News

Jul 13, 2023

Manufacturer says Australian implants market is 'least efficient' he's seen

A Californian medical device maker wants a say in a review of alleged overcharging that could cost private patients $800 million a year. Nabil Hilal, president of technology officer for Applied

A Californian medical device maker wants a say in a review of alleged overcharging that could cost private patients $800 million a year.

Nabil Hilal, president of technology officer for Applied Medical, said he feared an unsatisfactory outcome if the review panel was dominated by the big manufacturers "that came up with the unreasonable system" in place today.

Mr Hilal said the problem was wider than the implantable devices covered by the "prostheses list", because the Australian government allows big manufacturers to "bundle" overpriced routine products with devices only they can supply.

Nabil Hilal fears an unsatisfactory outcome if the review panel is again dominated by the big manufacturers. Jessica Hromas

Based on his experience of the medical devices markets in Australia, Europe and the US, "the Australian market is the least efficient we have seen. The prices are the highest," he said.

Health Minister Sussan Ley said on Friday the government would review the overcharging claims, saying devices had to be affordable as well as safe in order to take pressure of insurance premiums.

The claims centre on the "prostheses list" – a list of minimum private health rebates for devices implanted in humans during surgery, such as artificial knees and hips, or pacemakers.

The review is one of a series covering the Medicare Benefits Schedule, the Pharmaceutical Benefits Scheme and private insurers and was instituted by the government in a bid to pare back the $155 billion national health bill.

Applied and the insurers say big manufacturers shut out cheaper products by persuading the government to set rebates at minimum prices charged by suppliers with at least 25 per cent of the market for particular devices.

"Unless there is a commitment and a belief that it needs to be done correctly … our concerns continue to be the same because the same people being invited are the same people who instituted the 25 per cent utilitisation concept," Mr Hilal said.

He said he hoped and expected to be on the review panel because "we are the only ones on the taxpayers' side".

Most health fund members receive 30 per cent tax rebates on premiums, so taxpayers bear a large share of any overcharging.

Also on Friday, the government won judgment in a federal court action brought by Applied to reduce the prostheses list price for a laparoscopic clip applier from $412 to Applied's $99 price. The device is a stapler used in keyhole surgery.

Mr Hilal said the review was only a start and queried why the minister had fought the case all the way to judgment.

"The information that was available to the minister … was available to them a year ago," he said. "So why wasn't there this agreement a year ago? Why did Applied have to go through this process, spend excessive amounts of money for the ministry to be fighting us on reducing the cost for the taxpayer?

"We set out to change the unfairness of the system and we are not there yet. We are concerned with the path we are on. Although there are no credible voices disagreeing with the concerns we have expressed, there is no progress in the direction of reform," he said.

Susi Tegen – chief executive of industry lobby the Medical Technology Association of Australia, whose members include giants such as Johnson & Johnson and Covidien – welcomed the review and said claims of overcharging are not true.

"The facts show that overall costs of prostheses are increasing because more people are using them not because (of rising prices)," Ms Tegen said.

But Ms Ley cited examples of pacemakers costing $26,000 more and common artificial hips $2000 more to be implanted in a private hospital.

Follow the topics, people and companies that matter to you.

Fetching latest articles