To the Members of the Senate Standing Committee on Health Inquiry,

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1 8 Herbert Street, St Leonards NSW 2065 PO Box 970, Artarmon NSW 1570, Australia Ph: Fax: South Pacific 1 October 2014 Senate Standing Committee on Health Inquiry Parliament House Canberra ACT 2600 Australia To the Members of the Senate Standing Committee on Health Inquiry, On behalf of Stryker South Pacific please find following our response to the Inquiry into the impact of reduced Commonwealth funding for hospital and other health services provided by state and territory governments, in particular, the impact on elective surgery and emergency department waiting times, hospital bed numbers, other hospital related care and cost shifting. I hope this document provides some useful information. Please note, as well as addressing the Terms of Reference we have included additional points around the role of the Therapeutic Goods Administration, the Code of Conduct, and the National Joint Replacement Registry. Please do not hesitate to contact me if you have any questions, would like us to meet with the Committee, or require any additional information. Yours sincerely, George Faithfull Vice President Government & Regulatory Affairs Stryker South Pacific

2 Senate Select Committee on Health Inquiry Terms of Reference: a) the impact of reduced Commonwealth funding for hospital and other health services provided by state and territory governments, in particular, the impact on elective surgery and emergency department waiting times, hospital bed numbers, other hospital related care and cost shifting; Stryker is aware of the current political focus on ensuring the future sustainability of Australia s health system. While Stryker does not have a specific position on changes to current funding arrangements for hospitals and other health services, we believe that it is important to have a community debate about the level of resources we commit to health care and how these resources are spent. Medicare was established 30 years ago when health care needs were very different to today and treatment choices were much simpler. Today the community has more complex health care needs and a greater choice of available treatments for many conditions. The community is also wealthier than in the 1980s. Stryker believes that just as health care treatments have changed so too should we change the way we pay for health care. Research has shown that most Australians, who have the capacity to do so, are happy to make reasonable contributions to the cost of their health care if they feel they are obtaining good value for this contribution. However, Stryker also stresses that it is important to ensure that people who are disadvantaged have access to equally high standards of care through safety-nets and subsidies. Overall, Stryker supports the careful management of our health care resources and a sensible and fair approach to individual contributions to ensure the future sustainability of our health system. b) the impact of additional costs on access to affordable healthcare and the sustainability of Medicare; Stryker supports the focus of the current health care debate on ensuring all Australians have access to high quality health care. Given demographic and other changes in our community over the past 30 years, it is important that we assess whether or not Medicare is meeting our current needs. This debate needs to involve all stakeholders, including governments, industry, health care professionals and of course consumers. A broad and consultative discussion about how we pay for our health care will ensure that any changes to Medicare reflect both the health care needs of our community and our values and priorities. A recent focus of debate in the media has been Australia s overall expenditure on health care. This is understandable: health is a significant area of government expenditure and one which is growing faster than many other areas. The Australian Institute for Health and Welfare has found that as a proportion of all spending on goods and services, health spending has increased from 7.9% to 9.4% over the past decade (Australia s Health 2013). However, this rise in health spending is not necessarily a cause for concern. 9.5% of GDP is about the average health expenditure for OECD countries. For this outlay we enjoy some of

3 the best health outcomes and longest life expectancies of any country in the world (although we need to acknowledge and address the significant health gap between Indigenous and non-indigenous Australians). Like most countries, as we have become wealthier we have spent more of our resources on health care. This makes sense as health is an important priority and one which is essential in order to enjoy life benefits and contribute effectively to the community. However, rising health care costs do highlight the importance of ensuring that our health spending is delivering value to the community. There is good evidence that overall this is the case. Life expectancy for people over 65 in Australia has been growing steadily since 1970, a sign that our investment in health care is delivering positive outcomes. To ensure that this pattern continues, it is important to focus on the value of each dollar we spend on health care. This needs to take into account not just the actual cost of care but its outcomes over time, to individuals and the community as a whole. In many areas of healthcare the total benefits are not apparent for many years. Anti-smoking campaigns run in the 1970s and 80s are only now reducing the rates of lung cancer being treated in our hospital system. A hip replacement on a 60 year old can not only extend their life but add years of productivity which benefits all in the community. This applies to even younger community members who need their health and quality of life to continue to be productive in society. Short-term assessments of costs often miss the broad societal and longer term benefits of keeping people fit and healthy for as long as possible. Therefore, Stryker believes that current reviews and processes aimed at increasing the efficiency of our health system need to focus on long term value of investments in health care, rather than short terms costs, in order to achieve lasting improvements to our health system. c) the impact of reduced Commonwealth funding for health promotion, prevention and early intervention; Stryker in our role as manufacturer and provider of joint replacement prostheses is strongly supportive of the role of health promotion, prevention and early intervention in increasing health and well-being where this can reduce the need for high cost medical care. Most people who have a joint replacement are suffering from a musculoskeletal condition. Musculoskeletal conditions are the most common chronic conditions in Australia, affecting almost one-third of the population. They are the reason for almost 20% of GP visits and cost the community around $5.8 billion per year (the fourth highest contributor to overall health expenditure figures). The significance of musculoskeletal conditions was recognised in 2002 when they were designated as a National Health Priority Area.

4 Osteoarthritis (OA) is one of the most common musculoskeletal conditions. This is a painful and disabling ailment which can strike people of all ages. Currently there are limited measures to prevent OA, and there is no cure. Joint replacements are a highly successful surgical option to relieve pain and restore functionality to a joint damaged by this condition. Approximately 90% of replacement surgeries conducted in Australia have osteoarthritis as their primary diagnosis. While there are few strategies to prevent or reduce the development of osteoarthritis, there are a number of factors that influence the need for joint replacements and the outcomes of these procedures when performed. For example, reducing the current high rate of obesity within the Australian community would significantly reduce the overall need for joint replacements and improve outcomes for those people who have a joint replacement. Stryker supports ongoing health promotion and education efforts to promote healthy eating and physical exercise in order to halt the rising rate of obesity within our community. d) the interaction between elements of the health system, including between aged care and health care; Stryker has no specific comments against this term of reference. e) improvements in the provision of health services, including Indigenous health and rural health; Stryker believes that there is the potential to improve the outcomes of joint replacements in the Australian community through a number of different strategies. These focus specifically on reducing the rate of revisions of primary joint replacements. Joint replacements have a limited life span and when they fail a revision procedure is often undertaken. This is a much more complex procedure and not simply a repeat of the primary procedure; this is because once a joint replacement requires revising, a significant amount of bone and soft tissue is compromised in its removal. The revision prosthesis needs to be secured to the remaining bone which makes it a longer, less predictable and difficult procedure. Due to their increased complexity, revisions are significantly more expensive than primary procedures. For example, the cost of a revision hip replacement is typically around twice that of the primary procedure. These costs do not include the increased pain and suffering and loss of productivity for consumers, as well as the ongoing drain on health system resources. Revisions also inherently have poorer outcomes than primary procedures.

5 While Australia has achieved very good outcomes overall for primary joint replacements, there is room for improvement in delaying or preventing a proportion of revisions currently being undertaken. Reducing the rate of revisions will save valuable health care resources and reduce the pain, suffering and loss of productivity associated with revision procedures. Strategies to reduce the need for revisions include: Providing consumers with independent information and advice on the performance of alternative device options. Utilising prostheses with the best outcomes reflected in available clinical evidence such as the Australian National Joint Replacement Registry. Tying hospital funding to outcomes in specific areas, such as infection control, and providing incentives to address identified problem areas. Increasing preventive health efforts (as discussed above). While many cases of musculoskeletal disease cannot be prevented there is some scope to reduce the need for joint replacements through improved preventive health and health promotion strategies. Supporting GPs and the primary health care sector more generally to focus on promoting better health and activity levels could also reduce the need for joint replacements. Stryker also supports efforts to promote the use of higher performing devices in joint replacement procedures. Currently, there are a large number of different prostheses being used in joint replacement procedures, with some devices having significantly better outcomes than others. Stryker supports a review of all prostheses currently on the Prostheses List and consideration of changing current reimbursement practices to assess their relative performance. Also increasing post-market surveillance would enable the earlier identification of devices that may have higher than average failure rates. Stryker also believes that health services could be improved through the greater use of data. For example, Australia currently collects comprehensive data on joint replacements via the National Joint Replacement Registry, although this data is not always used as effectively as possible to inform clinical practice and regulatory processes. Stryker supports a dialogue with the medical profession, consumers and industry to explore ways in which the existing data can be used to promote increased consumer choice, improve clinical practices and achieve better overall outcomes for joint replacements.

6 f) health workforce planning; and Stryker has no specific comments against this term of reference. g) any related matters. Stryker would like to raise three other issues relevant to the Committee s Inquiry. These are as follows: Role of the Therapeutic Goods Administration Stryker supports Australia s current rigorous regulatory system for therapeutic goods. However, we believe that there is scope to increase the efficiency of regulatory processes for medical devices without reducing the level of scrutiny on devices or in any way compromising the safety of the Australian community. For example, there is currently a high level of duplication in the regulatory processes undertaken by different countries. There is the potential for Australia to reduce the need for this duplication while maintaining its oversight, decision making abilities and capacity to make independent regulatory decisions. This duplication could be avoided through the increased use of third party conformity assessment bodies with TGA moving towards a competent authority model of regulation. Stryker supports this direction for TGA, subject to the close involvement of all relevant stakeholders to ensure that high standards of quality and safety are maintained. Code of Conduct Stryker is a proud supporter of the Medical Technology Association of Australia (MTAA), and a signatory to their Code of Practice. We strongly support these self-regulated industry guidelines. It is unethical for manufacturers to provide gifts or enter into relationships with doctors (and other health professionals) which may unduly influence their clinical advice, and Stryker has a strong policy of not providing any inducements to surgeons or other health professionals as this undermines consumer confidence in the clinical advice provided. While we believe that most doctors are very ethical in their dealings with medical device companies and genuinely want to provide the best possible care to their patients, as long as this loophole exists all doctors will be vulnerable to the influence of companies seeking to promote their products unethically.

7 To ensure consumers can be confident in the independence and integrity of the health care they are receiving, we support a mandatory industry-wide Code of Conduct for all medical technology companies. One way this could be achieved would be to make registration of a product on the Australian Register of Therapeutic Goods listing contingent upon the sponsor adhering to an industry code. This would send a clear message to all medical device manufacturers that Australia will no longer tolerate any practices which put commercial interests above patient safety. National Joint Replacement Registry The National Joint Replacement Registry (NJRR) is Australia s world-class registry for joint replacements. It is funded by industry, via the Department of Health, and run by the Australian Orthopaedic Association based at the University of Adelaide. The aim of the NJRR is to improve and maintain the quality of care of people receiving joint replacement surgery. It achieves this by collecting standard data on joint replacements and patients. This data is then analysed and used by surgeons, other health care professionals, governments, industry and the community. While the registry is voluntary, it currently has a compliance rate of close to 100% from hospitals undertaking joint replacement surgery. This high level of compliance enables researchers, funders and policy makers to make decisions based on rigorous data. While some of the data collected by the NJRR is not publicly available (due to confidentiality reasons) there is a significant amount available on statistics such as comparative revision rates. This is a significant tool that allows comparative review in relation to factors such as ultimate effectiveness for both the patient and the health care system. It is important that close communication between the NJRR and TGA is maintained to minimise delays in making regulatory decisions, such as product recalls, once a problem has been identified.

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