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HEALTH INSURANCE (NATIONAL JOINT REPLACEMENT REGISTER LEVY)
BILL 2009
THE INQUIRY
1.1
In accordance with a Senate Resolution of 14 May 2009 to refer certain
budget-related bills to Senate Committees, the provisions of the Private Health
Insurance (National Joint Replacement Register Levy) Bill 2009 (the Bill) have
been referred to the Community Affairs Legislation Committee (the committee) for
inquiry and report by 16 June 2009.
1.2
The committee received 19 submissions relating to the Bill and these are
listed in Appendix 1. The committee considered the Bill at two public hearing
in Canberra on 11 June and 15 June 2009. Details of the public hearings are
referred to in Appendix 2. The submissions and Hansard transcript of evidence
may be accessed through the committee's website at: http://www.aph.gov.au/senate/ca.
THE BILL
1.3
The Bill creates a new Act, the Private Health Insurance (National
Joint Replacement Register Levy) Act 2009, for the purpose of establishing
the National Joint Replacement Register Levy to fund the National Joint
Replacement Registry (NJRR).
1.4
According to the Explanatory Memorandum, the Bill contains cost recovery
arrangements to ensure continued funding for the NJRR whilst preserving its
independence:
As levies will be imposed under legislation, and collected by
the Government on behalf of the Registry, there will be no possibility of
funding being withdrawn from the Registry by medical devices sponsors.[1]
1.5
It is proposed that a levy will be imposed on each joint replacement
prostheses sponsor on each day specified in the Private Health Insurance
(National Joint Replacement Register Levy) Rules as a NJRR levy day and each
day (if any) determined by the Minister of Health and Ageing by legislative
instrument to supplement the NJRR levy day. The Bill specifies, however, that
there can be no more than four levy days in a financial year.[2]
It recognises a sponsor as:
A person is a joint replacement prostheses sponsor if a joint
replacement prostheses is currently listed in the Private Health Insurance
(Prostheses) Rules (commonly referred to as the Commonwealth Prostheses List)
either as a result of an application made by the person under subsection
72-10(2) of the Private Health Insurance Act 2007, or is listed in
accordance with section 12 of the Private Health Insurance (Transitional Provisions
and Consequential Amendments) Act 2007 and the person was the sponsor of
that prosthesis for the purpose of the National Health Act 1953.[3]
1.6
Sponsors will be levied in accordance with the number of joint
replacement prostheses they sponsor with the levies utilised to fund the
operating costs of the NJRR. The rate of levy for joint replacement prostheses
will vary and may be set from zero to a maximum of $5,000.[4]
1.7
The Bill enables the Minister to make Private Health Insurance (National
Joint Replacement Register Levy) Rules providing for matters required or
permitted by the Bill to be provided, or necessary or convenient to be provided
in order to carry out or give effect to the Bill. The Rules 'may provide that
one or more kinds of prostheses are taken, or are taken not, to be joint
replacement prostheses for the purposes of the definition of joint
replacement prosthesis'.[5]
1.8
The Bill also provides that the Governor-General may make regulations prescribing
matters required or permitted by the Bill to be prescribed, or necessary or
convenient to be prescribed in order to carry out or give effect to the Bill.
1.9
The NJRR has been funded by the Commonwealth Government since 1998 and
the introduction of the cost recovery arrangements under the Bill are estimated
to amount to a budget saving of $5 million over four years.[6]
BACKGROUND
1.10
Approximately 70,000 hip and knee replacements are undertaken each year
in Australia with the rapid increase in the rate of joint replacement surgery
set to continue.[7]
The Department of Health and Ageing (the department) stated:
Expenditure on hip and knee prostheses represents around 30%
of total expenditure by health insurers on prostheses. Insurers paid $1.039
billion in benefits for prostheses in 2007–08, out of a total of $7.4 billion
spent on hospital benefits in that year. This means that prostheses expenditure
represents around 15% of privately insured hospital benefit outlays.[8]
1.11
The NJRR was established in 1998 by the Australian Orthopaedic
Association (AOA) with the operating costs of the registry funded the
Commonwealth. The six aims of the NJRR are:
- to determine demographic and diagnostic characteristics of
patients undergoing joint replacement surgery throughout Australia;
-
to provide accurate information on the use of different types of
prostheses in both primary and revision joint replacements;
- to evaluate the effectiveness of different types of joint
replacement prostheses and surgical techniques at a national level;
- to compare the Australian joint replacement experience to that of
other countries;
- to provide confidential data to individual surgeons and hospitals
to audit their joint replacement surgery; and
- to educate Australian orthopaedic surgeons in the most effective
prostheses and surgical techniques to achieve successful outcomes.[9]
1.12
The NJRR website states that its role is to monitor joint replacement in
order to maintain safety and the quality of joint replacement prostheses:
The purpose of the Registry is to define, improve and
maintain the quality of care of individuals receiving joint replacement
surgery. It achieves this by collecting a defined minimum data set that enables
outcomes to be determined on the basis of patient characteristics, prosthesis
type and features, method of prosthesis fixation and surgical technique used.
The principal measure of outcome is revision surgery. It is an unambiguous
measure of the need for further intervention. Combined with a careful analysis
of the timing and reasons for revision this can be used as an accurate measure
of the success or otherwise of a procedure. The Registry also monitors
mortality rates. This information is then used to inform surgeons, other health
care professionals, governments, orthopaedic companies and the community.[10]
1.13
In its submission, the AOA, which manages and administers the NJRR,
noted the contribution it has played to date:
Although the NJRR has only been in existence and fully
operational for a relatively short time, the information provided by the NJRR
is already influencing joint replacement and associated technologies in a
beneficial manner.[11]
1.14
Mr Ian Burgess, Chief Executive Officer, AOA, noted that the benefits of
the registry will increase over time and that the registry enjoys worldwide recognition
and respect as a high-quality registry.[12]
1.15
The NJRR's contribution was recognised by a number of submitters
including the Medical Technology Association of Australia (MTAA) which noted
that the NJRR:
...is a class registry in that it collects information on close
to 100 per cent of orthopaedic procedures in Australia. It is then able to
track occurrences of revisions of the orthopaedic devices used in the original
procedure. The information collected by the NJRR is able to identify a range of
reasons for revision, including surgeon technique, hospital-related infection,
patient compliance, and device performance.[13]
1.16
The MTAA further stated:
NJRR is the first national comprehensive class register. The
information collected by the NJRR is used for multiple purposes – to contribute
to post market surveillance by the regulatory authority, Therapeutic Goods
Administration (TGA), to monitor ongoing quality and safety of devices; to
inform surgeons on clinical performance; to identify hospitals with a higher
than expected infection rate; and to inform companies on product performance.[14]
1.17
The department commented that the NJRR assists in ensuring that
expenditure on prostheses by the private and public sectors 'is directed to
better performing products with lower revision rates'. The information provided
by the NJRR has:
...improved surgical practice and changed the use of particular
devices, reducing the number of unnecessary revision surgeries by 1,200
Australians per year and saving the health sector and consumers around
$44.6 million...These estimates are based on an analysis of the reductions
in the proportion of hip and knee procedures that are visions during the period
of operation of the NJRR.[15]
ISSUES
1.18
Submitters who supported the introduction of a NJRR levy included the
Australian Health Insurance Association (AHIA) which stated that:
The AHIA supports the proposed legislation. The Private
Health Insurance Industry believes it should be incumbent upon those sponsors
who wish to introduce prosthesis for use in the Australian health care system
to demonstrate the device's efficacy, and quality and safety credentials.[16]
1.19
The Royal Australasian College of Surgeons noted that as the funding
arrangements proposed in the Bill do not compromise the 'proven effectiveness'
of the NJRR and existing arrangements whereby the AOA is contracted by the
Commonwealth Government to administer the NJRR, it had no concerns with the
passage of the Bill.[17]
1.20
However, concerns were raised by a number of submitters that there had
been a lack of consultation with industry in relation to the levy, that the
levy places an inequitable burden on industry, and that the levy mechanism had
the potential to make some products unviable.
Lack of consultation with industry
1.21
A number of submitters raised concerns that the department had not
consulted the industry and involved stakeholders before introducing the Bill.[18]
Smith and Nephew Surgical held the view that consultation was important given
the 'significant implications for companies' whilst St. Jude Medical noted that
such consultation would have enabled delivery of 'good outcomes for all
parties'.[19]
Lifehealthcare Distribution also argued:
Certainly this kind of proposal should follow appropriate
consultation to achieve a result fairly across the spectrum of stakeholders,
and there has been no consultation so far from the Department of Health and
Ageing with the industry on this matter.[20]
1.22
Device Technologies questioned the logic of the timing of the Bill given
that the Review of Health Technology Assessment (HTA) is currently underway and
in light of a lack of consultation with industry stated:
It is disappointing to note that despite the consultative
progress being made through the current HTA Review and previous Productivity
Commission reports, industry has not been consulted and appears not to be
considered as an integral stake holder in the passage of this Bill, despite the
proposed tax being directed specifically and exclusively towards sponsors of
orthopaedic prostheses. Industry would have a conflict of interest in self
funding a registry of orthopaedic devices supplied by it to the Australian
healthcare system.[21]
1.23
The department responded to these comments:
For this particular budget measure, there was no consultation
with industry prior to it being announced in the budget. Since budget night, we
have provided a detailed briefing to the Medical Technology Association of
Australia. That was on 21 May. They are currently holding information sessions
which are open to members of the public including device manufacturers and
importers. We held one in Canberra last week, one in Sydney and one in
Melbourne, and we will have one in Brisbane on Thursday this week and in Perth
on Friday.
We have also had consultations with the industry about the
proposal to cost-recover the cost of the National Joint Replacement Registry in
the past. I think it was discussed in 2006.[22]
Joint Replacement Register Levy
1.24
A number of submitters from the industry, including the MTAA, supported
the NJRR but held the view that the health system rather than industry alone should
bear its costs:
MTAA has long been a supporter of the value of well-designed
and appropriate registries. Indeed, MTAA members committed funds to the pilot
study for the establishment of the NJRR. However MTAA also believes that good
public health policy which requires the active monitoring of the use and
performance of products post-market should be a cost to the health system.[23]
1.25
St. Jude Medical Australia Pty Ltd also argued that the proposed funding
arrangements placed the cost burden of the NJRR solely on the devices industry with
limited benefits accruing to the industry:
The Explanatory Memorandum to the Bill lists several moderate
benefits that may accrue to industry but makes no mention of benefits that
accrue to private health insurers, private hospitals, doctors, the public
sector and consumers. It seems inequitable that industry only is to fund a
registry that should be considered a public good.[24]
1.26
The MTAA noted that the NJRR was beneficial to multiple stakeholders
including clinicians, the Therapeutic Goods Administration and hospitals.[25]
It held that the private health insurance industry also benefited as it was
able to 'influence the level of reimbursement of comparator products listed on
the Prostheses List'.[26]
This view was supported by Advanced Surgical Technologies which stated:
It could be argued that the NJRR serves us [the industry]
least as certainly orthopaedic surgeons (through the AOA) and the Private
Health funds utilize the data far more intensely than suppliers. Indeed the
public sector is the primary beneficiary from the NJRR, hence Government's
decision since its inception to fund the Registry.[27]
1.27
Emphasising the cost savings since the NJRR was established, Catholic
Health Australia contended that the NJRR and any other registries be 'publicly
funded on the basis that the savings realised will more than compensate for
their running costs' and pointed to the 1,200 fewer revisions per year and
saving (through reduced expenditure) of about $16–$32 million per year.[28]
1.28
Stryker South Pacific stated:
Although industry is fully supportive of the NJRR and in fact
assisted with its establishment costs, the beneficiaries are far broader than
the stakeholders that have been targeted. This assistance has been provided in
good faith to the benefit of the overall public. If orthopaedic sponsors are
expected to take on the burden of these costs, the impact of this would be to
the detriment of those it is intended to serve.[29]
1.29
Boston Scientific Australia New Zealand (BSC) suggested that the fiscal
risk of the NJRR be shared between the government, AOA, health funds and
sponsors:
Each party contributes an equal share. BSC recommends that
the levy on sponsors be based on a percentage of overall sales, not on a per
listing basis. BSC also recommends that each orthopaedic surgeon be required to
pay a flat fee to the College for the NJRR.[30]
1.30
Zimmer held the view that a model based on those of the United Kingdom
and New Zealand where 'a levy is collected on each procedural invoice by the
sponsor supplying the implants for that procedure' be introduced:
The administrative cost of collecting this levy is borne by
the sponsors, who then add their contribution and pass on the total levy to the
registry at agreed intervals (quarterly, half-yearly or annually).[31]
1.31
Mr Andrew Wiltshire, Director of Corporate Affairs for Medtronic
Australasia argued that there were two appropriate options: one based on the UK
model where device companies collect a levy on behalf of the registry or
alternatively, a user pays system for those who wish to access the data.[32]
1.32
In response to concerns regarding the levy, the department highlighted
the appropriateness of manufacturers and importers of medical devices used in
joint replacement surgery funding the NJRR's costs:
...while there are other stakeholders who benefit from the data
supplied by the NJRR, suppliers derive considerable direct financial benefit,
as this forms part of their post-market surveillance of joint replacement
prostheses. This monitoring of the safety and quality of devices provides
benefit to the industry by improving consumer confidence in the safety and
efficacy of joint replacement devices. Any devices showing high failure rates
can be identified quickly and promptly removed from the market.
The data produced by the NJRR also assists the industry by
informing the development of new prosthesis, allowing manufacturers to draw on
reliable performance information for existing products and designs.[33]
1.33
The department further commented that the arrangements proposed are
consistent with the Commonwealth's cost recovery guidelines in that the costs
would be met by those who have a direct financial benefit from the operation of
the NJRR.[34]
Examples of cost recovery arrangements through levies were provided by the
department including the levy for the costs of the Private Health Insurance
Ombudsman, who provides services to consumers, doctors, hospitals as well as
private health insurers. As the most direct financial benefit of having those
ombudsman services available in the industry accrues to the private health
insurers, they are levied for the costs of running those arrangements.[35]
The department concluded:
Similarly, that is what is proposed in this case. Those that
have the most direct financial benefit would contribute to the cost through the
cost-recovery arrangements.[36]
Implications on the viability of some
products on the Prostheses List
1.34
St. Jude Medical held the view that as many products on the prostheses
list attract relatively small benefits (and that benefits on the list have
declined by eight per cent in real terms over the past years), an additional
tax by way of the proposed levy could 'easily make some products commercially
unviable, particularly if they are used infrequently or are specialised items'.[37]
Medtronic Australasia held the same position and argued that the advice which
informed the Explanatory Memorandum was 'at the very least disingenuous' and
commented:
We refer to the reference of some prosthetic devices
receiving benefits as high as $67,000, as a justification for a potential
maximum fee of $5,000. The Committee should be aware that only two items on the
Prostheses List of more than 9,000 items are listed at this benefit level.
Further examination would reveal these two items are very specialized and
rarely used. The Committee's consideration of the suitability of free
structures would have been better informed by advice that indicated more than
99% of the 9,000 items attract benefits of less than $8,000.[38]
1.35
This concern was also raised by Smith and Nephew Surgical and Stryker
South Pacific who stated that there is no effective mechanism for passing on
the costs by adjusting benefits.[39]
Stryker South Pacific commented:
The tax may well strike at the commercial viability of some
listed products, eg revision items, such have had low utilisation however are
absolutely necessary. It would be very unfortunate if such a scheme limited the
access to many of the options that are available today, to those who need them
to function and participate actively within the community. Such a scheme would
well have this impact with the end user of the technology being the loser.[40]
1.36
Advanced Surgical Technologies shared the same concerns:
Any tax imposed on suppliers would further erode our product
margins and act as a barrier to introducing new technology, or even maintaining
current products. Prostheses List benefits have reduced greatly over the last 3
years – minus 8% growth when adjusted for CPI. We have had to absorb business
cost increases (eg wages, freight etc) well into double digits over the same
period.[41]
1.37
The MTAA stated that as items listed on the Prostheses List are only
those supplied to the private health system, supplies would be 'left with no
alternative but to increase prices in the public health system as a result of
the levy for the NJRR'.[42]
Advanced Surgical Technologies maintained that removal of products from the
Prostheses List, whilst remaining available in the public hospital system may
lead to an increase in privately insured patients being treated in public
hospitals with an on‑cost to government.[43]
1.38
St. Jude Medical concluded that it was 'already disproportionately
expensive and time consuming to market products in Australia which is only a
tiny proportion of the international market'.[44]
1.39
Lifehealthcare Distribution maintained that the levy could jeopardise
the commercial viability of both current and future innovations.[45]
Global Orthopaedic Technology stated that Australian manufacturers will be
'effectively subsidising giant multinational manufacturers who dominate sales
of joint replacement in Australia' if the Bill is passed in its current form
which would discourage Australian manufacturers to develop new products and
'continue the trend towards loss of Australian manufacturing jobs'.[46]
Global Orthopaedic Technology went on to state:
The reality is that the large multinational orthopaedic
device companies dominate the market. Each of these companies has significant
numbers of Billing Codes to cover their product ranges. Smaller companies, such
as ourselves, sell significantly lower numbers of joint replacements but are
required by market pressure and the logistics of the industry to maintain
similar numbers of Billing Codes in relation to hips and knee prosthesis.
The end result of the Bill, as currently structured, is
likely to be that our company will pay roughly the same amount under the levy
as each of the large multinationals notwithstanding that each of the large
multinationals sells approximately 10 times the amount of joint replacements
that our company sells. This result is inherently unfair.[47]
1.40
In relation to concerns about viability, the department responded that:
...the bill would allow levy rates to be set from nil, zero
dollars, up to $5,000 as a maximum. If there are particular items that are
going to be withdrawn from sale if there is a levy imposed, it is available to
the government to set the levy for a particular product at zero. We need to
discuss that with industry because our objective is to make sure that patient
outcomes continue to be achieved and the levy is not designed to remove
products from the prostheses list. We would need to assess, I suppose, if there
were claims from a sponsor that they would withdraw a product, whether or not
those claims were genuine by looking at utilisation data for those products.[48]
1.41
The department also noted that the additional costs could not be
automatically passed on by device sponsors to private health insurers
(resulting in increased premiums), because the benefits that private health
insurers must pay for particular devices are set under Commonwealth
legislation:
Any increase in benefits for joint replacement products will
need to be negotiated betweens sponsors and insurers and then approved by the
Government through changes to the Prostheses List.[49]
Levy rate setting mechanism
1.42
Global Orthopaedic Technology raised concerns that the rate setting
mechanism was based on the number of Billing Codes a sponsor has on the
Prosthesis List rather than the number of joint replacements sold by a sponsor:
The costs of operation of the NJRR relate directly to the
numbers of prosthetic replacement operations actually performed and monitored.
The Bill proposes to place a levy upon the sponsors of joint
replacement prosthesis based upon the number of Billing Codes that a sponsor
has listed on the Prosthesis List.
We would point out that the number of Billing Codes that a
sponsor has on the Prosthesis List is not the same thing, and is not related
to, the number of joint replacements that a sponsor actually sells.[50]
1.43
The MTAA also commented that if the levy is based on listing rather than
utilisation, then sponsors will need to reassess the benefit of retailing which
might be used rarely.[51]
BSC held the same concern, articulating potential ramifications:
By basing the levy on the number of inclusions, there is an
incentive to reduce the number of inclusions a company has on the Prostheses
List. This is especially problematic for orthopaedics as companies have
traditionally left products on the List in case of the need for revision. Some
sponsors may consider it appropriate to remove earlier generations of products,
therefore reducing the range of available products for patient revisions. This
may lead to the need for surgeons to undertake a completely new replacement,
rather than simply revising one component.[52]
1.44
The Austofix Group held the view that the Bill does not clearly identify
the mechanism by which rates will be set and that any mechanism must take
utilisation into account given that:
In most categories, the majority of market share is held by a
small percentage of items. For example, of the 200 or more femoral stems
currently listed on the Prostheses List, the top 10 comprise 67% of sales,
whilst the top 2 hold 33% of sales. These items attract a premium on the
Prostheses List due to their utilisation, yet are out of patent and a number of
'generic' versions of these products are becoming available. To tax all femoral
stems at a standard rate would create a further barrier to entry to cheaper
alternatives and further entrench the market position of the market leaders. We
believe such a system would be anti-competitive and would actually prove detrimental
to both public and private health care systems.[53]
1.45
Smith and Nephew Surgical took the view that the levy, based on the
Prosthesis List Billing Codes, would apply indiscriminately regardless of
utilisation:
The Explanatory Memo identifies the most expensive
orthopaedic devise at $67K but omits the detail that these two specialised
items are outliers with extremely limited utilisation and:
- 47% of products have minimum
benefits less than $1K
- 89% of products have minimum
benefits less than $4K
- 99% of products have minimum
benefits less than $8K.[54]
1.46
The MTAA held a similar view, noting that 'products will be attracting a
significant, and disproportionate, individual levy to meet the projected Budget
savings of $5 million over four years'.[55]
This view was supported by the Austofix Group which argued that:
Some items with large benefits are revision items that serve
an important clinical purpose but which are not regularly utilised due to their
specialisation. Their benefits reflect the considerable cost of maintaining
inventories at such low utilisation and a poorly administered tax based upon
benefit alone may affect the commercial viability of such items.[56]
1.47
Professor Stephen Graves, AOA, responded to industry comments concerning
the cost of devices and stated:
I think you have been given a misleading picture there in
that, while many of the components used within a joint replacement may be of
that value, what is not mentioned is that multiple components are used. For
instance, in a knee replacement a femoral component, a tibial component and an
insert would be used. That would be the minimum number of components... I think
there is an element of truth in what you have been told, but what has not been
explained to you is that multiple pieces are used to make up one prothesis for
an individual.[57]
1.48
The department noted that the Bill allows for a single levy to be set
for each levy day, or for different levy rates for different kinds of joint
replacement prostheses. If all sponsors are levied an equal amount, the levy
will be around $600.00–$650.00 per listing per year.[58]
However, it is proposed that a range of levies be set in consultation with the
industry as the Prostheses List benefit range for joint replacement devices is
from around $50.00 to $67,000.00 per item.[59]
The department stated:
The government has proposed that there be a range of levies
set in consultation with industry under the rules, because there is a broad
range of approaches taken to listing products on the prostheses list. As I
said, some sponsors have individual component pieces like bolts and screws
listed separately on the prostheses list, whereas others have whole products
with several components listed together, at a much higher benefit.
We considered the best way to determine the levy and thought
that, because there is such a wide range of benefits for different types of
listings, it would be appropriate to set the levy based on benefit ranges
rather than just having a flat fee that applies to anything listed on the
prostheses list because there is a very broad range of benefits available.[60]
1.49
In relation to the maximum rates of levy, the department noted that the
$5,000 maximum rate of levy has been set to cover increasing costs in the
longer term.[61]
The department also commented:
Given the wide range of prosthetic devices used in joint
replacement surgery and the corresponding variation in benefits for different
kinds of joint replacement prostheses, a maximum rate of levy of $5,000.00 is
considered reasonable.[62]
1.50
The department commented on the use of utilisation data to inform the
levy setting mechanism. The department stated that the NJRR, while it collects
information from all joint replacement surgeries and thus can identify how many
of each particular device is used, it does not have access to costing data. The
department stated:
We have benefit data on the Commonwealth Prostheses List and
we have all been in discussions with prostheses device sponsors over the last
few years to try and match up those two data sets so that we can work out how
many products sold at this benefit are being used, but that is not currently
possible because the sponsors have declined to provide that information.[63]
1.51
However, the department indicated that the industry has recently reached
agreement with the NJRR, after a number of years of negotiation, to provide
billing code numbers to the registry and therefore 'in future we will be able
to match up utilisation data with benefit data which will allow the levy to be
set in a similar way to the UK levy'.[64]
1.52
In relation to the number of levy days, the department commented:
Levies do not need to be imposed on all four or even six of
those days. During our consultations with industry on the appropriate levy
rates, we discussed that it would be better to levy only once year. That would
reduce administration costs to the device sponsors who are being levied...So, if
I have products on the prostheses list at this day, then I will be subject to a
levy, which is imposed one month later. But again, the time between the census
day and the imposition day will need to be discussed with industry before it is
made under the rules.[65]
Industry representation on the National
Joint Replacement Registry
1.53
A number of submitters from the industry questioned the logic that they
were expected to pay for the NJRR but without greater representation in
relation to the management of NJRR data. Ms Anne Trimmer, MTAA, noted that when
the NJRR was first established there were two seats on the management committee
for industry representatives. This is not longer the case.[66]
Both Mr Sushobhan Dasgupta, General Manager of JJM and BSC articulated the
industry's view that there should be 'no taxation without representation'.[67]
1.54
Orthotech Holdings stated that whilst the industry was expected to pay
for the NJRR, it wouldn't have any say in the actual operation of the NJRR
which it noted, 'could be run in a far more cost effective way'.[68]
The Austofix Group also commented:
We would also ask what oversight, if any, industry will have
over the budget of the NJRR given that industry is the sole contributor to its
operations?[69]
1.55
Medtronic Australasia raised similar concerns:
At present, with regard to the NJRR, industry does not hold
any positions on the NJRR Management Committee. A position is held on the
subordinate Advisory Committee. Should industry seek data from the NJRR, then
it is only available on a payment basis. We are unclear as to what representation
and access to data industry may have if the proposed legislation is enacted.[70]
1.56
In relation to such concerns, the department highlighted the importance
of the independence of the NJRR, noting that the legislated cost recovery
arrangements would ensure the continuation of such independence from industry
as 'the levy will be mandatory and collected by the Government
to fund the NJRR'.[71]
The department went on to state:
The proposed arrangements will preserve the independence of
the NJRR. As levies will be imposed under legislation, and collected by the
Government on behalf of the NJRR, there will be no possibility of funding being
withdrawn from the NJRR by medical devices sponsors who are not happy with its
findings.[72]
1.57
The department also noted that there is industry representation on the
registry advisory committee as well as representatives of consumers, health
insurers and the government.
A poor model for future registries?
1.58
Medtronic Australasia and the MTAA raised the concern that the
imposition of a levy for the NJRR will create a precedent in relation to
payment of registries in a context in which there are likely to be further
registries established in the near future. MTAA argued that by:
...aligning the cost of obtaining the information collected by
a registry with the persons seeking it, there is an element of fiscal
discipline. Failure to align incentives could result in a proliferation of
registries and significant escalation of cost to the health sector. Ultimately,
it is the funders (overwhelmingly the Federal Government) that will bear the
costs of any increase in post market registries.[73]
1.59
BSC emphasised that if sponsors are required to 'foot the bill', it will
'discourage any sponsors from supporting the establishment of any future
registries, for example the cardiac registry'. BSC also noted that sponsors are
already supporting a range of local registries and trials and that they may
review their current support to reduce the risk of 'unexpected new levies'.[74]
CONCLUSION AND RECOMMENDATION
1.60
As a means of ensuring the continuation of the NJRR, the committee
welcomes the introduction of the Private Health Insurance (National Joint
Replacement Register Levy) Bill 2009.
1.61
The industry raised a number of concerns during the inquiry,
particularly in relation to equity of the levy arrangements and consultation
with the industry. The committee recognises that as the primary beneficiaries,
manufacturers and sponsors should cover the costs of the NJRR. The committee
notes that the department is to undertake consultation with the industry before
the finalisation of the regulations, including discussions with industry about
the most appropriate ranges of levies. In addition, as the industry has now
come to an agreement with the NJRR to provide data on billing codes, the
department will be able to use this data to inform the levy setting process.
Recommendation
1.2 The committee recommends that the bill be passed.
Senator Claire
Moore
Chair
June 2009
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