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MEDTECH INDUSTRY RESPONDS TO VOLUME DISCOUNT DEBATE

On Tuesday night the ABC’s 7.30 Report program aired a segment on the medical technology industry alleging a conspiracy between medtech companies, private hospital and healthcare professionals.

The segment focused on medical technology companies providing volume discounts to private hospitals when they choose to use the devices they make, such as pacemakers, for their patients. The 7.30 Report alleged, as a result of the volume discounts, that private hospitals were receiving between 5-50% off the value of the medical devices as either a repayment or in-kind.

To support the allegations, 7.30 Report spoke with a legal expert who said he believed the rebates provided to hospitals were, in his opinion, equivalent to “kickbacks”, and accused medtech innovators of being anti-competitive.

However, PulseLine understands the practice of rebates was considered by the Australian Competition and Consumer Commission (ACCC) in 2003, with the regulator being of the opinion that the conduct would not raise concerns under competition law.

The Medical Technology Association of Australia’s (MTAA) members abide by a Code of Practice which states that it “…ensures companies in the medtech industry conduct their arrangements with healthcare professionals in a transparent manner so decision-making on selection and use of products by doctors, or hospital purchasing departments, is based solely on the quality and suitability of the product, not on inducements (perceived or otherwise) paid to the doctor or any other decision-maker.”

While MTAA Code of Practice isn’t legislated, it has been used by the industry as a best practice guide for all medical technology companies to follow and has issued fines for breaches of the Code.

MTAA’s CEO, Ian Burgess, was interviewed by 7.30 Report, and said the industry opposed any action to constrain surgeon choice, whether it was being done by a private hospital or private health insurer.

“There should be one, and only one, consideration when deciding on which medical device to use and that is: which is in the best interest of the patient,” Mr Burgess said.

“MTAA rejects the characterisations made on the 7.30 Report of rebates being anti-competitive. The practice of providing rebates are in line with normal commercial arrangements that can apply across a number of markets in our economy”.

Mr Burgess confirmed MTAA does not have access to specific information about how suppliers and hospitals negotiate the supply of devices, and said he did not believe the association should be involved in individual discussions with medtech companies regarding their commercial arrangements.

The 7.30 Report story comes as public scrutiny continues over the rise in private health insurance premiums. In recent years the medtech industry has found itself the target of other special interest groups looking to shift the public’s focus away from their own practices as it relates to health insurance premium rises.

Just last year the medtech industry co-signed an Agreement with the Commonwealth Government that saw medtech innovators agree to cut their own prices by $1.1 billion, over four years, in order to have those cuts passed on as savings to Australians signed up for private health insurance.

PulseLine understands those cuts have already been credited with delivering the lowest premium increases for Australians in 17 years.

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