12 December 2016

Health Sector Update - December 2016

This article was written by Suman Reddy and Alexey Monin.

November has seen a busy month in the Australian health sector, particularly with respect to consultations and reforms concerning medical devices. Key developments have been:

  • the TGA releasing two further consultations for their review of medicines and medical devices regulation;
  • a Senate inquiry into the prostheses list being announced; and
  • publication of an external review of the Radiation Oncology Health Program Grants Scheme.

Internationally, the Software as a Medical Device (SaMD) Working Group of the International Medical Device Regulators Forum released a public consultation document concerning the clinical evaluation of SaMD.

Further details of these are below.

Review of medicines and medical devices

The TGA has released two further consultations for its review of medicines and medical devices regulation, which we reported here.

As part of the package of proposed reforms, the TGA will take steps to establish commercial bodies in Australia designated to undertake medical device assessments. Currently, only the TGA can perform conformity assessment in Australia, causing delay and timing uncertainty for applicants. The Designation of Australian conformity assessment bodies for medical devices consultation paper sets proposals for the implementation of a system to designate bodies to undertake conformity assessment certification of medical devices, including in vitro diagnostic medical devices for the Australian market.

The reform package also includes the creation of a priority review pathway for medical devices to expedite assessment of certain medical devices that are identified as “novel”. The Accelerated assessment of medical devices - Priority Review pathway consultation paper sets out the proposed criteria for what constitutes a “novel” medical device and an approach to implementation.

Submissions for both consultations close on 11 January 2017.

Prostheses List

Prostheses List (PL) reform has been a hotly contested issue by a range of deeply invested stakeholders and lobby groups for the last few years. The Government announced its policy in October with the release of the Industry Working Group on Private Health Insurance Prostheses Reform Final Report, accompanied by Minister Ley’s media release on the same day which gave more context to the recommendations in the report.

The key recommendation was that there be a reduction of benefits payable by private health insurers across the four high cost categories of the Prostheses List: cardiac, intra-ocular lens, hips and knees. The final report also recommended that the Prostheses List Advisory Committee’s (PLAC) functions be expanded to include a routine process of post-marketing monitoring and reviews and that the PLAC should consider developing a routine process for the assessment of devices for possible removal from the PL on clinical or cost-effectiveness grounds.

But just when we thought the Government was done with the reviews, on 21 November the Senate voted to support Senator Xenophon’s call for an inquiry into the PL to be undertaken by the Senate Community Affairs Committee.

The terms of reference of the review include:

  • the operation of relevant legislative and regulatory instruments;
  • opportunities for creating a more competitive basis for the purchase and reimbursement of prostheses;
  • the role and function of the PLAC and its subcommittees;
  • the cost of medical devices and prostheses for privately insured patients versus public hospital patients and patients in other countries; and
  • the impact the current PL framework has on the affordability of private health insurance in Australia.

Submissions should be received by 30 January 2017. The Committee has set a report date of 30 March 2017.

Software as a Medical Device

The development and take-up of software with “therapeutic” functionality has been steadily increasing for a number of years now. Currently, there is no special treatment of software within the therapeutic goods regulatory framework, so software is regulated under the Therapeutic Goods Act 1989 if it falls within the definition of “medical device” – hence the name “software as a medical device” or SaMD. This means that SaMD needs to go through the same regulatory approval process applicable to physical medical devices, and this framework may not be entirely suitable to deal with the highly technical and data-driven nature of SaMD, particularly when it comes to evaluating the clinical impacts and outcomes of SaMD. Accordingly, the International Medical Device Regulators Forum (IMDRF) Software as a Medical Device (SaMD) Working Group is currently developing guidance for the clinical evaluation of SaMD.

The SaMD Working Group has released the Software as a Medical Device (SaMD): Clinical Evaluation consultation for public comment. The closing date for submissions has been extended to 13 December 2016.

Radiation Oncology Health Program Grants Scheme

The Department of Health has recently undertaken a review of the Radiation Oncology Health Program Grants Scheme (ROHPG) having commissioned MP Consulting to perform an external review in March 2016. The ROHPG was introduced in 1988 and has not been reviewed formally since 1999. The ROHPG is a Commonwealth scheme which provides contributions toward the capital costs incurred by radiation oncology providers (eg for the purchase of radiotherapy equipment). In FY 2014-2015 the Commonwealth provided $68.5 million to 78 providers under the scheme.

The review follows other related reviews, including those conducted by the Australian National Audit Office, which recommended measures to improve program design, mechanisms and pricing transparency in the ROHPG and the current MBS review into the Medical Benefits Scheme which includes funding for medical services including radiation oncology services.

The Department engaged MP Consulting to consider:

  • the current and future role of radiotherapy in the treatment of cancer in Australia
  • the role of the ROHPG in the context of broader Australian Government health policy and health funding
  • the strengths and limitations of the existing scheme
  • the merits of continuing Commonwealth funding for radiotherapy equipment
  • if funding is to continue:
    • options for improving the effectiveness, efficiency, equity and sustainability of funding
    • potential mechanisms to better influence, through the provision of funding, improved health outcomes consistent with broader health policy.

Summary of MP Consulting review

The review found that radiotherapy is an important and effective cancer treatment in Australia, and that the ROHPG’s role and objectives in funding radiation therapy equipment are relevant and justified. This is despite the fact it was considered unusual for the Commonwealth to provide such funding, which would ordinarily be left to State and Territory governments and supplemented by the MBS. However, the ROHPG is still an appropriate way for the Commonwealth to contribute to the cost of radiotherapy equipment because of the increasing prevalence of cancer, the high cost of radiotherapy equipment (being the highest capital cost of any equipment in health service delivery), the impact that patient access has on utilisation of radiotherapy as a treatment, the effectiveness of radiotherapy and the risk that ceasing funding would reduce the viability of regional radiotherapy services.

The review suggested several improvements to the ROHPG, including:

  • replacing the existing system (which lists eligible equipment and sets different funding amounts for each piece of equipment) with a single contribution by the Commonwealth for high capital costs associated with the provision of external beam radiotherapy;
  • de-linking ROHPG payments from MBS rebates for service items and making the Commonwealth contribution 10 equal payments over a 10-year period to promote certainty and reduce reporting costs of providers;
  • publishing the information on areas of need as determined by the Department of Health and a list of all applications that are approved including the equipment, location and proposed date of commissioning;
  • making separate application processes for:
    • replacement equipment – which involves consideration of whether the equipment continues to be in an area of need; and
    • new or expanded facilities – which involves a competitive process every two years following publication of information about national areas of need; and
  • adding new conditions to funding which require regular independent auditing of equipment to ensure it is appropriately calibrated and delivering the expected dose of radiation and de-commissioning of equipment after 13 years.

This review and its recommendations form part of a broader review of the public management and funding of radiotherapy services in Australia. A summary of programs relating to radiation therapy under Medicare is also available. If you have any questions about ROHPG, MBS or other radiation therapy related regulatory issues, please contact us.

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