Open letter to our Governments

I am writing to urge immediate Government action on a critical issue facing local medical device developers, one that threatens the very sustainability and potential of this vital industry. Recent discussions at the AusBiotech and MTPConnect summit in Canberra illuminated the many challenges we face in bringing Australian-developed medical devices to market. While there was great focus on incentivizing innovation and providing support through the development process, one crucial element was overlooked: securing a pathway to sales for these devices, particularly in the Australian market.

The Problem: A Well-Constructed Path to Nowhere

In essence, the proposals to improve the innovation ecosystem for medical devices in Australia are akin to building a six-lane highway of impeccable quality—straight to a cliff. The development process is well-supported, but when it comes time to sell the device in Australia, local entrepreneurs are confronted with an array of barriers that stifle success and discourage investment. These barriers include:

1. Private Sector Challenges: In the private sector, the prostheses list—a key enabler of reimbursement for medical devices—requires “more evidence” of safety and effectiveness even after the Therapeutic Goods Administration (TGA) has cleared the device as “fit for purpose”. This extra evidence requirement can take years to satisfy, pushing the time to market far beyond what is reasonable, especially for small and medium enterprises with limited resources. Furthermore, the expectation of “two years of independent, published results” before reimbursement parity is achieved means that local developers must wait an additional six years or more before securing revenue.
2. Public Sector Barriers: On the public side, Local Area Health Services (LAHS) typically operate through tendering processes. If a local company is fortunate enough to have its device considered, it may still face challenges such as bundling—a tactic used by large overseas companies to offer discounted packages. This practice often leaves locally-made products unable to compete on price, making the “Made in Australia” label an expensive and unfunded advantage that does little to secure sales.

These issues often lead to a grim outcome: local innovators are left without a market for their devices. This not only kills nascent companies but also undermines the credibility of Australian medical devices on the global stage. As a result, many local companies are forced to pivot and focus on overseas markets, particularly the United States, which is not the desired outcome of Australia’s “Innovation Incentive” programs.

The Solution: Guaranteeing Sales and Encouraging Innovation

The solution to this issue lies in securing a clear pathway to sales for locally developed devices, both at the Federal and State levels. By addressing this critical gap, we can create a thriving, sustainable medical device sector in Australia that drives innovation, supports local businesses, and ultimately benefits the Australian healthcare system.

1.  Federal Solution: A Pathway to the Prostheses List

At the Federal level, the solution is simple: recognize TGA clearance as sufficient for inclusion on the Prostheses List. This would allow locally developed devices to be eligible for reimbursement, making them more competitive in the private sector. For added assurance, a limited release of the device could be facilitated in key centres of excellence, with post- market scrutiny conducted by independent experts working at these centres. This would provide a controlled environment where both safety and efficacy are thoroughly evaluated, and independent results can be published years earlier than the current process would allow.

Importantly, these new devices would often replace overseas products at comparable prices, meaning that this proposal would either be cost-neutral or, when accounting for the local economic benefits of supporting Australian jobs, a net advantage to the Australian economy. Furthermore, the economic case for supporting local device developers is compelling: as it stands, millions are being spent on innovation incentives, but without securing sales, the return on investment is limited. This solution would leverage those existing resources and drive tangible economic outcomes.

2.  State Solution: A Local Path to Sales

At the State level, we propose that Local Area Health Services (LAHS) enter into agreements with local device developers at the outset of the development process. These agreements would provide a clear path to market and would include:

• A commitment that the device must achieve TGA clearance before it can be considered.
• Specific requirements related to the needs of the LAHS, such as storage conditions, order quantities, and other operational considerations.
• A guarantee that the price of the locally developed device would be competitive with overseas alternatives, ensuring that there is no financial disadvantage to purchasing locally.
• A minimum order commitment—perhaps 30% of the total need—giving local developers a guaranteed off-take of their product while still leaving room for established overseas suppliers.

This model would create a win-win scenario: local developers get access to a guaranteed market, while the State health budgets remain cost-neutral or even benefit from the lower overhead costs associated with supporting Australian-made products.

Why This Matters

The future of the Australian medical device industry depends on ensuring that local companies have the confidence and certainty to continue developing their products. These are businesses that are often forced to take on significant debt and financial risk during development, only to see their efforts stymied at the final hurdle: sales. By implementing these reforms, we not only support innovation but also ensure that Australian companies have a fair chance to compete in the marketplace.

In short, if we truly want a thriving local medical device industry, we must take action now. We must ensure that innovators are able to transition from development to market with clear, supported pathways to sales. Without this, we risk losing out on the potential economic and healthcare benefits of a homegrown medical device sector, and more importantly, we fail to live up to the promises made by government innovation incentives.

Conclusion

Australia is home to some of the brightest minds in medical device development. However, without a clear path to market, these innovations will be relegated to the sidelines or transferred overseas. By removing the barriers to local sales, we can unlock the full potential of Australian medical technology, creating jobs, improving healthcare outcomes, and ensuring that innovation is not just supported, but also celebrated.

I urge the Government to take immediate action to implement these changes, ensuring a sustainable, competitive, and innovative medical device industry in Australia.

Sincerely,

Dr Greg Roger

Managing Director, Vestech Medical Pty Ltd