Brendan Shaw
"The HTA Review Report is farsighted enough to be visionary, while being firmly grounded in the practicalities of the here and now."
Hon Mark Butler MP, Minister for Health and Aged Care, 11 September 2024.
After two years of administrative delays, numerous meetings, hundreds of submissions, various research and options papers, and a truckload of hope, the Australian Minister for Health and Aged Care has released the Final Report of Australia’s HTA Review for comment. The Report into how Australia conducts health technology assessment (HTA) for medicines, vaccines and co-dependent technologies has been a long time coming and expectations in patient communities, clinician groups and the pharmaceutical industry are sky high.
Congratulations to Medicines Australia and the industry for getting this far
At the outset, it’s important to congratulate Medicines Australia and the Australian pharmaceutical industry on getting this far. The Review is an Australian government commitment that comes out of the 2022 Medicines Australia – Australian Government strategic agreement. Now, the Review has been completed and its Final Report has been released for comment. This is no mean feat and should be acknowledged. To have secured this in and of itself is an achievement, as are the early indications from the government that it plans to implement the Review’s recommendations.
So, what are the good, the bad, and the ugly parts of the Review’s Report?
The Good
There are a lot of things to like in this Report.
Recommendations to improve coordination with the Australian states and territories on listing and funding new medicines and therapies are long overdue. The track record of coordinating state and territory government funding of medical technologies with federal funding has been patchy to say the least. Getting this right will be critical as more and more cell and gene therapies, which are administered through state hospital systems, come on the market.
The recommendations to improve incentives for antimicrobials and managing antimicrobial resistance (AMR) are welcome, even if in need of finessing. The proposal for plain language summaries is great and perhaps recognition that everyone’s previous attempts to speak about HTA in normal language rather than techno-babble gobbledegook have failed. More proactive vaccine evaluation and funding will be good if implemented correctly and alongside other reforms to vaccine evaluation methods. Updating the post-HTA pricing framework and improving the accountability therein would be a good step forward.
While a substantial number of the ideas are ‘good’, many of them are not new. Horizon scanning was an original commitment in the first 2010 Memorandum of Understanding, and the idea to have case managers for complex PBAC submissions has been around for decades. Developing mutually agreed metrics to measure progress on listings was another outcome of the 2010 MoU that is still an idea that needs to be implemented. I confess to laughing at the Review’s suggestion to remove the need for the TGA Delegate’s overview to improve parallel TGA and PBAC evaluations, because I recall Medicines Australia putting exactly that proposal on the negotiating table back in 2009 for the first MoU and being told at the time that it was too radical.
The focus on greater use and acceptance of real world evidence (RWE) and real world data (RWD) is possibly one of the major improvements coming out of the Review. While, yes, some of us have been banging on about this for 20 years, the Review coming out with comprehensive recommendations and support for finally embedding this more in HTA evaluation is welcome. Combined with the recommendations to reboot Managed Entry Agreements (another 2010 reform in need of some TLC), there is the potential for this to turbocharge Australian HTA into the 21st century on the back of big data, AI, genomics and personalised medicine.
Another interesting and potentially positive recommendation is for the PBAC to develop a qualitative values document. For years PBAC and its supporters have argued that it takes things like ethics, qualitative values and community standards into account when making decisions. However, there’s no reference, evidence or explanation of if, how and when PBAC does this. The PBAC putting in writing the qualitative values it uses and, importantly, subjecting those to patient and community scrutiny, could be an important step forward. I’m unclear on the last time the PBAC tested its value sets against those of the community at large, so some sort of write-up and review of these values could be useful if done properly.
The recommendation to consider using a lower 3.5% discount rate compared to the standard 5% in rare instances for some gene therapies and vaccines is a small step forward but doesn’t go far enough. I’ve written on this before. While many policy arguments in life are often complicated with different perspectives and valid competing points of view, I find Australia’s ongoing use of 5% discount rate largely indefensible. The economic and social policy justification for Australia’s use of a 5% discount rate in HTA is as flimsy today as it was in the 1980s when it was dropped into the first draft of the PBAC Guidelines almost as an afterthought. While the proposed change is a first step, it’s not good enough.
Another major recommendation to reform and expand the PBAC to be one HTA committee to cover all medical technologies is worth considering if done properly. One option to consider is moving towards an English NICE-style system in Australia that is more structured, has more resources and operates at arm’s-length from the Department of Health and Aged Care. The recent debacle with the deferrals of up to 50 medicine submissions from the March 2025 PBAC meeting shows that, despite the imposition of full PBS cost recovery on the industry 15 years ago, the current system isn’t working. The implementation of a well-resourced, medical technology assessment agency that services one or more HTA committees with dedicated in-house evaluation staff separate to both the Department of Health and the university system could be a positive step forward.
The Bad
Other points in the Report are of real and potential concern. The recommendation to make the PBAC the one HTA committee to cover all medical technologies could end up being a disaster if implemented poorly or with nefarious intentions. Unless the anticipated new committee structure is implemented consistent with best practice administrative independence and principles, there is always the risk that we end up with a New Zealand Pharmac-style system that is primarily focussed on managing a fixed budget and cost containment (see my blog on this here). The tragedy of the old Pharmac model shows what can sometimes happen when you isolate a small administrative organisation away from public scrutiny and tell it not to let the budget grow.
The proposal for streamlined and detailed PBAC submission processes, ostensibly to manage resources better, has risks attached to it. While it could have been placed in the ‘Good’ category, it’s lineball whether this will turn out to be beneficial to patients, or just a way for the government and PBAC to perpetually hold companies over a barrel and delay PBS listings unless they can squeeze out the lowest price. This recommendation could have perverse incentives for government, as noted by MA CEO, Liz de Somer, in her dissenting views contained in the Report.
The Report’s summary of the Productivity Commission’s Advances in measuring healthcare productivity paper does not tell the full story, by implying that the Commission argues that measures to contain the financial sustainability had a big impact on the productivity of the health system, together with quality improvements. In fact, the Productivity Commission paper made the explicit point that the adoption of new medical technologies, new science and techniques was one of the leading drivers of productivity improvement in the health system, and – notably – not cost reductions. The Commission even went so far as to say:
“More timely approval processes for pharmaceuticals and other medical technologies would help ensure that the diffusion of new treatments remains a positive contributor to productivity growth.” (p. 11).
See my blog on this here.
The Ugly
The biggest ugly parts of the Review are more about the pressing policy and political background, rather than what’s in the Report itself.
During the previous two decades Australian government negotiations with the pharmaceutical industry on PBS reforms have supposedly been about ensuring PBS financial sustainability to fund earlier and the better adoption of new medical technologies. For 20 years governments of all political persuasions have worked with Medicines Australia and the industry to generate savings and make the PBS financially sustainable. Today, the amount of national income that Australia spends on the net PBS – the net PBS-to-GDP ratio – is lower than when the first Intergenerational Report came out in 2002 with overblown warnings of future budget blowouts.
Sadly, the history of PBS reform shows that governments of all political persuasions have been quick to lock-in the tens of billions of dollars in savings from PBS reforms but have been slack when it comes to implementing reforms to improve patient access. The result is that over the last two decades, the PBS has not grown with the Australian economy and population while the sick wait longer.
The fact that so many recommendations in the 2024 HTA Review Final Report are either old ideas recycled again, or, in several cases, actual policy commitments made in previous strategic agreements that were never properly implemented illustrates the problem. Industry might want to reflect on this going forward.
Equally disappointing are the sermons in the HTA Review Report about opportunity cost and assumptions that any upward revision in prices and costs would reduce net welfare gain to society. Unfortunately, the discussion here is pretty one-dimensional because it focuses largely on the costs of reform with little acknowledgement that such changes could benefit patients, the community and society. There are a few points where the Report inadvertently lets the cat out of the bag by saying that taking a less constricted view in HTA decision risks making new medical technologies more cost-effective – meaning that they get funded sooner and provided to patients, health practitioners and the community quicker.
There is a reason why Australia is falling behind other comparable countries in accessing new medicines, and it’s not because our HTA system is world leading.
The HTA Review is an opportunity to finally get some real progress on the improvements in access to new medicines and vaccines we’ve been talking about for years. We can also get better return for patients, the community and industry for all the savings banked over the last two decades.
The proof will be in how the Report’s recommendations are implemented. How the HTA Review is implemented by governments, industry, clinicians and patients in the future will be crucial to its success.
Will it be good, bad or ugly?
Only time will tell.
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