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ASHLYNNE:

From Schwartz Media, I’m Ashlynne McGhee, this is 7am.

There are these really strict rules around how drug company reps try to influence doctors to prescribe particular medications.

But when it comes to the expensive medical devices inserted in our bodies during surgery, all sorts of screws, pacemakers and implants, it seems like the wild west.

Medical device sales reps are scrubbed up and working in operating theatres. They’re even advising surgeons on which products to use.

Today, The Saturday Paper’s national correspondent Mike Seccombe, on whether the pursuit of profit is driving clinical decisions.

It’s Tuesday April 30.

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ASHLYNNE:

Mike, set the scene for us. Take us into the operating theatre of a major hospital.

MIKE:

All right, Ash I shall try. Okay, so suppose you're getting a bit long in the tooth maybe. You need hip replacement surgery, let's settle on that one. You go to your doctor, you get referred to a specialist, and then they book you into a surgeon. And that's the person who actually puts in the new hip. By the time you're in the theatre, you're literally unconscious of the fact that alongside the surgeon in the operating theatre, more likely than not, is someone that you've never seen before. And this is the person who represents the company that owns the device that's being implanted in you.

So no one has asked you if this is okay, whether you consent to them being there, and furthermore, they're not just there as passive observers. They're there to give advice and sometimes even to assist during the procedure. I thought it was extraordinary, I knew none of this. Not that I've had to, fortunately, have my hips and knees redone yet, but I just found it extraordinary to know that there's this whole cohort of thousands of people who are in ORs (operating rooms) all around the country, and I didn't know they were there.

ASHLYNNE:

Right, but these people aren't doctors. Like, they're not even medically trained, are they?

MIKE:

Well, some are, but yes you're right, they're basically salespeople. You know, and according to Private Health Care Australia, which is the peak body for medical insurers, there are nearly as many of these people, of what they call front line sales and marketing reps, as there are surgeons. So there's around 5000 of these reps compared to about 6000 registered surgeons in the country as of, you know, last year. And these reps can be pretty much anyone.

A lot have some kind of medical training, in fairness, but depending on which company they're working for the definition can be pretty loose. According to the private insurers, there are also people who are former police officers, hospital porters, former athletes, personal trainers.

To be fair to them, as even the private insurers admit, they do get training in the devices that they're selling. I spoke to Rachel David, who's the CEO of the private health lobby Private Health Care Australia, who tells of one company, for example, that sends its Australian recruits off to the United States for a six week intensive course where they learn everything from anatomy to, you know, the ins and outs of the appliance, obviously, but also to what they call, quote, “in theatre selling role play”. So, suffice to say, they get training but they get much less training than your surgeon or even your GP would have had.

Audio Excerpt - Medical Sales Representative 1:

“So in this vlog, I'm going to be doing a day in the life of a medical sales rep. So normally I do like weekend vlogs, but I thought it'd be fun to mix it up a little bit and take you guys along. I’ve gotten some questions…”

Audio Excerpt - Medical Sales Representative 2:

“I've got two surgeries this morning starting at 7am, so I'm headed to a surgery centre that's about 45 minutes away. So on my way there now…”

Audio Excerpt - Medical Sales Representative 3:

“So jumping in what you guys can see here is, again, this is my paycheque for December 15th of 2017. One paycheque, down here in the yellow, you're going to see $4,500. I mean when you look at that it’s not too bad…”

MIKE:

I should add that they're also getting very well paid for this. Average base salaries are somewhere between $120,000 and $140,000 and they often come with pretty generous other perks. You know, one job that I saw, for example, offered a $22,000 car allowance as well as other other things. And a lot of them also are selling on a commission basis, so the more they flog, the more they get.

One ad I saw actually said, straight up, that the successful applicant would need to be, and I'm quoting here, “present in the operating theatre to assist surgeons and theatre staff to maximise the use and application of our products”.

ASHLYNNE:

Just to really pick up and clarify the obvious here, even if these people do have medical backgrounds, they're not the type of people who would normally be in an operating theatre, right? Like they're there purely for this one purpose.

MIKE:

Well, yes that's right and the requirements are pretty vague as far as I can tell. They appear to be taking over more and more of the functions of nurses and the people in hospitals who order supplies because they come with their own, obviously. Clearly they can't cut you open like a surgeon can, but there isn't a lot of regulation about their role beyond that. Compared with, for example, pharmaceuticals, you know, there are very strict regulations around pharmaceuticals in Australia but not to medical devices. You know, for example, a drug company rep can't go into the operating theatre to upsell, but there's no such rules for medical device representatives.

But the interesting thing here, to my mind anyway, is that some doctors I spoke to said that these medical reps weren't unwelcome in the operating theatre. I spoke with Karen Fielding, president of the Royal Australasian College of Surgeons, and she told me that over the past decade or so, and even more since Covid, there have been a lot of stresses on the health system. You know, longer shifts, staff shortages, this has made the overall level of expertise, at least among the support staff in theatre, not what it once was. Now she's a rural orthopaedic surgeon and, as she said, she does a lot of hips and knees. And she told me that she always insisted on having one of these reps in the OR with her.

She said, and I quote, that she “wouldn't go into the theatre without one at the moment.” And she went on to say, “I don't know any surgeons who would say that they weren't an integral part of the team.” So they've been thoroughly well accepted by most of the medical fraternity. You know, clearly doctors are desperate for more resources, and these sales reps are quite well trained, obviously, in the specific device that they're selling. And so you can see why some doctors, especially regional ones, find these people indispensable.

The doctors tend to call these people “device assistants” in inverted commas. But, you know, once again, it's important to remember that first and foremost they're salespeople and their primary purpose is to make money for their employers.

Of course, the surgeons themselves have sworn an oath. Used to be called a Hippocratic oath, these days they swear to something called the Declaration of Geneva, but it's essentially the same thing. And it begins by saying, I solemnly pledge to consecrate my life to the service of humanity. But, as Rachel David put it, this doesn't apply to those device makers. As she says, you know, everyone else in there, their first duty of care is to the patient. But for the sales rep, their first duty of care is to their company.

ASHLYNNE:

After the break, what happens if it all goes wrong?

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ASHLYNNE:

Mike, when you've got medical device sales reps in the room, and in some cases they're actually stepping in to help with these surgeries, what does that actually mean for patient outcomes?

MIKE:

Well, the worst example of what can go wrong is what happened with an implant known as pelvic mesh. And possibly, you know, a lot of our listeners would be familiar with this already, but this was an implant, a type of mesh sold by Johnson and Johnson. It was only ever formally tested on men with hernias, but it came to be widely used, off-label essentially, for women who had suffered prolapse. And it caused all sorts of complications and left a lot of people in pain. The reps for the company that produced it were, like all the others, in their spruiking for its use with doctors. Ultimately, pelvic mesh was withdrawn from use in Australia and there followed the largest product liability class action in Australian history. And Johnson and Johnson wound up having to pay $300 million to women who'd been badly affected by this.

The private health insurers are currently campaigning to have others removed too, and notably is one called the spinal cord stimulator which is an implant used to treat chronic back pain. And these devices cost like $60,000-$75,000 a pop. And according to the data they fail more than 40% of the time. And then, more often than not, they’re removed and another one’s just put in at the same cost all over again. And they're still being used in the Australian market but the health insurers want them removed.

But another big issue here is not just devices that fail, it’s even devices that work, are extraordinarily expensive. And there are big questions to be asked around whether commercial imperatives are driving clinical decisions. If something goes wrong, who is accountable? It just means a lot of cost to the system, and ultimately it means a lot of cost for patients.

ASHLYNNE:

If we talk for a moment about that cost, there's a clear reason why, I think, the private health insurances are jumping up and down about this. Devices can potentially cost them a huge amount of money, so they're speaking from their own position of interest, but I just want to break it down a bit more than that. In this situation, who is making money? Who's losing money here? And where does the patient sit in all of that?

MIKE:

Well, you're right, there are all these salespeople selling all these devices. There are literally thousands of various devices on a list that’s kept by the federal government and there's a price set for each one.

You know, when you get a new hip for example, it's not just the joint itself but it's all the screws, glues, all the other bits that go into the operation. And according to the private health insurers, Australians pay between 30 and 100% higher prices for these medical devices than any other country in the world. For example, you put a screw in, does a patient really need a $45 brand name new screw? Or can they get by with a $2 screw manufactured in China as a generic brand? The private insurers say that, in fact, a lot of what goes into patients is essentially generic in nature, but is charged far more than the generic cost.

So that's their complaint and, in fairness, we should not feel too sorry for the insurance companies in all of this either because they are doing just fine. Last year, according to the government data, insurance profits went up 110% from about 1 billion to well over 2 billion. It's true that not all of that was because of increased cost to patients, a lot of that was because these companies invest their premiums and at, you know, current high interest rates they do pretty well out of that. But nonetheless, even if you strip that out, profitability was still up by about 50% last year. And the insurance claim that part of the reasons why premiums are so high is because they pay so much for devices.

The device makers are making money, the insurers are making money, and the bottom line is that even as they squabble about costs, all parties are doing pretty well out of the health industry.

ASHLYNNE:

So there are some changes happening in this space, talk me through what's going on.

MIKE:

Well, last month, the Health Minister, Mark Butler, announced that he had approved an average premium increase across the private health industry of 3.03%.

Audio Excerpt - Mark Butler:

“We didn't have a scenario where we could freeze health insurance premiums, but I think keeping them at 3%, which is lower than wages growth at the moment…”

MIKE:

So he's trying to screw down on the amount of profit being made by the private insurers.

Audio Excerpt - Mark Butler:

“Lower than the increases we've been able to make to the pension, yes it will be tough for households, I'm acutely aware of that, but we've worked really hard to keep it down at 3%.”

MIKE:

By the same token, as we can see, patients are winding up at the end of this process paying more and more out of their own pocket. You know, I looked at data by the Australian Prudential Regulatory Authority, which showed that last year out-of-pocket expenses went up 10%. So essentially, you know, the government screws down on the insurers. Insurers screw down on the device makers. But at the end of it all, what winds up happening is less coverage for patients and more out of pocket expenses.

ASHLYNNE:

What's happening here compared to overseas?

MIKE:

The fact is, I mean, our healthcare system is still better than a lot, right? The United States spends something like 20% of its GDP on health. They've got one of the worst health systems in the world, and ours is a lot better than that.

By the same token, I talk to people who've been around this area for a long time and they see us becoming more and more like the American system, and that's a worry.

ASHLYNNE:

So you've kind of taken this peek behind the curtain now that not many of us actually get. How would you feel if you were heading into a surgery now? And how should we feel?

MIKE:

Look, I honestly don't know quite where to fall on that because clearly there's been a diminution in some of the skills in ORs. And it's possible that these people fill some of that skills gap and clearly the surgeons think so. Equally, It does seem to me that this is just introducing extra costs into the system that we really don't need to have.

ASHLYNNE:

Mike, thanks so much for your time.

MIKE:

Thank you.

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ASHLYNNE:

Also in the news today,

The lawyer for Deputy Greens leader Mehreen Faruqi has told the Federal Court he plans to show evidence that Senator Pauline Hanson is a, quote, "well-known, long-standing and prolific sayer of racist things".

Senator Faruqi launched a racial discrimination act trial over a tweet posted by the One Nation leader telling her to, quote, "piss off back to Pakistan”.

In his opening statement, Senator Faruqi's barrister said they would seek to prove the comment was racially motivated by providing decades of evidence that Senator Hanson has said "racist things".

And the government is considering expanding the powers of the e-safety commissioner to cover hate speech and AI deepfakes as it conducts a review into the e-safety act.

It comes amid a legal feud between e-safety and social media platform X over orders to take down footage of violent crime.

That’s all from us for today, we’ll see you again tomorrow.

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