Applied Health Economics and Health Policy

, Volume 17, Issue 4, pp 421–431 | Cite as

Why is There Discordance between the Reimbursement of High-Cost ‘Life-Extending’ Pharmaceuticals and Medical Devices? The Funding of Ventricular Assist Devices in Australia

  • Sopany SaingEmail author
  • Naomi van der Linden
  • Christopher Hayward
  • Stephen Goodall
Current Opinion


New health technologies often yield health benefits, but often at a high cost. In Australia, the processes for public reimbursement of high-cost pharmaceuticals and medical devices are different, potentially resulting in inequity in support for new therapies. We explore how reimbursement is different for medical devices compared with pharmaceuticals, including whether higher cost-effectiveness thresholds are accepted for pharmaceuticals. A literature review identified the challenges of economic evaluations for medical devices compared with pharmaceuticals. We used the ventricular assist device as a case study to highlight specific features of medical device funding in Australia. We used existing guidelines to evaluate whether ventricular assist devices would fulfil the requirements for the “Life-Saving Drugs Program”, which is usually reserved for expensive life–extending pharmaceutical treatments of serious and rare medical conditions. The challenges in conducting economic evaluations of medical devices include limited data to support effectiveness, device-operator interaction (surgical experience) and incremental innovations (miniaturisation). However, whilst high-cost pharmaceuticals may be funded by a single source (federal government), the funding of high-cost devices is complex and may be funded via a combination of federal, state and private health insurance. Based on the Life-Saving Drugs Program criteria, we found that ventricular assist devices could be funded by a similar mechanism to that which funds high-cost life-extending pharmaceuticals. This article highlights the complexities of medical device reimbursement. Whilst differences in available evidence affect the evaluation process, differences in funding methods contribute to inequitable reimbursement decisions between medical devices and pharmaceuticals.


Author Contributions

SS, NvDL and SG designed and wrote the manuscript; CH reviewed the manuscript and provided clinical input. All authors read and approved the final manuscript.

Compliance with Ethical Standards


This research is supported by an Australian Government Research Training Program Scholarship.

Conflict of interest

Sopany Saing and Stephen Goodall have no conflicts of interest that are directly relevant to the content of this article. Naomi van der Linden is employed by AstraZeneca Netherlands. Christopher Hayward has received honoraria and grants from Medtronic LLC unrelated to the current article. Christopher Hayward has received travel support to attend meetings and speak at meetings sponsored by Novartis AG and Medtronic LLC, unrelated to the current article. St Vincent’s Hospital owns patents licensed to Medtronic LLC unrelated to the current article.

Data Availability

Data sharing is not applicable to this article as no datasets were generated or analysed during the current study.


  1. 1.
    Australian Government Department of Health. Pharmaceutical Benefits Scheme—hepatitis C medicines 2016. Canberra (ACT); 2016.Google Scholar
  2. 2.
    Australian Minister for Health. PBS listing for Kalydeco and Soliris. Canberra (ACT): The Hon Peter Dutton MP Minister for Health; 2014.Google Scholar
  3. 3.
    Australian Government Department of Health. Application 1519: tisagenlecleucel (CTL019) for treatment of refractory/relapsed CD19-positive leukaemia and lymphoma. PICO confirmation: Medical Services Advisory Committee; 2018 (last updated: 25 Jun 2018). Accessed 10 Jan 2019.
  4. 4.
    Liu G, Chen E, Lewis D, Rao G. Food and Drug Administration’s Humanitarian Device Exemption marketing approval pathway: insights for developing devices for rare diseases. J Med Devices. 2017;11:034701–034708. Scholar
  5. 5.
    Australian Government Department of Health. Prostheses list: part A. Canberra (ACT): Australian Government Department of Health; 2018.Google Scholar
  6. 6.
    Clement FM, Harris A, Li J, Yong K, Lee KM, Manns BJ. Using effectiveness and cost-effectiveness to make drug coverage decisions: a comparison of Britain, Australia, and Canada. JAMA. 2009;302(13):1437–43.CrossRefPubMedGoogle Scholar
  7. 7.
    Baumgardner JR, Neumann PR. Balancing the use of cost-effectiveness analysis across all types of health care innovations. 2017. Accessed 14 Apr 2017.
  8. 8.
    Tarricone R, Torbica A, Drummond M, MedtecHTA Project Group. Key recommendations from the MedtecHTA Project. Health Econ. 2017;26:145–52.CrossRefPubMedGoogle Scholar
  9. 9.
    Ciani O, Wilcher B, van Giessen A, Taylor RS. Linking the regulatory and reimbursement processes for medical devices: the need for integrated assessments. Health Econ. 2017;26:13–29.CrossRefPubMedGoogle Scholar
  10. 10.
    Tarricone R, Torbica A, Drummond M. Challenges in the assessment of medical devices: the MedtecHTA Project. Health Econ. 2017;26:5–12.CrossRefPubMedGoogle Scholar
  11. 11.
    Drummond M, Griffin A, Tarricone R. Economic evaluation for devices and drugs: same or different? Value Health. 2009;12(4):402–4.CrossRefPubMedGoogle Scholar
  12. 12.
    Heart Foundation. Heart transplants and organ donation. Canberra (ACT): The Heart Foundation; 2010. Accessed 21 Mar 2019.
  13. 13.
    Prichard R, Kershaw L, Davidson PM, Newton PJ, Goodall S, Hayward C. Combining institutional and administrative data to assess hospital costs for patients receiving ventricular assist devices. Int J Technol Assess Health Care. 2018;34(6):555–66.CrossRefPubMedGoogle Scholar
  14. 14.
    Hayward C, Jansz P. Mechanical circulatory support for the failing heart: progress, pitfalls and promises. Heart Lung Circ. 2015;24(6):527–31.CrossRefPubMedGoogle Scholar
  15. 15.
    Kirklin JK, Naftel DC, Pagani FD, Kormos RL, Stevenson LW, Blume ED, et al. Seventh INTERMACS annual report: 15,000 patients and counting. J Heart Lung Transpl. 2015;34(12):1495–504.CrossRefGoogle Scholar
  16. 16.
    Jarl J, Gerdtham U-G. Economic evaluations of organ transplantations—a systematic literature review. Nordic J Health Econ. 2012;1(1):61–82.Google Scholar
  17. 17.
    Alba AC, Alba LF, Delgado DH, Rao V, Ross HJ, Goeree R. Cost-effectiveness of ventricular assist device therapy as a bridge to transplantation compared with nonbridged cardiac recipients. Circulation. 2013;127(24):2424–35.CrossRefPubMedGoogle Scholar
  18. 18.
    Clarke A, Pulikottil-Jacob R, Connock M, Suri G, Kandala N-B, Maheswaran H, et al. Cost-effectiveness of left ventricular assist devices (LVADs) for patients with advanced heart failure: analysis of the British NHS bridge to transplant (BTT) program. Int J Cardiol. 2014;171(3):338–45.CrossRefPubMedGoogle Scholar
  19. 19.
    Long EF, Swain GW, Mangi AA. Comparative survival and cost-effectiveness of advanced therapies for end-stage heart failure. Circ Heart Fail. 2014;7(3):470–8.CrossRefPubMedGoogle Scholar
  20. 20.
    Moreno SG, Novielli N, Cooper NJ. Cost-effectiveness of the implantable HeartMate II left ventricular assist device for patients awaiting heart transplantation. J Heart Lung Transplant. 2012;31(5):450–8.CrossRefPubMedGoogle Scholar
  21. 21.
    Pulikottil-Jacob R, Suri G, Connock M, Kandala N-B, Sutcliffe P, Maheswaran H, et al. Comparative cost-effectiveness of the HeartWare versus HeartMate II left ventricular assist devices used in the United Kingdom National Health Service bridge-to-transplant program for patients with heart failure. J Heart Lung Transplant. 2014;33(4):350–8.CrossRefPubMedGoogle Scholar
  22. 22.
    Sharples LD, Dyer M, Cafferty F, Demiris N, Freeman C, Banner NR, et al. Cost-effectiveness of ventricular assist device use in the United Kingdom: results from the evaluation of Ventricular Assist Device Programme in the UK (EVAD-UK). J Heart Lung Transpl. 2006;25(11):1336–43.CrossRefGoogle Scholar
  23. 23.
    Tadmouri A, Blomkvist J, Landais C, Seymour J, Azmoun A. Cost-effectiveness of left ventricular assist devices for patients with end-stage heart failure: analysis of the French hospital discharge database. ESC Heart Fail. 2018;5(1):75–86.CrossRefPubMedGoogle Scholar
  24. 24.
    Rose EA, Gelijns AC, Moskowitz AJ, Heitjan DF, Stevenson LW, Dembitsky W, et al. Long-term use of a left ventricular assist device for end-stage heart failure. N Engl J Med. 2001;345(20):1435–43.CrossRefPubMedGoogle Scholar
  25. 25.
    Slaughter MS, Rogers JG, Milano CA, Russell SD, Conte JV, Feldman D, et al. Advanced heart failure treated with continuous-flow left ventricular assist device. N Engl J Med. 2009;361(23):2241–51.CrossRefPubMedGoogle Scholar
  26. 26.
    Rogers JG, Pagani FD, Tatooles AJ, Bhat G, Slaughter MS, Birks EJ, et al. Intrapericardial left ventricular assist device for advanced heart failure. N Engl J Med. 2017;376(5):451–60.CrossRefPubMedGoogle Scholar
  27. 27.
    Mehra MR, Goldstein DJ, Uriel N, Cleveland JC, Yuzefpolskaya M, Salerno C, et al. Two-year outcomes with a magnetically levitated cardiac pump in heart failure. N Engl J Med. 2018;378(15):1386–95.CrossRefPubMedGoogle Scholar
  28. 28.
    Schmier JK, Patel JD, Leonhard MJ, Midha PA. A systematic review of cost-effectiveness analyses of left ventricular assist devices: issues and challenges. Appl Health Econ Health Policy. 2019;17(1):35–46.CrossRefPubMedGoogle Scholar
  29. 29.
    Nunes AJ, MacArthur RGG, Kim D, Singh G, Buchholz H, Chatterley P, et al. A systematic review of the cost-effectiveness of long-term mechanical circulatory support. Value Health. 2016;19(4):494–504.CrossRefPubMedGoogle Scholar
  30. 30.
    Australian Government Department of Health. Medicare benefits schedule book. 1 May 2017 ed. Canberra (ACT): Commonwealth of Australia; 2017.Google Scholar
  31. 31.
    Vitry A, Roughead E. Managed entry agreements for pharmaceuticals in Australia. Health Policy. 2014;117(3):345–52.CrossRefPubMedGoogle Scholar
  32. 32.
    Australian Institute of Health and Welfare. Hospital resources 2015–16: Australian hospital statistics. Canberra (ACT): Australian Institute of Health and Welfare; 2017.Google Scholar
  33. 33.
    Association Australian Private Hospitals. Private hospitals service provision: APHA facts on private hospitals. Canberra (ACT): Australian Private Hospitals Association; 2016.Google Scholar
  34. 34.
    Rothery C, Claxton K, Palmer S, Epstein D, Tarricone R, Sculpher M. Characterising uncertainty in the assessment of medical devices and determining future research needs. Health Econ. 2017;26:109–23.CrossRefPubMedGoogle Scholar
  35. 35.
    National Health Service. National institute for Health and Clinical Excellence. Appraising life-extending, end of life treatments. 2009. Accessed 27 Feb 2017.
  36. 36.
    National Institute for Health and Clinical Excellence. Abiraterone for castration resistant metastatic prostate cancer previously treated with a docetaxel-containing regimen 2012. Accessed 18 Mar 2019.
  37. 37.
    Chew DS, Manns B, Miller RJH, Sharma N, Exner DV. Economic evaluation of left ventricular assist devices for patients with end stage heart failure who are ineligible for cardiac transplantation. Can J Cardiol. 2017;33(10):1283–91.CrossRefPubMedGoogle Scholar
  38. 38.
    McKie J, Richardson J. The rule of rescue. Soc Sci Med. 2003;56(12):2407–19.CrossRefPubMedGoogle Scholar
  39. 39.
    Levy WC, Mozaffarian D, Linker DT, Sutradhar SC, Anker SD, Cropp AB, et al. The Seattle Heart Failure Model: prediction of survival in heart failure. Circulation. 2006;113(11):1424–33.CrossRefPubMedGoogle Scholar
  40. 40.
    Australian Government Department of Health. Life Saving Drugs Program—Information for patients, prescribers and pharmacists. Canberra (ACT); 2019. Accessed 10 Jan 2019.
  41. 41.
    University of Adelaide. Life Saving Drugs Programme review: technical assessment. Canberra (ACT): Pharmaceutical Benefits Schedule. 2015. Accessed 21 Mar 2019.
  42. 42.
    Australian Government Department of Health. Procedure guidance for medicines funded through the Life Saving Drugs Program (LSDP). Canberra (ACT); 2018.$File/Procedure-guidance-for-medicines-funded-through-the-LSDP.pdf. Accessed 21 Mar 2019.
  43. 43.
    Australian Institute of Health and Welfare. Cardiovascular disease, diabetes and chronic kidney disease: Australian facts. Prevalence and incidence. Canberra (ACT): Australian Institute of Health and Welfare; 2014.Google Scholar
  44. 44.
    Katz JN, Waters SB, Hollis IB, Chang PP. Advanced therapies for end-stage heart failure. Curr Cardiol Rev. 2015;11(1):63–72.CrossRefPubMedGoogle Scholar
  45. 45.
    Marasco SF, Summerhayes R, Quayle M, McGiffin D, Luthe M. Cost comparison of heart transplant vs. left ventricular assist device therapy at one year. Clin Transpl. 2016;30(5):598–605.CrossRefGoogle Scholar
  46. 46.
    Australian Government Department of Health. Medicare benefits schedule book: operating from 01 May 2017. Canberra (ACT): Australian Government Department of Health; 2017.Google Scholar
  47. 47.
    Canadian Agency for Drugs and Technologies in Health. Drugs for rare diseases: evolving trends in regulatory and health technology assessment perspectives. Ottawa: CADTH; 2013 [updated 2016 Feb]. (Environmental scan; issue 42).Google Scholar
  48. 48.
    Kanatani Y, Tomita N, Sato Y, Eto A, Omoe H, Mizushima H. National Registry of Designated Intractable Diseases in Japan: present status and future prospects. Neurol Med Chir (Tokyo). 2017;57(1):1–7.CrossRefPubMedGoogle Scholar
  49. 49.
    Weinreb NJ, Deegan P, Kacena KA, Mistry P, Pastores GM, Velentgas P, et al. Life expectancy in Gaucher disease type 1. Am J Hematol. 2008;83(12):896–900.CrossRefPubMedGoogle Scholar
  50. 50.
    Shemesh E, Deroma L, Bembi B, Deegan P, Hollak C, Weinreb NJ, et al. Enzyme replacement and substrate reduction therapy for Gaucher disease. Cochrane Database Syst Rev. 2015;3:CD010324.Google Scholar
  51. 51.
    El Dib R, Gomaa H, Carvalho RP, Camargo SE, Bazan R, Barretti P, et al. Enzyme replacement therapy for Anderson–Fabry disease. Cochrane Database Syst Rev. 2016;7:CD0066632016.Google Scholar
  52. 52.
    Estep JD, Starling RC, Horstmanshof DA, Milano CA, Selzman CH, Shah KB, et al. Risk assessment and comparative effectiveness of left ventricular assist device and medical management in ambulatory heart failure patients: results from the ROADMAP study. J Am Coll Cardiol. 2015;66(16):1747–61.CrossRefPubMedGoogle Scholar
  53. 53.
    van Dussen L, Biegstraaten M, Hollak CEM, Dijkgraaf MGW. Cost-effectiveness of enzyme replacement therapy for type 1 Gaucher disease. Orphanet J Rare Dis. 2014;9:51.CrossRefPubMedGoogle Scholar
  54. 54.
    Engelberg AB, Kesselheim AS, Avorn J. Balancing innovation, access, and profits: market exclusivity for biologics. N Engl J Med. 2009;361(20):1917–9.CrossRefPubMedGoogle Scholar
  55. 55.
    Pharmaceutical Benefits Scheme. Life Savings Drugs Program. Canberra (ACT): Australian Government Department of Health; 2016. Accessed 21 Mar 2019.

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Centre for Health Economics Research and Evaluation (CHERE)University of Technology SydneySydneyAustralia
  2. 2.Erasmus School of Health Policy and ManagementErasmus University RotterdamRotterdamThe Netherlands
  3. 3.Heart Failure and Transplant UnitSt Vincent’s HospitalSydneyAustralia
  4. 4.Victor Chang Cardiac Research InstituteSydneyAustralia

Personalised recommendations