N E E D F O R D E R E G U L AT I O N O F M E D I C A L D E V I C E S I N
Current Scenario of Healthcare in Australia
Healthcare in Australia is primarily funded by the government, and provided jointly by the public and
private sector. The government of Australia funds/subsidizes healthcare services primarily through
Medicare, the Pharmaceutical Beneﬁts Scheme (PBS) and the 30% Private Health Insurance Rebate
Medicare, the public health insurance scheme, was established in 1984, with the aim of providing all
Australians with free universal access to healthcare. Medicare also provides funding to public hospitals
to enable them to provide free services to Australians. The PHIR and PBS subsidize expenses towards
private healthcare services and prescription medicines.
The healthcare system in Australia has undergone several reforms since introduction of Medicare in
1984. Some of the key reforms include case-mix funding, privatization, contracting for services, cost-
shifting and compliance with the Medicare Agreements.
The healthcare industry in Australia is expected to experience steady growth in future, driven by the
ageing population, increasing population due to in-migration trends, advances in medical technology
and rising awareness about disease and treatment options among the Australian population.
Some of the key challenges facing healthcare industry in Australia include long waiting list in the
hospitals, government regulations, price reduction pressure, and cost-containment initiatives from the
Mechanism of Regulating Medical Equipment and Devices
Medical equipment in Australia is regulated under the Therapeutic Goods Act 1989. The Therapeutic
Goods Administration (TGA), a Division of the Commonwealth Department of Health and Ageing, is
entrusted with the administration of the Therapeutic Goods Act 1989. The Ofﬁce of Devices, Blood
and Tissues (ODBT) is the area within the TGA, which is responsible for regulating medical devices.
Three statutory committees have been established to provide advice on the regulation of therapeutic
goods in Australia. They include:
Medical Devices Evaluation Committee (MDEC) – The MDEC provides advice to the Minister on
issues relating to the safety, quality, performance and timely availability of medical devices. The
Committee also provides advice on the policies, procedures and priorities that should be applied to
the administration of the medical devices legislation.
Therapeutic Goods Committee (TGC) – The TGC advises the Minister on standards relating to
therapeutic goods, as well as the raw materials, manufacturing processes and testing procedures used.
National Coordinating Committee on Therapeutic Goods (NCCTG) – The NCCTG consists of
representatives from the states, territories and the commonwealth that discuss many aspects of the
regulation of therapeutic goods (including medical devices).
The Australian government introduced a new regulatory framework for medical devices in the year
2002, with a ﬁve year transition period ending in 2007. The new system aims to harmonize Australian
medical device regulatory standards with the internationally harmonized regulatory framework
consistent with the outcomes from the Global Harmonization Task Force for medical devices (GHTF),
and inter alia provides for:
‣ Medical Equipment Approval Process: All medical devices locally manufactured or
imported, must get pre-market approval and register with the Australian Register of
Therapeutic Goods (ARTG), before they can be marketed, distributed or sold in Australia.
Medical equipment in Australia is required to be classiﬁed, based on the level of potential
risk, as determined from the manufacturer’s intended purpose for the medical device and a
set of classiﬁcation rules. Besides, the responsibility for conformity assessment in Australia
rests with the manufacturer/authorized representative. The role of the TGA, or notiﬁed
body, is to issue certiﬁcation after they have conﬁrmed that the conformity assessment
procedures are appropriate and have been applied.
‣ Post-market Surveillance: Once a medical device has received pre-market approval from
the TGA, it is necessary to make sure that the product continues to meet all the regulatory,
safety and performance requirements and standards. The Australian government has
designed three major systems for post market surveillance. Every manufacturer/sponsor of
the medical device has a role to play in each of them. Three systems include:
✓ The manufacturer’s post-market surveillance system;
✓ Post-market monitoring of market compliance by the TGA; and
✓ Vigilance programs
A manufacturer/sponsor must implement and maintain a post-market monitoring system to collect
and assess data and information related to the performance of medical devices, after approval. Any
adverse events must be tested against the thresholds deﬁned in the regulations, and conveyed to the
Pricing and Reimbursement of Medical Equipment, Devices and Prosthesis
In the Australian healthcare set-up, based on the universal health insurance system, the pricing
structure of medical equipment largely depends on the reimbursement policies. Reimbursement is
deﬁned as an act of compensating someone for an expense. Reimbursement of medical equipment
means, how medical technologies secure payment from the public and private payers.
The Australian Federal government’s funding of healthcare includes three major national subsidy
✓ The Pharmaceutical Beneﬁts Scheme (PBS)
✓ The 30% Private Health Insurance Rebate (PHIR)
These schemes play key role in the reimbursement of medical technologies and procedures in
Australia. The Medicare and the PBS schemes cover all Australians. Both these schemes subsidize
private medical services and large proportion of prescription medicines. Under the Medicare, funded
by the Federal and State governments, public hospitals provide free healthcare service. The 30% PHIR
scheme, funded by the Australian government, supports people’s choice to retain private health
Medical devices in Australia are reimbursed as a part of treatment procedure, deﬁned according to
the Australian National Diagnosis Related Groups (ANDRG). The Medical Services Advisory
Committee (MSAC) is key body inﬂuencing the reimbursement level of health technology and
procedure. The principal role of the MSAC is to advise the Australian Minister for Health and Ageing
on evidence relating to the safety, effectiveness and cost-effectiveness of new medical technologies
and procedures. Based on this advice, the Australian Government takes decisions about the public
funding for new and existing medical procedures. In addition to the MSAC, three Health Technology
Assessment (HTA) bodies; including the Australian Safety and Efﬁcacy Registry of New Interventional
Procedures - Surgical (ASERNIP-S), the Pharmaceutical Beneﬁts Advisory Committee (PBAC), and the
Prosthesis and Devices Committee (PDC) also plays important role in deciding reimbursement.
How Regulation Impedes Accessibility and Affordability of Medical Devices
The approval from PDC takes up to eight months after the TGA approval. Additionally, If MSAC
approval is also required; it can take up to an additional 15 months. Overall a new product takes
about 20-25 months to pass through TGA, MSAC and PDC assessment. The sequential pathway of
assessments (TGA, MSAC and PDC) in a worst case scenario can take up to 40 months from
inclusion on the Australian Register of Therapeutic Goods (ARTG) which allows for market entry to
The following are the key problem areas in the current system, which need to be addressed:
1. Multiple Watchdogs, Overlapping Roles
We currently have three watchdogs in the form of TGA, PDC and MSAC, and all of them
perform slightly different yet overlapping roles.
2. Flawed Assessment
No single watchdog undertakes a total assessment; and despite the apparent overlap, serious
gaps remain in the assessment process. In some instances, inappropriately qualiﬁed heads,
insufﬁcient inter-committee communication, and ignorance compound the problem. There is
a lack of organised management of outmoded technologies and interventions, some of which
may be harmful to patients as well as wasteful of scarce resources.
3. Inherent Repetitiveness adds to the Costs
Because dissimilar analytical processes, albeit with some degree of duplication, are adopted by
multiple agencies at different stages, the system has become quite complex, repetitive,
expensive and inadequate.
Issues and Concerns under Review of HTA
In its submission to the HTA Review, the Department of Innovation, Industry, Science and Research
(DIISR) described the structure of the medical devices industry as:
…composed of local small to medium sized enterprises (SMEs), which excel in
niche markets, and importers, including many multinational companies... The medical
devices industry is knowledge intensive, highly skilled and regulated, and innovation
results from considerable research and development. … Australia exports most of the
medical devices it produces and imports most of the medical devices it consumes.
As DIISR noted, the Australian medical technology industry is characterised by small companies
operating in small markets. In this environment, there is a risk that if regulatory arrangements impede
timely market access, niche players may opt to set up overseas and market back to Australia, resulting
in lost innovation and economic opportunities.
It is also signiﬁcant that, in comparison to pharmaceuticals, devices tend to follow an evolutionary
development path consisting of small but frequent innovations. Each particular innovation or phase of
a device may therefore have a relatively short commercial life span before a competitor introduces a
further innovation. These aspects of the medical technology market have implications for the
regulatory system. For example, the timeliness of an HTA is especially important as the time taken to
approve a device may take a greater share of the ‘market window’ than would be the case for a
breakthrough pharmaceutical with 15 years’ patent protection.
1. TGA - Areas of Concern
TGA has earned a reputation for incompleteness and imprecision in its role to assess safety
and efﬁcacy. Australia-based manufacturers do not have a choice of certiﬁcation body other
than TGA, which alone is permitted to conduct pre‐market assessment (known as
conformity assessment) for domestically manufactured goods, whereas overseas
manufacturers can enter the Australian market on the basis of assessments conducted by
third party conformity assessment (TPCA) bodies, and under mutual recognition agreements
between Australia and the European Community. Domestic manufacturers contend that
choice of TPCA body would reduce regulation timeframes and costs and create a level
playing ﬁeld with overseas manufacturers.
Post-market surveillance program is of a reactive nature, and driven by reports of adverse
outcomes from sponsors, who need to supply the same information in different formats to
separate agencies, which does not comply with principles of good regulatory process. Such
reports are fragmented and largely reactive, with a heavy reliance on sponsors’ notiﬁcation of
adverse events. The conﬂict of interests, which is intrinsic to this process, poses considerable
risk of safety for Australian patients. A more comprehensive approach that proactively utilizes
a variety of data sources to inform the ongoing marketing is required to be developed.
2. MSAC - Areas of Concern
MSAC is considered slower, more cumbersome, less ﬂexible and possibly less consistent in its
recommendations than other Commonwealth HTA agencies. Responsibility for establishing
and then reviewing the evidence base for MSAC applications lies with DoHA rather than the
applicant. The general lack of evidence provided, coupled with a “one‐size-ﬁts-all” approach to
evaluation results in inefﬁcient use of HTA resources.
The establishment of expert advisory panels is considered unacceptably slow. These panels
are an essential part of the MSAC process and develop the evaluation protocol (essentially
the clinical parameters for the review) but can take up to six months to be formed.
There is currently no targeting of assessment effort based on an application’s alignment with
health priorities and potential for improved clinical outcomes. There are concerns about the
thoroughness of the MSAC’s cost effectiveness evaluations.
3. PDC - Areas of Concern
• There is considered to be assessment duplication concerning how safety of devices is
assessed by the PDC and the TGA.
• The process is considered onerous, overly administrative and lacks transparency. A
particular concern is the limited transparency concerning the choice of comparator used
in beneﬁt negotiations and reasons for decisions.
• Limited opportunities are provided to sponsors to comment on assessments and the
lack of clinical expertise on the Prostheses and Devices Negotiating Group (PDNG)
also limits the level of debate that occurs during price negotiations.
• There are inherent conﬂicts of interest in the composition of the PDNG and sponsors
are concerned that the PDNG are employed by insurers and, therefore, act on their
behalf during negotiations. It has also been argued that the PDC itself is fundamentally
unbalanced as it is weighted towards insurer representation as against sponsor
• The biannual application process is too infrequent for products that have a lifecycle of
only a few years. In particular, as inclusion on the ARTG is required before an application
to the Prostheses List is made, receipt of an ARTG number shortly after the cut off for a
listing cycle means there is a six month delay before an application can be lodged.
• Some products already on the Prostheses List do not meet the criteria for listing, while
new applications that do not meet the criteria are being declined. The Health Minister
agreed to implement recommendation 8 of the Doyle Report ‐ that items on the List
that do not meet the criteria for listing should be removed by no later than December
• Individual Clinical Advisory Groups (CAG) are considered to have differing views on
what constitutes acceptable clinical evidence for the purpose of listing and beneﬁt level.
Deregulation - Widespread Advantages
The author believes that the following deregulating measures can, not only, help cut down the time for
rollout of newer therapeutic equipment and devices into markets thereby making them readily
accessible to Australian patients, but also, bring down their prices considerably, as the level playing ﬁeld
created by taking these measures would open up the scope for competition among their suppliers –
both domestic and overseas.
1. Single Integrated Regulatory Authority shall replace Multiple Committees
It is recommended that a Single Integrated Regulatory Authority be established, and it should
discharge all of the functions of TGA, PDC and MSAC. It must be chaired by a suitably
qualiﬁed clinician with nationally recognised clinical and managerial skills, and include balanced
representation from key stakeholder groups including government, the clinical colleges and
peak professional bodies, consumer groups, medical device and technology groups, health
funds and health actuaries.
2. Pre-Market Assessment
The Single Integrated Regulatory Authority should be made responsible for pre-market
assessment of all new medical devices and technologies. Safety, efﬁcacy and cost effectiveness
should be analysed by this authority. Increased clinical advice, greater scrutiny of devices,
greater accountability of decision-makers and improved time management shall be
mandatory; and the perceptible evidence of performance shall provide the essential
foundation for decision-making.
3. Synchronized Introduction to the Market
There should be simultaneous allocation of Australian Register of Therapeutic Goods
Numbers, Private Health Insurance Prosthetic Listing, Company Catalogue Numbers and
CMBS item numbers for each device and/or technology.
4. Post-Market Surveillance
Rigorous post-market surveillance should be of a proactive, centrally driven, clinically
assessable nature, involving non-partisan professional bodies such as the AOA National Joint
Replacement Registry. The author recommends establishment of additional registries, such as
ACL reconstructions, cardiac/cardio thoracic prostheses and trauma registries. Cross
referencing of databases will provide substantial insight into multi-modal management of
medical conditions. Such registries need to be well-ﬁnanced, conﬂict-free, with professional
ownership of the data, and protected under Quality Assurance legislation for compliance.
5. Constant Performance Monitoring
Liaison ofﬁcers should form a constant and direct link between the Single Regulatory
Authority and sponsor groups. Assistance should be provided with appropriate medical
device application procedures, collation of pre-market assessment data, facilitation of
concomitant safety/efﬁcacy/cost effectiveness analyses and regular reporting of post-market
surveillance and adverse incident reports.
6. Choice of Prostheses
It is essential that existing practices continue with regard to the choice of particular
prostheses in joint replacement surgery – namely it is the choice of the treating surgeon, in
discussion with the patient concerned. Surgeons are most appropriately placed to make such
a decision, with regards to the individual circumstances and patient needs. It is felt that the
gap payments required for prostheses should be minimised to ensure that the appropriate
prostheses are readily available to meet patient needs.
1. Department of Industry, Tourism and Resources, ’Medical Devices for a Healthy Life’, The report of
the Medical Devices Industry Action Agenda, Canberra, 2006
2. Department of Industry, Tourism and Resources, op cit, p. 8
3. Department of Innovation, Industry, Science and Research, ‘Submission from the Department of
Innovation, Industry, Science and Research to the Health Technology Assessment (HTA) Review’
Submission to the HTA Review, May 2009
4. Regulation Impact Statement Review of Health Technology Assessment in Australia
5. Work is ongoing to implement this Doyle Review recommendation and will continue in August