients (n=<500)

Potential market for a product may be millions of patients

Return on investment Devices are developed through iterative improvement,

resulting in a rapid life-cycle, high competition and lower total relative returns per product

Pharmaceuticals are developed slowly and tend to be targeted to large markets, with very large returns per product

Operator skill Outcomes may depend on surgical technique and skill Rarely relevant

Life cycle Relatively short (2–4 years) Longer (10–20 years)

Innovation Technology/innovation evolves rapidly, following a constant

cycle of iterations

Evolution of pharmaceuticals is slow

Physical infrastructure Often necessary for delivery of treatment Usually not required

Clinical evidence Obtained from indirect comparisons, quasi experimental

designs, observations and registry data. There is no double-blind placebo for a device and surgery for an implantable device cannot be randomly assigned. Monitoring and active post-market follow up is common

Obtained from large double-blind randomised controlled trials, the majority of clinical evidence is collected pre-market

Follow up Success of many devices (e.g. pacemakers) depends on

follow-up and physical monitoring of the device

Success does not depend on long term follow up

Change Change varies widely, some devices may be subject to large

changes (e.g. insulin pumps) while others change little over decades (e.g. syringes)

Once products are on the market they do not tend to change

4. Pharmaceuticals and medical technology

Significant drug groups by highest cost to

government (section 85 only)5 Medical technology

Lipid modifying agents None

Agents acting on the renin-angiotensin system Implanted device that activates the baroreflex system to regulate blood pressure

Drugs for acid-related disorders Incisionless surgery to reconstruct valve at top of stomach, solution implant via

endoscopy to keep stomach acid from entering the esophagus, implantation of pacemaker-like device to control the esophageal sphincter

Psychoanaleptics None

Antibacterials for systematic use None

Analgesics Pain pumps and drug delivery systems

Drugs for obstructive airway diseases Inhaled bronchodilators, oxygen supplementation, continuous positive airways

pressure (CPAP) devices, bilevel positive airway pressure machine (BiPAP devices)

Psycholeptics None

Calcium channel blockers Implanted device that activates the baroreflex system to regulate blood pressure,

implantable cardiac devices and ablation procedures to treat arrhythmia

Opthalmologicals Contact/intraocular lenses, bionic eye

Antithrombotic agents Implantable cardiac devices, cardiac ablation procedures to treat arrhythmia

Drugs used in diabetes Insulin pumps, continuous glucose monitoring

Drugs used for treatment of bone diseases Implantable prostheses, prosthetic and mobility devices

Antineoplastic agents Radiation therapy, radiosurgery, brachytherapy, proton therapy, tiny injectable

radiation beads

Endocrine therapy Radiation oncology, surgical procedures, laparoscopic adjustable gastric banding,

gastric bypass

Immunosuppressants None

Immunostimulants None

4 Adapted from Taylor, R.S. et al. (2009). Assessing the clinical and cost-effectiveness of medical devices and drugs: Are they that different? Value in Health, 12(4), 404-406.

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5. Healthcare funding in Australia

5.1. Medicare

Medicare is funded from taxation and subsidises healthcare for all Australians. Medicare provides subsidies for prescribed medicines, free or subsidised treatment by practitioners such as doctors or dentists, substantial grants to State and Territory governments to contribute to the costs of providing free access to public hospitals, and specific purpose grants to State/Territory governments and other bodies.

The Commonwealth Medicare Benefits Schedule (MBS) lists a wide range of consultations, procedures and tests, and the Schedule fee applicable for each item. Proposed listings of new medical procedures and new technologies on the Schedule are assessed by the Medical Services Advisory Committee (MSAC) on the basis of evidence of safety, cost-effectiveness and benefit to patients. Although Schedule fees are used to calculate Medicare benefits entitlements, doctors can charge whatever fee they wish, provided the service is not ‘bulk-billed’.

5.2. Pharmaceuticals

Medicines or pharmaceuticals prescribed by doctors and dispensed in the community by independent private sector pharmacies are directly subsidised by the Commonwealth Pharmaceutical Benefits Scheme (PBS). The PBS provides subsidies for about 800 different pharmaceuticals. Additional drugs are added when assessed as meeting safety, quality, effectiveness and cost-effectiveness criteria. Around 75% of all prescriptions dispensed in Australia are subsidised under the PBS. The other major source of subsidised medicines is public hospitals which provide medicines to inpatients free of charge and do not attract subsidies.

5.3. Private Health Insurance

The Commonwealth regulates insurance offered by registered health insurance organisations to ensure that the principle of community rating is maintained. This means that health funds must charge everyone the same premium regardless of the health status or claims history of the individual. Patients with private health insurance may choose to be private patients in a public hospital, in which case private health insurance will cover all or nearly all of the charges. Private insurance benefits can also contribute to payment of the costs of allied health/paramedical and other costs (for example, surgically implanted prostheses) incurred as part of the hospital stay.

The Commonwealth Government has introduced measures designed to encourage people to take up private health insurance and decrease the pressure on the public system. One measure was the introduction of a 30% rebate on private health insurance in January 1999. Another initiative is Lifetime Health Cover, which is designed to encourage people to take out hospital cover early in life and maintain their cover. People who join a health fund before they turn 31 years of age and who stay covered pay a lower premium throughout their lives relative to people who delay joining. Patients with private health insurance are able to receive reimbursement for implantable devices from the Prostheses List (see below).

5.4. Consumable medical technology

Medical consumables are provided to patients in the community through a variety of Commonwealth and State and Territory schemes. In some cases there may be inequity of access depending on where the patient lives. Federal and State/Territory schemes are listed below.

Federal schemes

Repatriation Pharmaceutical Benefits Scheme (RPBS)

Administered by the Department of Veterans’ Affairs (DVA). Provides access to certain medications and dressings for treatment of entitled veterans and war widows. The range of items is more comprehensive than is available through the PBS and includes assistive devices

Rehabilitation Appliances Program (RAP)

Administered by the DVA. Provides aids and appliances to eligible members of the veteran community to help them maintain their independence. A range of appliances are provided through six product groups (continence, mobility function and support, oxygen, diabetes, personal response systems, Continuous Positive Airway Pressure (CPAP))

National Diabetes Services

Scheme (NDSS) Administered by Diabetes Australia and delivers diabetes-related products at subsidised prices, information and support services to approximately 910,000 people with diabetes each year

Stoma Appliance Scheme (SAS)

Provides stoma related products (medicines and appliances) to individuals who have undergone either a temporary or permanent surgically created body opening (stoma). Approximately 30,000 people receive products under the scheme

Continence Aids Payments Scheme (CAPS)

The CAPS assists individuals with permanent and severe incontinence to meet some of the costs of continence products

Epidermolysis Bullosa Dressing Scheme

The only Federal scheme for modern wound care devices assists patients with Epidermolysis Bullosa. Up to 200 patients will be assisted

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State/Territory schemes

ACT ACT Equipment Scheme

Domiciliary Oxygen Scheme

Continuous Positive Airway/Variable Positive Airway Pressure (CPAP/VPAP) Scheme ACT Spectacles Subsidy Scheme

Breast Prosthesis Scheme

NSW Program of Appliances for Disabled People (PADP)

Aids for People in DAHDC Accommodation Services

NT Territory Independence Mobility Equipment (TIME) Scheme

QLD Medical Aids Subsidy Scheme (MASS)

SA Independent Living Equipment Programme (ILEP)

Disability SA Equipment Program

TAS State wide Community Equipment Scheme

State wide Continence Aids Scheme

Spectacles and Intra-Ocular Assistance Scheme Home Oxygen Scheme

Spinal Account

VIC Victorian Aids and Equipment (A&EP) Scheme

WA Community Aids and Equipment Program (CAEP)

5.5. Implantable devices

Hospitals: In public hospitals medical devices are purchased under state, regional or hospital arrangements and are provided free of charge for patient use. Access to surgical procedures may be constrained by budgets. In private hospitals medical devices are purchased by private hospital/hospital groups with categories of devices reimbursed by means of contractual arrangements with health funds, e.g. procedure banding or the Prostheses List.

National Procedure Banding Schedule: The schedule covers theatre fees and consumables used in operating theatres according to the complexity of the procedure.

Prostheses List: Under the Private Health Insurance Act 2007, private health insurers are required to pay benefits for a range of prostheses that are provided as part of an episode of hospital treatment or hospital substitute treatment for which a patient has cover and for which a Medicare benefit is payable for the associated professional service. Items on the Prostheses List include cardiac pacemakers and defibrillators, cardiac stents, hip and knee replacements and intraocular lenses, as well as human tissues such as human heart valves, corneas, bones (part and whole) and muscle tissue. The list does not include prosthetics, external breast prostheses, wigs and other such devices. The Prostheses List lists the benchmark benefit to be paid by the private health insurers for each group of products.

The Prostheses List contains over 9,500 prostheses and is in three parts: Part A – Prostheses; Part B – Human Tissue (includes products that are substantially derived from human tissue); and Part C – Non-implanted Devices.

Products meeting all of the following criteria are eligible for consideration for inclusion on the Prostheses List: 1. The product must be included on the Australian Register of Therapeutic Goods; and

2. The product must be provided to a person as part of an episode of hospital treatment or hospital-substitute treatment; and

3. A Medicare benefit must be payable in respect of the professional service associated with the provision of the product (or the provision of the product is associated with podiatric treatment by an accredited podiatrist); and

4. The product should:

(a) be surgically implanted in the patient and be purposely designed in order to: (i) replace an anatomical body part; or

(ii) combat a pathological process; or (iii) modulate a physiological process; or

(b) be essential to and specifically designed as an integral single-use aid for implanting a product, described in (a) (i), (ii) or (iii) above, which is only suitable for use with the patient in whom that product is implanted; or

(c) be critical to the continuing function of the surgically implanted product to achieve (i), (ii) or (iii) above and which is only suitable for use by the patient in whom that product is implanted; and

5. The product has been compared to alternate products on the Prostheses List or alternate treatments and: (i) assessed as being, at least, of similar clinical effectiveness; and

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The Prostheses List is an important source of access to medical technologies. For example, 75% of insulin pumps are purchased by health funds which cover the cost of pumps for people with Type 1 diabetes. Over 90% of gastric reduction and gastric bypass procedures for obesity are performed in private hospitals and patients without private health insurance are often unable to access bariatric surgery.

Joint replacement procedures can be performed in public or private hospitals. The National Joint Replacement Registry (NJRR) reported 82,823 joint replacements in 2010. The majority were for knees (53%) and hips (42%). Since 2001, the number of knee and hip replacements has increased by 67% and 40% respectively.

Figure 1: Number of joint replacement procedures reported on the National Joint Replacement Registry (NJRR) in 2010

6. General health trends in Australia

The average life expectancy in Australia is 79 years for males and 84 years for females. The projected leading specific causes of burden of disease and injury arecoronary heart disease, anxiety and depression, Type 2 diabetes, dementia, stroke, lung cancer, chronic obstructive pulmonary disease (COPD), adult-onset hearing loss, colorectal cancer and asthma6. Australia has 1,317 hospitals (57% public, 43% private).

There are 4.9 million admissions to public hospitals and 3.3 million admissions to private hospitals each year. Additionally, there are over 51,000 public admissions for hospital-in-the-home care (1% of public hospital admissions) annually. Just over half of all Australians (52%) are covered by general treatment private health insurance7.

7. Healthcare expenditure in Australia

In 2008-09 health expenditure in Australia was $112.8 billion8. Governments directly fund almost 70% of healthcare. The Commonwealth funds

43% of healthcare (16% of which is raised by the Medicare Levy). State governments contribute an additional 26% and individual payments make up about 17%9. More than two thirds of all health expenditure is associated with chronic disease management (approximately $75 billion).

Salaries for medical and nursing staff represent 52% of admitted patient costs. Other costs are made up of medical and drug supplies, diagnostic and allied health services and administration costs. Medical supplies make up 9% of costs10. Medical technologies comprise approximately

5% of expenditure (similarly in the US, expenditure on medical technology makes up 5% of total health care costs, in the EU the percentage is slightly higher at 6%). Consequently reduction in expenditure on medical technology offers only limited potential to contain total expenditure11.

The cost of prostheses represents only a small part of a hospital’s total budget (around 3% in a public hospital)12. In 2008-09, expenditure on

aids and appliances was $3.3 billion. Of this, 71.5% was funded by individuals’ out-of-pocket expenditure13.

45,000 50,000

Hips Knees Shoulders

Procedure Elbows, wrists ankles, spine 40,000 35,000 30,000 25,000 Number 20,000 15,000 10,000 5,000 0

6 Australian Institute of Health and Wellbeing (AIHW). (2010). Australia’s health 2010. Australia’s health series no. 12. Cat. no. AUS 122. Canberra. 7 PHIAC, 2010.

8 AIHW. (2010). Health expenditure Australia 2008–09. Health and welfare expenditure series no. 42. Cat. no. HWE 51. Canberra. 9 AIHW. (2010). Australia’s health 2010. Australia’s health series no. 12. Cat. no. AUS 122. Canberra.

10 Commonwealth of Australia. (2010). The State of our Public Hospitals – June 2010 Report.

11 LEK Consulting Best Practices in Medical Device Procurement – A Road Map to System Success, a research paper prepared for Medtronic International 2009. 12 AIHW. (2009). National Hospital Cost Data Collection, Cost Report Round 12 (2007-2008), p 30. 2009.

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8. Changing the Australian healthcare system

A number of changes are set to occur over the next five years that will change the way that healthcare is delivered in Australia. There is a shift towards the provision of medical services in the home – many medical technologies have remote monitoring capabilities and can be used in the home. Up to $620 million will be invested from July 2011 to 2015 to provide Medicare rebates for online video consultations (telehealth) across a range of specialties. An eight year investment of $43 billion will fund the rollout and operations of the National Broadband Network (NBN). The availability of high speed affordable internet will provide a number of indirect benefits to the healthcare system (e.g. enabling rapid delivery of test results and medical data). Additionally, over $466 million will be invested over the next two years in the first release of a personally controlled electronic health record.

9. Challenges facing the Australian healthcare system

The number of people aged 65-84 years will double and the number of people aged over 85 will quadruple by 205014

The number of aged care places will need to double by 2030 in order to meet demand Current spending on aged care will double by 2049-5015

There is a shortage of informal care-givers, nurses and doctors16

Rapid growth in chronic diseases is expected in the areas of diabetes, mental illness, cardiovascular disease, cancer and joint disorders

Type 2 diabetes is expected to become the leading cause of disease burden and it is estimated that by 2030 approximately 75% of Australians will be overweight or obese17

The annual loss of workforce participation from chronic disease in Australia is around 537,000 person-years of participation in employment and approximately 47,000 person years of part-time employment18

Approximately 12% (n=864,000 in 2008-09) of patients who present at an emergency room are non-urgent, usually with minor illnesses or stable chronic conditions and minor complicating symptoms

9.3% of potentially preventable hospitalisations are due to chronic ailments, which could be prevented or managed through effective, timely care (usually non-hospital)

Over 30% of Australia’s total burden of death, disability and disease can be accounted for by risk factors (e.g. smoking, obesity)19.

Figure 2: Changing needs for medical technology with Australia’s ageing population20

14 National Health and Hospitals Reform Commission: A Healthier Future For All Australians – final report June 2009. Canberra: Department of Health and Ageing. 15 Australian Government (2010). Australia to 2050: future challenges. The Intergenerational Report.

16 Joyce, C.M. et al. (2006). More doctors, but not enough: Australian medical workforce supply 2001-2012. Medical Journal of Australia, 184(9),441-446. 17 National Preventative Health Taskforce, 2009, Australia: the healthiest country by 2020 – National Preventative Health Strategy – the roadmap for action. 18 AIHW. (2006). Chronic diseases and associated risk factors in Australia. Cat. no. PHE. 81. Canberra.

19 AIHW. (2010). Australia’s health 2010. Australia’s health series no. 12. Cat. no. AUS 122. Canberra.

20 Australia’s projected population, 2010-2030. Data from Australian Bureau of Statistics (ABS), Population Projections, Australia. Table B9. Population projections, By age and sex, Australia - Series B.

4,500,000 • Ultrasound • Fetal monitors • Incubators • Cochlear implants • Gastric banding • Sleep apnea aids • Dialysis • Joint replacements • Defibrillators • Stents • Neurostimulators • Pacemakers • Incontinence aids • Contraceptive devices • Contact lenses 0-9 10-19 20-29 30-39 40-49 50-59 Age range 2010 2030 60-69 70-79 80-89 90+ 4,000,000 3,500,000 3,000,000 2,500,000 Population (number) 2,000,000 1,500,000 1,000,000 500,000 0

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10. International health expenditure

The United States spends the largest percentage of its gross domestic product (GDP) on healthcare in the world. Healthcare expenditure for 12 countries is shown below.

Figure 3: Total health expenditure as a percentage of gross domestic product (GDP) for 12 countries21

11. Value of the global medical technology industry

The global medical technology market is valued at over US$300 billion per annum22. Australia is a small market with a share of the international

market estimated at 2.61%23.

Because of the small size of the Australian market companies developing innovative technologies will need to consider the potential return on investment in making a decision on whether to bring a technology into Australia or invest in the development of a new technology in Australia. Almost every product supplied in Australia is supplied in other markets, often with comparable regulatory systems (EU, USA, Canada). The epicentre for medical technology innovation has traditionally been the United States, which employs over 422,000 people24 and is home

to 32 of the 46 medical technology companies that have an annual turnover greater than US$1 billion. Figures 4-6 show medical technology sales data from Clinica League Tables 2010, which rank medical technology companies by total revenue from all medtech segments between 2008 and 2009.

Figure 4: Medical technology sales for the top ten international companies in 2009

China Israel Japan Brazil Australia UK NZ Canada Germany Fance USA

India Country Percentage of GDP 0 2 4 6 8 10 12 14 16 Siemens Healthcare GE Healthcare Medtronic Philips Roche Diagnostics Covidien Boston Scientific Stryker Abbott Laboratories Johnson & Johnson

Company

Total R

evenue ($US millions)

0 5,000 10,000 15,000 20,000 25,000

21 World Health Organization (WHO). World Health Statistics, 2011.

22 Griffith Hack, Mind the gap: medical technology innovation in Australia, June 2010. 23 Clinica’s Review and Analysis of the Medtech Industry in 2010.

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Figure 5: Highest international sales in cardiology (2009)

Figure 6: Highest international sales in orthopaedics (2009)

Emerging economies are capturing an increasing share of the industry. Countries such as China, Brazil and India are able to deliver cheaper devices fast, decreasing the overall cost of healthcare. The capacity of countries with strong medical technology market potential to adapt to the changing nature of innovation is assessed by the Medical Technology Innovation Scorecard. The countries analysed are Brazil, China, France, Germany, India, Israel, Japan, United Kingdom and United States. While the US still maintains the highest score, its overall innovation score has decreased. In contrast, China, Brazil and India have all shown increased scores25. The Innovation Scorecard estimates the difficulty of

market access by country from most difficult to easiest: Japan was rated the most difficult market to access, followed by China, India, France and Germany, with the easiest being United Kingdom, Israel and United States.

12. Value of the medical technology industry in Australia

There is no official data collected on sales of medical technology in Australia. MTAA calculates the size of the industry based on extrapolation of data collected by its contracted service provider, Ultrafeedback, from 20 member companies in a quarterly Market Barometer Online Survey (MBOS), data provided by members and estimated revenue of non-member companies. Total revenue for the Australian medical technology industry for 2009-10 was calculated to be in the order of $7.6 billion. The value is higher if invitro diagnostic devices (IVDs) are included (~$8.4 billion), and both IVDs and dental products are included (~$9.2 billion). The Australian medical technology industry is expected to grow at a Compound Annual Growth Rate (CAGR) of 9% per annum over the next five years26.

St Jude Medical Medtronic Ter umo Edwards Lifesciences Sorin Group Boston Scientific Greatbatch CR Bard Thoratec

Johnson & Johnson

Company

Revenue ($US millions)

0 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000

Zimmer Medtronic Synthes Biomet

Smith & Nephew

Stryker

Orthofix Inter

national DJO

Wright Medical

Johnson & Johnson Company

Revenue ($US millions)

0 6,000 5,000 4,000 3,000 2,000 1,000

25 Medical Technology Innovation Scorecard. The race for global leadership. PricewaterhouseCoopers, 2011.

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13. Imports and exports of medical technology in Australia

Nearly all medical technology products manufactured in Australia are exported, while the majority of medical technology products used in Australia are imported. In 2010, the value of medical technology imports was $3.3 billion and the value of medical technology exports was $1.2 billion27. The comparative values for medicinals and pharmaceuticals were $9.5 and $3.9 billion respectively.

Figure 7: Australian medical technology imports and exports (1998-2010)

14. The medical technology landscape in Australia

There are over 500 medical technology companies in Australia with products registered on the Australian Register of Theapeutic Goods (ARTG). This number does not include IVD companies (of which there are approximately 60) or dental (of which there are over 50). There are 53 medical technology companies listed on the Australian Securities Exchange (ASX) with a combined market capitalisation of $2.4 billion. The majority (>75%) of companies in Australia are independent distributors or Australian affiliates of international companies.

Figure 8: Classification of medical technology companies in Australia (%)

Data obtained from 240 companies in the MTAA database. Companies were able to select more than one category.

The majority of medical technology companies are located in NSW (54%), followed by VIC (24%), QLD (11%) and WA (7%).

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Imports Exports Value ($A U millions) 0 50 100 150 200 250 300

27 ABS - 5368.0 International Trade in Goods and Services, Australia, November, 2010. 56%

13%

2% 8%

21%

Importer of medical technology as subsidiary of a multinational company Third party independent importer of medical technology

Manufacturer of medical technology in Australia

Supplier of medical technology manufactured in Australia Exporter of medical technology

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Figure 9: Location of medical technology companies in Australia (%)

15. Employment in the medical technology sector in Australia

The three stages of the continuum for the development and delivery of medical technology are research and development (biological sciences, biomedical engineering, biomedical sciences, medicine, medical research, medical technology, nursing, physical sciences), manufacturing (biological sciences, biomedical engineering, biomedical sciences, commerce, information technology, manufacturing, medicine, nursing, physical sciences, regulatory and quality, reimbursement, health economics), and distribution (biomedical sciences, education, medicine, nursing, product specialists, sales and marketing, regulatory and quality, reimbursement, health economics).

Disciplines relevant to the medical technology industry include biomedical engineering, biological sciences, health economics, information technology, law, manufacturing, nursing, physical sciences, regulatory and quality, sales and marketing. Personnel are generally placed in the one of three stages along the continuum for the development and delivery of medical technology. The medical technology industry in Australia employs approximately 17,500 people. The majority of MTAA member companies (77%) employ between 20-100 staff.

Figure 10: Number of staff in MTAA member companies (%)

11% 0% 54% 4% 0% 7% 24% ACT NSW NT QLD SA VIC WA 43% 34% 23% <20 20-100 >100

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16. Medical technology listed on the Prostheses List

There are 9,365 items listed on the February 2011 Department of Health and Ageing Prostheses List which are reimbursed by private health insurance. The February list included 749 new listings. The majority of these items (76%) are manufactured by MTAA members. In 2010 benefits were paid for 1.6 million prostheses by registered health insurers, at a total value of $1.3 billion. These data (for private patients in both public and private hospitals) are shown below.

Prostheses category Number of gap and no gap

permitted prostheses Sum of no gap and gap permitted benefits paid

Cardiac Stents 18,357 $54,023,733 Defibrillators 3,041 $95,477,487 Pacemakers 14,711 $69,379,537 Hips 71,549 $182,502,920 Knees 88,458 $195,676,370 Lens 66,159 $29,312,737 Other 1,422,456 $701,494,869 Total 1,684,731 $1,327,867,652

17. Medical device listings on the ARTG

All medical technology products sold domestically are regulated by the Therapeutic Goods Administration (TGA). New medical technologies are added to the ARTG daily. There are over 35,000 medical devices listed on the ARTG (including IVDs and dental) (the number of individual items is likely to be far higher).

Figure 11: Categorisation of medical technology items on the ARTG

38% 9% 2% 1% 1% 1% 1%1%3% 1% 4% 2% 0% 14% 3% 3% 3% 4% 12% Medical garments Dental, othodontic Sterilization Mobility aids IVDs Hospital furniture Auditory Cardiac General medical Urology Injection/infusion Respiratory Orthopaedic Surgical Woundcare Imaging First Aid

Vision (glasses, contacts) Opthalmics

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18. Research and Development (R&D)

Medical technology companies invest a considerable portion of their revenue in R&D. It has been estimated that high technology medical technology companies in the United States devote upwards of 20% of their revenue to R&D28. Data from Clinica League Tables 2010 showing

expenditure on R&D for the highest earning international companies is shown below. Figure 12: Medical technology R&D spend in 2009 (US$ million)

Australian government expenditure on health and medical research as a percentage of GDP is within the 0.11%-0.12% band29. The annual spend on

R&D for the medical technology sector by Australian businesses was $388 million in 2008-2009. This includes expenditure on R&D for medical biotechnology, nanotechnology and biomedical engineering30. There were 18,000 medical technology patents filed in Australia between 2003 and

2009. Only 7% of these patents were filed by Australian companies. The most popular international patent classifications were ‘diagnosis, surgery and identification’, followed by ‘blood vessel filters and prostheses’ and ‘devices for introducing media into and onto the body’31.

19. Regulation of medical technology in Australia

The regulation of medical devices is based on risk assessment. Devices are classified according to the risk they present to the human body. Therefore an invasive device has a higher risk to a patient than a device that is not implanted. The device classification reflects this risk. This determines the level of regulatory oversight, including the level of evidence required before the device can be approved for supply on the market. The general classification for medical devices is as follows:

Classification Risk Level and Regulatory

Requirements Examples

Class I Low Wheelchairs, ostomy pouches, crutches, hospital beds

Class IIa Low to Medium Electrocardiographs, contact lenses, hearing aids

Class IIb Medium to High Non-implantable insulin infusion pumps, long term urinary catheters,

modern wound care devices designed to penetrate the dermis

Class III High Heart valves, aneurysm clips, cortical electrodes, medical devices

containing medicines, silicone breast implants, blood bags Active Implantable

Medical Devices (AIMD) High Pacemakers, neurostimulators, implantable cardiac defibrillators, cochlear implants

Medical devices are regulated by the TGA in Australia. Manufacturers of medical devices have to undertake assessments of their own manufacturing processes to assure that their products comply with a prescribed set of essential safety and performance principles. All devices are required to have varying levels of clinical evidence depending on their classification. Manufacturers of all medical devices have to undertake risk analyses to determine the residual risk when the device is used. Clinical evidence has to be developed if any residual risk cannot be eliminated so that the manufacturer can demonstrate that the benefit of using the device outweighs any residual risk. For Class I items, clinical evidence may therefore not be needed if it is possible to determine that benefit outweighs risk (e.g. the risk of rare allergic rash in the case of

28 USITC, “Medical Devices and Equipment: Competitive Conditions Affecting U.S. Trade in Japan and Other Principal Foreign Markets,” March 2007. 29 Research Australia. Trends in Health and Medical Research Funding, April 2009.

30 ABS. Research and Development. Businesses. 8104.9, 2008-09.

31 Griffith Hack, Mind the gap: Medical technology innovation in Australia, June 2010.

3M

Medtronic Philips

Roche DiagnosticsSt Jude Medical

Boston Scientific Becton Dickinson

Covidien Stryker

Johnson & Johnson Company

Medical technology R&D spend

0 2,000 1,600 1,800 1,200 1,400 1,000 800 600 400 200

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a Band Aid). Companies must produce detailed technical documents to prove that there is no residual risk if they claim that clinical data is unnecessary. It is normal to expect that the level of clinical evidence required for an approval by the TGA will increase as the risk classification increases.

Manufacturers of medical devices classified higher than Class I also require independent certification that their manufacturing processes meet internationally acceptable manufacturing standards.

The level of evidence required for pre-market assessment of medical devices can be complicated. It is often not practical to use similar techniques for the development of medical devices as required of pharmaceutical companies to prove medicines are safe and effective. For example, the use of double blind randomised clinical trials is not practical or ethical for testing an implanted medical device. The safety and efficacy of a medical technology depends not only on the product itself but also on how it is used. The need to adjust for user characteristics complicates the design and analysis of clinical studies.

The only compliance certification accepted by the TGA, other than that issued by the TGA, is CE certification before an approval to supply medical devices in Australia. Even so, the TGA can and does sometimes require more evidence, especially clinical evidence, before an approval is granted. The Australian legislation prescribes what products and manufacturers are required to have TGA certification.

All medical device manufacturers and sponsors have to comply with post-market vigilance and monitoring requirements. The three major components of post-marketing activities are the manufacturer’s post-marketing surveillance system, post-marketing monitoring of market compliance by the TGA and internationally agreed vigilance programs.

The TGA also has a voluntary reporting system for people who use medical devices to report problems with those devices.

20. Medical technology and clinical trials in Australia

Australia is a good location for clinical trails at any stage due to its sound healthcare infrastructure. Clinical trials are worth around $1 billion to the Australian economy each year 32. Australia attracts trials internationally and this figure includes approximately $450 million of foreign

investment. There was rapid growth in the number of clinical trials being conducted in Australia from the early 1990s. Figure 13: Cumulative number of medical technology trials registered in Australia

Australia faces increasing competition from developing countries in Asia, South America and Eastern Europe which can run clinical trials at a lower cost and have more volunteers. The United States has also been affected by the movement of clinical trials to developing countries. Costs and delays in gaining ethical approval may also have led to a decline in Australia’s competitiveness in this area. In March 2011 the Australian Government accepted the recommendations of the Clinical Trials Action Group which will improve the speed of approval for new trials, streamline a national ethics approval process, trial monitoring and information on clinical trials.

Information regarding clinical trials in Australia is available from an online register. The Australian New Zealand Clinical Trials Registry (ANZCTR) includes trials covering pharmaceuticals, medical devices, treatment and rehabilitation therapies. Sponsors are responsible for registering trials and details of all trials in Australia are made available online. The registry includes objectives, treatment(s) under investigation, outcomes, sample size and recruitment status, design, principal investigator and contact person. Certain details are mandatory and data items comply with the International Committee of Medical Journal Editors (ICMJE) and the World Health Organization (WHO).

32 Australian Government. Clinically competitive: Boosting the business of clinical trials in Australia. Clinical Trials Action Group Report, 2011.

1999 2000 2001 2002 2003 2004 Year 2005 2006 2007 2008 2009 2010 Number of trials 0 50 100 150 200 250 300 350 400

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In 2010 the number of trials commenced in Australia with the interventional code ‘treatment device’ was 75. Almost 400 device trials were registered in Australia between the years 1999-2011. Of these, 68% had Australia as the primary sponsor and 73% conducted research in Australia. The primary purpose of medical technology trials was treatment (91%). Australian trials of medical technology cover a wide range of conditions.

Figure 14: Conditions associated with medical technology trials in Australia

The majority of clinical trials are sponsored by industry due to the expense and risk involved when bringing new products to market. An Australian survey has addressed the value Australia derives from industry funded clinical research33. Survey respondents reported involvement in

a total of 3,484 clinical trials and research projects, of which industry was the major funder. Six key categories were rated high or very high value by the majority of respondents: early access to medicines and improved outcomes; translation of evidence into clinical practice; enhancing Australian trial expertise; enhancing the global profile and research opportunities for researchers; provision of funding for research and academic projects and retaining researchers in the public health system.

Figure 15: Primary sponsors of medical technology trials in Australia

33 Bourgeois, C. (2008). Value of Industry Sponsored Clinical Trials in Australia. Inaugural Survey of Investigator Perceptions on the Value of Industry Funded Clinical Research. NSW Clinical Trials Business Development Centre, on behalf of the Pharmaceuticals Industry Council (PIC).

Anaesthesiology Genetics Cancer Cardiovascular Haematology Injury Metabolic MusculoskeletalNeurological

Optical Oral Other Renal

ReproductiveRespirator y Sleep apnoea Surger y Condition Percentage of trials (%) 0 14 10 12 8 6 4 2 Sponsor Charities,

foundations Industry Governmentbody Hospital Individual Other University

(%) 0 35 25 30 20 15 10 5

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21. Timeline of Australian medical technology inventions

1926 The world’s first electronic heart pacemaker is developed at Sydney’s Crown Street Women’s Hospital by Dr Mark Lidwell and Edgar Booth

1930s The humidicrib is developed in Tasmania in response to the polio epidemic and is a portable alternative to the ‘iron lung’ made from plywood. The technology is used to save premature babies

1961 Drs George Kossoff and David Robinson build the first ultrasound scanner and pioneer the field of fetal ultrasound obstetrics

1970s Professor Earl Owen and microscope manufacturers Zeiss pioneer microsurgery, which uses specialised microinstruments and equipment for precision surgery

1978 The first person is implanted with a cochlear implant (bionic ear) developed by Professor Graeme Clark at The University of Melbourne

1980s Dr Victor Chang pioneers modern heart transplantation in Australia. His work in conjunction with St Vincent’s Hospital leads to the development of the artificial heart valve

1981 Professor Colin Sullivan and co-workers at Sydney University invent the continuous positive airways pressure (CPAP) machine which supplies pressure to keep the airways of sleep apnoea patients open during sleep

1990 Professor Fred Hollows is named Australian of the Year for his work in eye health, including the development of low cost manufacturing of intraocular lenses

1991 Drs Michael Ryan and Stephen Ruff from Sydney perfect plastic rod bone repair, using plastic rods rather than metal pins and tubes which interfere with scans (e.g. MRI)

1992 Optical research scientist Stephen Newman develops the world’s first multi-focal contact lens in Queensland, giving clear vision at all distances to individuals with presbyopia

1998 The Solarscan™ device is developed which scans the skin and compares the image to a database to determine whether sunspots are melanomas

1999 Long-wearing night and day contact lenses that transmit an increased volume of oxygen and can remain in place for 30 days are developed by the Cooperative Research Centre for Eye Research and Technology in NSW

2005 Dr Fiona Wood is named Australian of the Year for her work in burns treatment, including the development of spray-on skin for burns victims

2011 Melbourne-based company Phosphagenics aims to offer patients with diabetes the world’s first transdermally delivered insulin.

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22. Historical advances in medical technology

22.1. Cochlear implants

Experimental cochlear implants were first developed and implanted in the 1960s as early research established that stimulation of the acoustic nerve with electrode(s) implanted in the cochlear led to hearing. A large amount of clinical research was undertaken during the 1970s. While some of the earliest implants were able to provide background sound and aid with lip-reading, individuals were unable to hear speech. In the 1980s cochlear implants were approved by the FDA for use in adults and children as young as two. The first bionic ear was implanted in Australia in 1978. In the 1990s external components become miniaturised and multichannel devices were developed. Bilateral implantation procedures are now often performed to enable better sound localisation.

\

22.2 Pacemakers

In 1926 doctors at Sydney Hospital devised a portable apparatus that used a variable pacemaker rate to stimulate the heart to beat again. The earliest pacemakers were far too large to be implanted in the body. A number of different types of external pacemaker were developed, however drawbacks were patient immobility, pacemaker blackouts and the potential risk of electrocution. The first wearable external pacemaker was developed in 1958 and had controls to adjust the rate of pacing. Leads passed through the skin of the patient and the electrodes themselves were attached to the surface of the heart.

The first pacemaker was implanted in a human in 1960; however, the implant failed within three hours. The recipient of the first pacemaker went on to receive 26 different pacemakers and lived until the age of 8634. Further innovation led to pacemakers with batteries that were recharged

from the outside via an induction coil. The world’s first Lithium-iodide cell powered pacemakers were developed in the early 1970s. The new batteries lasted a decade, rather than a year and were far more reliable than mercury batteries. Another development was the encasing of pacemakers using titanium to prevent body fluids disrupting electrical circuitry. Today pacemakers are fully implanted, have rechargeable batteries, are miniature and operate like mini-computers.

Figure 17: Today’s cochlear implants are miniature2

Figure 19: One of the earliest battery operated pacemakers from 19574

Figure 16: The original prototype bionic ear (multi-channel cochlear implant) developed by Professor Graeme Clark at the University of Melbourne1

Figure 18: One of the earliest working implantable pacemakers, developed in the 1960s3

1. Image from the National Museum of Australia, www.nma.gov.au/collections/bionic_ear_prototype. 2. Image from Cochlear, www.cochlear.com

3. Image from, www.biotele.com/pacemakers.htm. 4. Image from, www.biotele.com/pacemakers.htm. 34 Success stories: Larsson, Arne: St Jude Medical.

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22.3 Insulin pumps

The first insulin pumps were developed in the early 1960s and were so large that they were worn on the back like a backpack. The first insulin pump to be manufactured in the 1970s was known as the “big blue brick” due to its size and appearance. The pumps of this era did not have the control necessary to ensure safe delivery of insulin. Additionally, the pumps were not user friendly (some required the use of a screw driver to adjust dose). This meant that even by the late 1980s pumps were only being used by a minority of patients. A large amount of development occurred before pumps were considered as viable alternatives to injections of insulin via a syringe for patients with Type 1 diabetes.

Medical innovation and advances in electronics in the 1990s led to the development of pumps that were far smaller and user-friendly and enabled functional interaction. Recent models are water resistant, small and have software that enable temporary basal doses, extended bolus does and multiple infusion sets.

Figure 20: Today’s miniature implantable pacemakers5

Figure 22: Today’s pumps provide 24 hour, continuous glucose monitoring7

Figure 21: The first insulin pump, developed in the 1960s6

5. Image from Medtronic, www.medtronic.com.

6. Image from Medscape, www.medscape.com. 7. Image from Medtronic, www.medtronic.com.

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23. Emerging medical technologies 2010-11

35

23.1 Cardiovascular/Vascular

Real-time assessment using implantable blood pressure monitor Bioabsorbable drug-eluting stents

Hypertension treatment via the baroreflex system MRI compatible pacemaker

Ultrasound-enhanced thrombolytics to improve the effectiveness of clot dissolving drugs Image-guided intracardiac surgery to correlate pathology to anatomical location Stem cells to repair scar tissue associated with congestive heart failure Treatment of hypertension by blocking kidney renal nerve functions

Disposable balloon catheter and non-invasive surgery to treat atrial fibrillation.

23.2 Oncology

Radioactive trace biomarkers as probes for early tumour detection

Early detection of skin cancer using optical imaging to detect cellular pathologies Lung cancer detection via biomarkers in a patient’s breath

Identification of magnetically-charged cancer biomarkers in the blood Optical tomography magnification of tissue to diagnose cancer

Drug delivery using focused ultrasound to enhance tissue permeability and enable chemotherapy to pass the blood brain barrier to treat brain cancer

MRI-guided laser coagulation therapy to destroy brain tumour tissue MRI-guided robotic radiotherapy for precise delivery of external beam radiation Light-activated chemotherapy agents

Prostate cooling catheter to protect tissue from thermal damage during surgery.

23.3 Gastrointestinal

Use of breath testing to detect H. pylori bacteria (an indicator of peptic ulcer) Robotic gastrointestinal capsule as an alternative to endoscopy

Implantable magnetic beads to stop food acid entering the esophagus to manage reflux.

23.4 Pulmonology

Electrical impedance tomography to assess conductivity variations and monitor lung injury associated with ventilator use Catheter-based technology to simultaneously deliver oxygen to the blood and remove CO2, acting as an artificial lung to enable the lungs to heal.

23.5 Nursing

Real-time monitoring of blood to assess glucose, electrolytes, amino acids Breath-based tests to detect gene-based variants that affect Warfarin metabolism Antimicrobial coating on catheters to prevent ventilator acquired pneumonia Sepsis microfilters to clear the blood of pathogens.

23.6 Neurology

Electric impedance myography for motor neuron disease diagnosis

Blood test to identify biomarkers of brain injury and neurodegenerative disease Deep brain stimulation for stroke therapy

Implanted pulse generators to stimulate the hypoglossal nerve to aid the neuromuscular system to open the upper airway in patients with sleep apnea

Drug therapy designed to prevent and promote the clearing of amyloidal plaque deposits in the brain of Alzheimer’s disease patients.

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23.7 Women’s Health

Non-invasive fetal EKG to accurately separate maternal and fetal EKG signals Light-based tools to diagnose cervical cancer using spectroscopy

Acoustic signals based on density to detect tumours.

23.8 Surgical

Acoustic hemostasis to control bleeding

Photochemical bonding using light and photosensitive dye for wound closure.

23.9 Imaging

Elastography to image pathology placed under stress (cancerous tissue is stiffer than healthy tissue)

Computer-assisted tortuosity to detect blood vessel tumours (twisted or crooked blood vessels may indicate cancer) Dynamic light scattering for early detection of cataract biomarkers.

24. Value of Technology

Medical technology can deliver significant savings to the health system over time. Unfortunately, the benefits of medical technology are often poorly understood, insufficiently articulated and developed and may be perceived as being a burden on the healthcare system.

MTAA developed the Value of Technology project to contribute to an improved understanding of the impact of advances in medical technology on healthcare expenditure in Australia, and the associated costs and benefits for the Australian healthcare system and community. The outcome of this research will improve evidence-based cost-benefit analysis of medical technologies.

24.1 Implantable infusion pumps

Implantable infusion pumps are generally the recommended treatment for patients with chronic pain who are ineligible for corrective surgery and needing continuous pain relief. Implantable infusion pumps are preferred when systemic/conventional drug delivery systems such as pills or patches have failed to provide sufficient pain relief or cause intolerable adverse events.

An implantable infusion pump is a medical device that is surgically implanted into the patient to provide continuous long-term drug treatment. The infusion pump is implanted subcutaneously and delivers drugs from the pump device to the site of administration. The types of medication that can be infused include opioids, local analgesics and calcium channel blockers. These drugs can be delivered intravenously, intraarterially, subcutaneously, intraperitoneally, intrathecally or epidurally.

Clinical benefits

The clinical benefits of implantable infusion pumps have been well documented and include: Drug dispensing schedules and dosage can be programmed by the clinician Reduction in pain levels

Reduction in opioid intake and opioid side-effects such as vomiting and nausea Reduction in the incidence of surgical site infections36.

Cost benefits

Infusion pumps have been demonstrated to be cost-effective by:

Reducing overall treatment costs such as reducing the need for narcotics37

Reducing the risk of surgical site infections

Significantly reducing the length of hospital stay (reduction of 1-3 days across a variety of surgical areas)38..

36 Singh, K. et al. (2005). A prospective, randomized, double-blind study evaluating the efficacy of postoperative continuous local anesthetic infusion at the ilac crest bone graft site after spinal athrodesis. Spine, 30, 2477-2483.

37 White et al. (2003). The use of continuous popliteal sciatic nerve block after surgery involving the foot and ankle: does it improve the quality of recovery? Anesthesia & Analgesia, 97, 1303-1309.

38 Yoost, T. et al. (2009). Continuous infusion of local anesthetic decreases narcotic use and length of hospitalisation after laparoscopic renal surgery. Journal of Endourology, 23, 623-626.

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Figure 23: Average pain scores before and after implantable infusion pump treatment39

Note: Vertical error bars show 95% confidence intervals (CI).

24.2 Cochlear implants

There are a wide range of electronic-hearing devices currently available for people with moderate to profound, unilateral or bilateral hearing loss. Of these devices, cochlear implants are the most effective device in the treatment of people with severe (between 61-80 dB) to profound (≥ 80 dB) sensorineural hearing loss.

The UK’s National Institute for Health and Clinical Excellence (NICE) guidance regarding cochlear implants for individuals with severe or profound deafness who do not receive adequate benefit from hearing aids has recommended:

Unilateral cochlear implantation as an option for adults and children Simultaneous bilateral cochlear implantation for children

Simultaneous bilateral implants for adults who are blind or who have other disabilities that increase their reliance on auditory stimuli as a primary sensory mechanism for spatial awareness40.

Cochlear implants replace the function of sensory hair cells in the cochlea that are no longer able to generate electrical impulses in response to sound. The cochlear implant bypasses missing or damaged sensory hair cells and directly stimulates the auditory nerve to provide auditory sensation and enable sound perception.

Figure 24: Cochlear implantation device41

Pain before pump treatment Pain decreased Pain increased No change Pain af ter long-ter m pump treatment 0 0 1 2 3 4 5 6 7 8 9 10 10 8 6 4 2 9 7 5 3 1

1. A sound processor is worn behind the ear, which captures sound and turns it into digital code. It also has a battery that powers the entire system. 2. The sound processor transmits the digitally-coded sound through the coil

to the implant.

3. The implant converts the digitally-coded sound into electrical impulses and sends them along the electrode array placed in the cochlea (the inner ear).

4. The implant’s electrodes stimulate the cochlea’s hearing nerve, which then sends the impulses to the brain where they are interpreted as sound.

39 ECRI Institute Health Technology Assessment Information Service. Implanted infusion pumps for chronic noncancer pain. (2008). Health Technology Assessment Program. 40 NICE. (2009). Cochlear implants for children and adults with severe to profound deafness. Available at www.nice.org.uk/TA166.

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Clinical benefits

Cochlear implants provide significant benefits to those with hearing impairment by42:

Improving sound and speech perception

Improving language development and communication skills

Improving the likelihood of developing or regaining normal or near-normal auditory and verbal language abilities Tinnitus suppression

Improving educational development Enhancing employment opportunities.

Cost benefits

The cochlear implant is extremely cost-effective, generating important health benefits in children and adults at reasonable direct costs and providing net savings to society especially when benefits translate into reduced educational costs and increased earnings.

In Australia, costs of cochlear implantation ($AUD, 1999) per quality-adjusted life years (QALY) (15-year assessment) ranged from $5,070-$11,100* for profoundly deaf children, $11,790-$38,150* for profoundly deaf adults and $14,410-$41,000* for partially deaf adults43.

Generally, a cost per QALY in the range of €25,000 ($33,000) to €38,000 ($50,000) is considered cost-effective.

24.3 Insulin infusion pumps

Insulin pump therapy, which is also referred to as continuous subcutaneous insulin infusion (CSII) therapy, replicates normal insulin secretion by the pancreas. The UK’s NICE recommends CSII therapy for patients with Type 1 diabetes including:44

Children under the age of 12 years, if treatment with multiple daily injections is not practical or is not considered appropriate Adults and children (12 years and over), if attempts to reach average blood glucose levels with multiple daily injections result in disabling hypoglycemia or in average blood glucose levels of 8.5% or above.

An insulin infusion pump has a tiny tube that connects from the pump to an even smaller tube that sits just underneath an individual’s skin. A piece of tape holds the tube in place and the pump can be disconnected if the person wants to swim, shower or play sports.

Clinical benefits

There are several clinical advantages of CSII compared to conventional treatment with multiple daily injections45,46:

Better control of blood glucose levels Fewer problems with hypoglycaemic episodes

Reduction in number of insulin doses per day, thereby partly off-setting the cost of CSII Improved quality of life, including a reduction in the chronic fear of severe hypoglycaemia Better freedom of lifestyle and easier participation in social and physical activity.

Cost benefits

Multiple studies have shown CSII to be cost-effective when compared to multiple daily injections, where the costs per QALY ranged from $16,992 in the US to £34,330 in the UK47. Generally, a cost per QALY in the range of 25,000 ($AUD 33,000) to 38,000 ($AUD 50,000) is

considered cost effective.

Most cost analyses support the assumption that initiating CSII is more expensive than continuing multiple daily injections. However, the benefits of CSII such as improving glycaemic control and prevention of complications (hospitalisation is one of the main costs associated with diabetes), decreased fear of hypoglycaemia, reduction in depression, and avoidance of cognitive impairment in children, can further reduce the estimated costs of CSII treatment.

42 Cohen, N.L. et al. and the Department of Veterans Affairs Cochlear Implant Study Group. (1993). A prospective randomised study of cochlear implants. New England Journal of Medicine, 328, 223-237.

43 Carter, R. & Hailey, D. (1999). Economic evaluation of the cochlear implant. International Journal of Technology Assessment in Healthcare, 15(3), 520-530.

44 NICE (2008). Continuous subcutaneous insulin infusion for the treatment of diabetes mellitus. Review of technical appraisal guidance 57. In: National Health Service, ed. London. www.nice.org.uk/ta151.

45 Cummins, E. et al. (2010). Clinical effectiveness and cost-effectiveness of continuous subcutaneous insulin infusion for diabetes: systematic review and economic evaluation. Health technology Assessment, 14(11), 1-181.

46 www.ndss.com.au, accessed 31 May, 2010.

47 Cohen, N. et al. (2007). Continuous subcutaneous insulin infusion versus multiple daily injections of insulin: economic comparison in adult and adolescent Type 1 diabetes mellitus in Australia. Pharmacoeconomics, 25(10), 881-897.

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24.4 Bariatric surgery

Bariatric surgery has proven to be a successful method for the treatment of individuals who are morbidly obese48. There are several surgical

treatment options available for the management of morbid obesity: Laproscopic gastric banding (LAGB)

Gastric sleeve or sleeve gastrectomy Open biliopancreatic diversion (BPD) Roux-end-Y gastric bypass (RYGB).

The type of procedure performed depends on the patient’s clinical needs. To date all surgical treatment options have allowed patients to achieve and maintain significant weight loss, improve their health and enhance their quality of life.

Clinical benefits

Bariatric surgery provides a dramatic reduction or resolution of many serious co-morbidities associated with obesity such as49,50:

Type 2 diabetes Metabolic syndrome Hypertension Dyslipidemia Gastroesophageal reflux Asthma Arthritis/joint pain

Polycystic ovarian syndrome Depression

Sleep apnoea.

Cost benefits

Bariatric surgery has been shown to be cost-effective when compared to conventional and non-surgical treatments51. A recent cost-effectiveness

study has been conducted in Australia. The study was a 2-year randomised controlled trial including 60 obese participants (BMI>30 and <40 kg/m2) and showed that surgically induced weight loss appears to be a cost-effective intervention for managing recently diagnosed Type

2 diabetes in obese patients (see Figure 25)52. The results showed that mean medication costs were 1.5 times higher for the patients in the

conventional treatment group, primarily due to higher use of diabetes medication. The mean medication cost was $900 for those patients who underwent surgery and $1,400 for patients undergoing conventional therapy (2006 costs in $AUD). The authors concluded that the costs of undergoing surgery are offset by the avoidance of the ongoing costs of managing obesity-related diabetes using medication.

Figure 25: Mean medication cost per patient for surgical and conventional (non-surgical) patients over time53

48 O’Brien, P.E. et al. (2006). Treatment of mild to moderate obesity with laproscopic adjustable gastric banding or an intensive medical program: a randomised trial. Annals of Internal Medicine, 144, 623-623.

49 Brancatisano, A. et al. (2008). Improvement in co morbid illness after placement of the Swedish Adjustable Gastric Band. Surgery for Obesity and Related Diseases, 4(Suppl. 3), S39-46.

50 Buchwald, H. et al. (2004). Bariatric surgery: A systematic review and meta-analysis. Journal of the American Medical Association, 292, 1724-1737.

51 Picot, J. et al. (2009). The clinical effective and cost-effectiveness of bariatric (weight loss) surgery for obesity: A systematic review and economic evaluation. Health Technology Assessment, 13, 1-358.

52 Keating, C.L. et al. (2009). Cost-efficacy of surgically induced weight loss for the management of Type 2 diabetes: A randomised controlled trial. Diabetes Care, 32, 580-584. 53 Keating, C.L. et al. (2009). Cost-efficacy of surgically induced weight loss for the management of Type 2 diabetes: A randomised controlled trial. Diabetes Care, 32, 580-584.

Month Surgical Conventional Cost A UD 0 6 12 18 24 500 400 300 200 100

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