Medical device industry rejects Discovery's planned fees

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South Africa’s biggest medical scheme administrator Discovery Health plans to introduce hefty fees to assess the effectiveness of medical devices such as glucose monitors, drawing sharp criticism from a supplier body group that has warned its members would be forced to pass on the costs to patients.

Discovery Health CEO Jonathan Broomberg responded that several thousand new medical devices became available in South Africa every year, and not all of them have sufficient evidence for safety, efficacy and cost effectiveness to justify funding.

Business Day reports that the SA Medical Technology Industry Association (Samed) indicated in a letter that Discovery Health intends to start charging companies from the beginning of July for its evaluations of whether their devices are worth paying for.

It plans to charge R98,000 for each assessment.

The report says Discovery Health, as South Africa’s biggest administrator, wields significant influence in the industry. Many administrators follow its lead in deciding which medicines and devices to approve.

The health technology assessments for which Discovery plans to start charging are conducted by a handful of private sector players in South Africa, including its rival administrator Medscheme.

The CEO of Samed, Tanya Vogt, said in the report that the association supported such assessments, but was opposed to Discovery Health charging fees to do so. "Discovery’s HTA (health technology assessment) process will only apply to the schemes which it administers. Other administrators and schemes which also have HTA processes may subsequently introduce similar fees, which will not be sustainable for suppliers.

"This may result in companies having to increase the price of their products in order to compensate for additional charges to access the private sector medical scheme market."

The report quotes Vogt as saying that the proposed fees might prove prohibitive for small and historically disadvantaged medical device suppliers. "This could constrain access to innovative medical technologies and appropriate and quality care."

Discovery Health CEO Jonathan Broomberg said several thousand new medical devices became available in South Africa every year, and not all of them have sufficient evidence for safety, efficacy and cost effectiveness to justify funding. "Discovery Health has a responsibility to advise its 19 client medical schemes on which of these devices and products should and should not be funded, and an HTA is a critical tool in developing this advice.

"In the absence of this rigorous approach to evaluating new technologies, schemes would be paying for large numbers of products that lack evidence or are priced too high to be cost effective. This would rapidly lead to increased claims and increase premiums for scheme members," he said.

Discovery Health deploys a large team to carry out these assessments, Broomberg is quoted in the report as saying. "In our view, it would be fair for these costs to be shared with the suppliers who are requesting funding for their products. The proposed cost is based on a detailed activity-based costing exercise that determined the cost of resources used to perform an HTA," he said.
Vogt wrote to Samed members informing them of the board’s opposition to Discovery’s intention to charge for the assessments. Her letter said the board was seeking legal advice about the lawfulness of Discovery’s plans.

Broomberg said in the report that Discovery Health was confident it was acting within the law.

Business Day report

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