JOINT COMMITTEE ON ENTERPRISE, TRADE AND INNOVATION debate -
Tuesday, 20 Jul 2010

Sustainable Medical Sector: Discussion with Irish Medical and Surgical Trade Association

Chairman

I welcome Mr. Justin Carty, executive director, and Pádraic Dempsey, director, the Irish Medical and Surgical Trade Association. Mr. Dempsey is also general manager of IntraVeno Healthcare, a United Drug company. We thank them for their attendance and arriving so promptly.

I draw their attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable. The same notice is read to everybody and the delegation is no exception.

I now call on Mr. Carty to address the committee. In general, the address should be succinct as one gets the best value from a meeting through questioning.

Mr. Justin Carty

I thank members for accepting the request of the Irish Medical and Surgical Trade Association, IMSTA, to appear before the joint committee to make a presentation on providing sustainable employment in high-end jobs within the medical technology sector in Ireland. I appreciate that the joint committee has a full agenda and therefore, its meeting with IMSTA is especially welcome. I am joined by Mr. Padraic Dempsey, a member of IMSTA's board and a sponsor of our procurement supply chain industry group. Although our chairman was due to attend this meeting, unfortunately he has been obliged to decline to appear at the last minute due to a medical uncertainty.

IMSTA is the representative body of the medical technology supply industry in Ireland and I will elaborate shortly on what exactly that encompasses. The industry employs 30,000 people, mostly in high-end jobs, while supporting approximately 120,000 other jobs. It is an important part of our economy. It produces 10% of total exports, which are valued at more than €6 billion annually. Innovative medical technology can have a dramatic effect on patients' health and quality of life. It saves lives and can save the Exchequer money. A vibrant manufacturing base for medical technology development, quality health services and economic prosperity are inextricably intertwined. There is considerable potential for growth in this knowledge-intensive sector, leading to expansion of manufacturing activities and job creation.

Medical technology is a part of the health technology that encompasses a wide range of health care products and, in one form or another, is used to diagnose, monitor or treat every disease or condition that affects humans. These innovative technologies, that is, the application of science and technology, are improving the quality of health care delivered and patient outcomes through earlier diagnosis, less invasive treatment options and reductions in hospital stays and rehabilitation times. Health technology is any intervention that may be used to promote health or to prevent, diagnose or treat disease. It includes the pharmaceuticals, devices, procedures and organisational systems used in health care. Pharmaceutical exports in 2009 were worth €44 billion, device exports account for a further €7 billion and the ICT industry is worth €20 billion annually, of which the health care ICT sector is a growing part. Consequently, medical technology and innovation are part of the solution, not part of the problem.

I will turn to the reason for our appearance before the joint committee. IMSTA is committed to engagement with stakeholders to facilitate a better understanding of how the industry can help the Government to meet its objective of a stronger patient-centred health service while simultaneously contributing to the Government's smart economy objectives. Enhanced partnership between the health system, academia and industry facilitate innovation. The Departments of Enterprise, Trade and Innovation and Health and Children must work together and with industry for the benefit of patients and industry. Focusing on this industrial sector reflects the Government's agenda by stimulating innovation as a means to maintain Ireland's edge as a global leader in the life sciences market. We believe that Ireland has unique potential to offer a comprehensive industry solution by leveraging and integrating the device supply capabilities to facilitate research and development and regulatory approval requirements of the device industry as it evolves. The supply side of the industry operates at the interface between patients and clinicians and as such, is uniquely placed to work with specialists to identify, validate and develop the future technological innovations that will sustain the vibrancy of the sector in Ireland.

The role of the Government is to help to create the right conditions for enterprise to grow and prosper. The enterprise support agencies in Ireland have an enviable track record in attracting foreign direct investment and they treat investors like rock stars. However, when it comes to using the innovative technologies manufactured and marketed in Ireland, the health sector treats world-class highly sophisticated medical technology products like commodities. Rock stars get treated like beggars. This disconnect between enterprise and health sectors must be fixed. Public procurement policy appears to know the price of everything and the value of nothing. The HSE's national service plan for 2010 states "literature suggests that health technology is a greater driver of costs than demography". I am unsure what that means. The HSE's national director of finance repeated the same sentence in a late payments lunch debate in Brussels at the end of March.

In other words, Ireland Inc. thinks that innovation in health technology is a cost driver and clearly, the health service is averse to it. What message does this send to potential future foreign direct investment companies? This lack of foresight is having a negative effect on Ireland's reputation as a good place in which to do business. It undermines the Government's strategy of positioning Ireland as a competitive and innovation-driven location. It is contrary to the excellent efforts of the enterprise support agencies to create high-end knowledge-based jobs. It affects our long-term prosperity and the quality of our lives. We risk developing a "for export only" strategy in respect of innovative medical technologies. Are Irish patients not entitled to get access to medical technologies developed and manufactured in Ireland by Irish people? Does the Government want to have a world-class medical technology enterprise culture and a second rate health service? Clinical and specialist input is needed to evaluate correctly and procure sophisticated medical technology, which should not simply be contracted for the lowest price if we are to give a quality health service and provide sustainable employment in the sector.

For patients, the Government must guarantee access to the most clinically and cost-effective drugs and treatments. For new medical technologies, the Government must simplify the pathway by which they pass from development into wider use and must develop ways to benchmark and monitor uptake. The Government should support innovation as a driver of productivity. Dialogue with industry to understand sectoral needs is essential for the continued success of Irish enterprise. The Departments of Enterprise, Trade and Innovation and Health and Children must work together and with industry to develop policies that are good for health and good for the economy.

In addition, the Department of Health and Children, the Health Service Executive, HSE, and the Health Information and Quality Authority, HIQA, must work together to enable innovative medical technologies. The new HSE directorate of quality and clinical care, led by the highly able Dr. Barry White, is to reorient the management focus from professional hierarchical functions to clinical units of management. This could result in the adoption of a much more "whole of life" approach to the procurement of medical technology. HIQA was set up to drive quality, safety, accountability and the best use of resources in the health and social services and has established a health technology assessment division to advise the Minister for Health and Children on the economic evaluation of health technologies. The resources exist and all that is needed is a little joined-up thinking. I am happy to note that today, the Taoiseach, Deputy Cowen, is opening a centre at Cherrywood, Dublin, for one of our members, Covidien. In addition, the Minister for Enterprise, Trade and Innovation, Deputy Batt O'Keeffe, was present for the announcement of the creation of 200 jobs in its commercial operations centre.

In summary, medical technology and innovation are part of the solution to rising health care costs and not a cause of them. Medical technology and innovation are part of the solution to hasten economic renewal, productivity growth and jobs. We ask the joint committee to support IMSTA in its efforts to induce the Government to set up a joint ministerial-industry group to review and co-ordinate a Government strategy to provide sustainable employment and high-end jobs within the medical device sector in Ireland and to review procurement procedures for medical technology.

Chairman

Thank you, Mr. Carty.

Deputy Arthur Morgan

I apologise for missing the opening part of Mr. Carty's presentation. Were members in a position to offer or seek to achieve in the near future a single deliverable, what should it be? While obviously one needs a number of objectives, I ask the witnesses to condense them and to specify the primary short-term objective with which they think members can help them?

Mr. Padraic Dempsey

I will respond. From an industry perspective and to be fair, the biggest objective is to have a clear and transparent system for introducing health technology into the Irish sector. Ireland has been successful in doing this with the pharmaceutical industry. From a medical device perspective, we do not have access to the pharma-economic centres to assess products and determine which will save the economy money. If we had some of the world's leading technology, it would attract the companies in question. A new system of introducing new technology would help the industry to come across.

Deputy Arthur Morgan

Mr. Carty stated that a joined-up Government strategy would be of significant help in that regard, as the Government could co-ordinate with companies to ensure the industry can road test its expertise.

Mr. Justin Carty

Yes. The resources exist and are operating as separate businesses despite the medical technology sector really being just one business. Sometimes it is seen as an enterprise and an export business and health as a separate business, but they are inextricably intertwined.

Deputy Damien English

A number of Mr. Carty's comments were not included in his submission, so we can review some of the key items. He stated that he wanted the Government to review and co-ordinate its strategy, but there is no strategy in the first place. Did he mean he wanted the Government to put a strategy in place?

Mr. Justin Carty

It is to co-ordinate the enterprise strategy with the health strategy so that there is one industry strategy.

Deputy Damien English

In which case it would not really be a review, but the start of a new strategy that merges the two existing strategies.

Mr. Padraic Dempsey

Yes. From our side, the system to review current technology is broken up. It is fantastic if we have technology that can get someone out of hospital more quickly, but the follow-up into the community in terms of how the patient is treated is not present. From a device perspective, these systems do not exist, but they do from a pharmaceutical perspective. As Mr. Carty stated, the Barry Whites of the world are around, but it is a question of how they will link up and who will have the greatest say. Currently, the situation is price-driven and everyone is trying to control his or her budget whereas Dr. Barry White is trying to get the best technology available. This element could be joined up.

Deputy Damien English

What is the main problem with simplifying the path from development into wider use? Is it cash for development or the amount of time that must be spent on red tape?

Mr. Padraic Dempsey

A process is in place. When I worked at MSD, industry was not attracted to Ireland by its population of 4 million people, but by the studies that showed we possess the best international surgeons trained in the State, the UK and the US. Industry is happy with that situation, but it wants to allow surgeons access to its products to get used to them and to conduct evaluations and clinical trials. This would be a considerable bonus for the industry. From this perspective, it is a question of allowing access and of not allowing a single procurement person to block the evaluation and use of a product based solely on its unit cost.

Deputy Damien English

Currently, a surgeon who wants to use a product must go through his or her procurement department's red tape. The process gets stuck there.

Mr. Padraic Dempsey

Yes.

Deputy Damien English

Could a product be sitting somewhere for one year?

Mr. Padraic Dempsey

We have launched products in other markets that we have not been able to get into Ireland in four or five years. We must examine many technologies, so identifying which are the most important is the challenge. We are still using technology as much as ten years old. Our surgeons are returning from America and asking for this or that product, but they are being stopped by procurement sections. They are not even allowed to engage in an open debate on the true cost in the long run. This is where many companies are struggling.

Deputy Damien English

Should the discussion be held centrally?

Mr. Padraic Dempsey

Yes.

Deputy Damien English

That makes sense.

Chairman

Would that involve the Irish Medicines Board, the food and drug advisory groups in the US and the UK and so on? What level of contact exists to accelerate the process?

Mr. Justin Carty

The Irish Medicines Board is the regulator of the domestic market and of the manufacturing of medical devices. We have a close relationship with it and the Department of Health and Children has engaged in wide public consultation on a proposed statutory instrument. We have an important dialogue with the board. The board is key to the regulation of medical devices, as Ireland is a gateway for US companies seeking to enter Europe. If Ireland has a good industry that is favourably disposed towards new technology, US companies might use our regulatory system to get approval for marketing their products in Europe. This is an important point.

Chairman

The Irish Medicines Board has an important function.

Mr. Justin Carty

A key function.

Mr. Padraic Dempsey

Not to blow the Irish trumpet too much, but recognition of the Irish Medicines Board by US and European companies, and irrespective of the question of joint European recognition, is excellent. Under this proposal, however, the board would be the first to say it needed extra resources.

Chairman

I will get around to that matter.

Mr. Padraic Dempsey

There could be a sufficient amount of work. The board's reputation is excellent. For Ireland, providing recognition of products across Europe could open up an interesting market.

Chairman

Does the Irish Medical and Surgical Trade Association, IMSTA, view the co-ordination of the Government strategy as encompassing the Irish Medicines Board within the Department of Health and Children, with the Department of Enterprise, Trade and Innovation then joining with those in a confluence of interests instead of in a separate, but parallel, stream?

Mr. Justin Carty

The board has a key function and would work closely with and advise the Department of Health and Children. Initially, we are seeking a joint ministerial group to bring the two Departments to the same table instead of pursuing separate strategies for the same sector.

Deputy Damien English

Why has that not been done previously?

Mr. Padraic Dempsey

It sounds simple and logical. I am only newly returned to the industry, having been away for several years, but this process has been ongoing since I left five or six years ago. Mr. Carty may have a different answer, but it seems that people are afraid of going outside their budgets by X % and are fighting their corner. This means the bigger picture is not seen, so someone at a higher level must tell them it must be taken into consideration.

Deputy Damien English

It is a question of selection from above.

Mr. Justin Carty

Yes.

Senator Brendan Ryan

I must confess that, from our guests' presentation, I am unclear on what the problem is, although their responses to Deputy English touched on it to some degree. They referred to a background of 30,000 jobs, €44 billion in exports, device exports valued at €7 billion and €20 billion in the health care ICT sector. They recommend that the two Departments should work more closely together. Could they give further specific examples that would define the problem, such as something that has been prevented because of a lack of integration?

Mr. Justin Carty

We do not have the structure for assessing innovative, ordinary technologies. New products made by generic medical device manufacturers in Ireland cannot get on the general medical card scheme, GMS, lists. Therefore, they cannot be procured in Ireland. The enterprise agencies try to get them exported to and successfully sold in other jurisdictions, but they cannot be sold in our own back yard. We should have a co-ordinated strategy. Not only should we sell these products in the market making them, but we should trial them and assess their knock-on effects instead of letting that be done in other markets.

Mr. Padraic Dempsey

I have a clear example. We have an automated pharmacy dispensing machine that we tried to introduce into hospitals two or three years ago. Essentially, it is a large vending machine that allows one to store pharmaceutical products securely in wards throughout a hospital. Traditionally it is done by a pharmaceutical technician, who will bring the product up on a daily basis. This way, one does not need the pharmacy technicians. The product is on the ward and we only need to refill it every week. This is major technology in the US. In the past, we could not get the technology in because of the risk of job losses. Now, pharmacists and hospitals are telling us there is a headcount freeze and they cannot recruit new people. They need the new technology but the procurement people are saying they have no money to purchase this in 2010. Industry is well capable of handling itself and if we need to do five year finance deals, we can do them. Those working in the procurement sector are telling us they cannot do the deal. Pharmacists are completely understaffed and the drug errors and risks following that are significant. The Irish Times reported a claim of €4.7 million at one hospital last week. There is an endless stream of these things. It goes from that complexity to simple wound care. Instead of the wound having to be dressed every day, it can be dressed once a week. This affects nursing time. This is the procurement argument and we have to deal with it. The bigger picture is that when the companies who manufacture this see Ireland not opening its arms to embrace the technology, it has a knock-on effect when trying to attract them to manufacture in Ireland. It has an impact in terms of how they see us.

Deputy Michael P. Kitt

Is research ongoing on improving medical devices? There are many replacement operations taking place. The earlier stents were not as good as more modern ones. Does that research continue? It is expensive to have screening of all of these devices. Can it be checked that all of these devices work? Mr. Dempsey referred to pharmacy dispensing machines. Can Mr. Dempsey tell us about the question of generic drugs and the cost of drugs?

Mr. Padraic Dempsey

From a pharmaceutical perspective, it is completely outside of our remit. The perspective of the Irish Medical and Surgical Devices Trade Association is solely on medical devices. We are very linked in and we have seen developments in the pharmaceutical sector and reference pricing. Most people in the medical device sector and the Irish Medical and Surgical Devices Trade Association agree we are moving things in the right way and will create better value for money. Our side of this is not the pharmaceutical side but how we get the products to the patients and the most cost-effective way of running a hospital. I do not want to comment on the pharmaceutical side. There are two sides to stents, trial and evaluation. The Irish Medicines Board and the FDA are consistently testing and nothing will be introduced to the market without consideration of safety. Another opportunity in Ireland is the long-term analysis of the market. Medtronic and Boston Scientific manufacture these products. Ireland could be seen as a centre where these evaluations carried out and clinical trials are evaluated. That is a major challenge in terms of the Irish market.

Mr. Justin Carty

Regarding research and development, I was pleased to hear the funding announcement from the EU towards continuing to invest heavily in research and development. It has been successful in the past two years and many manufacturing companies on diagnostic products and medical devices have a considerable amount of research and development. There is an opportunity to grow that sector substantially and consolidate the industry. It is a strategy of the enterprise agencies to involve academia and have greater involvement of clinicians to help identify the product to be developed. There is considerable potential for more activity in the area.

Chairman

This is the first committee meeting attended by Deputy Richard Bruton. We look forward to his contribution, which will no doubt be constructive and will contribute positively to the work of the committee.

Deputy Richard Bruton

Thank you, Chairman. Perhaps my questions display the concerns of a finance spokesman. I am sorry I did not hear the full presentation although I heard most of it on the monitor. As spokesman on finance, there will always be additional interventions one can make to prolong life or to improve people's chances of survival. Procurement policy is in the unenviable position of trying to draw lines or be a gatekeeper for State money. If it is consultant-led, unless it is budget capped, the consultant makes the choice of remaining with old technologies or moving to new technologies. One then gets into rules and it seems there are rule-based systems of procurement that are trying to protect the taxpayer and present a framework for these difficult choices. When my parents were in hospital, totally unnecessary interventions were made simply because they were still in hospital. There is a problem of how to develop a procurement policy. Against that background, do private hospitals, where money follows the patients or procedures are funded by insurance, exhibit a more open attitude? Can they deliver the same cost effectiveness using a model whereby the money follows the patient, as opposed to budgetary caps? Can we take the experience of the Bon Secours Hospital or its equivalent and tell the HSE that here is a model that not only is working to develop these technologies but doing it in a cost-effective way?

Can we not segregate the matter of regulatory approval from procurement, perhaps through getting protocols under the research and development budgets that certain technologies can be tested, so that one is not going to the procurers and so that a consultant can become part of the research and development project and get the necessary approval to apply testing and get the regulatory air miles up, or whatever has to be done? We could be waiting forever to see a change in the rules, particularly against the background where every budget must take a 5% cut. The tendency will be to batten down the hatches on everything we are doing because that is the easy way of dealing with this. Are there exemplars we can look to rather than railing against procurers trying to act as gatekeepers?

Mr. Padraic Dempsey

At the risk of hogging the microphone, the two questions are very good. A new private hospital is being built in Cork. The CEO comes from Chicago and has experience of the American hospital system. He has worked in some of the biggest hospitals there. The hospital is part of the Sheehan Medical group. The CEO has purchased 17 of the pharmacy dispensing machines for his hospital, with seven operating rooms. He knows he can track the cost savings and does not have to recruit additional people in the pharmacy. He has done a health economic analysis of the purchase and can justify it to the board of the Sheehan Medical group. Private hospitals are considering doing things in a different way and are seeking to save money, improve patient safety and bill appropriately. This is also linked to the VHI set-up. That could be an effective starting step in trying to link procurement and research and development. If technology is used and taken from a separate budget over a 12 month, three, four or five-year period, members of the Irish Medical and Surgical Devices Trade Association are convinced some of the technology will pay for itself. If it was taken from a separate budget to allow new technology to be examined and evaluated, through the health economics centre in St James's Hospital, it could have a considerable effect. It would show that Ireland was opening its doors to this technology in a prudent way. It would not put all the procurement pressure on purchasing and IMSTA members would be very happy.

Mr. Justin Carty

The resources are there so we are not looking for additional expenditure. HIQA has a health technology assessment unit. By and large, HIQA looks at national issues that cost millions of euro but it also has the structure to evaluate medical technology. The HSE has incorporated a new directorate of quality in clinical care which allows clinicians and academia to become involved in care paths and procurement decisions. If we have dialogue at a high enough level and co-operation among the relevant State bodies we can find device evaluation pathways to evaluate the economic benefits of the technologies. It would lead to a culture which was open to innovation and to the smart economy and would assist research and development. It would be good, not only for the quality of health care but for the economy as a whole.

Senator John Paul Phelan

At the bottom of one of the pages of the presentation, it states that clinical specialist input is needed to procure sophisticated medical technology. What level of input do clinicians have into procurement practices at the moment? There are many procurement sections in the HSE around the country but that is another argument. Are they solely responsible for procurement?

Mr. Justin Carty

There certainly is clinical preference but I do not think there is a standardised procedure, though that may come with the quality in clinical care directorate. In some hospitals there may be five different cardiologists and five different care plans. That would create a headache for procurement purposes but if it were streamlined procurement would become a much easier function and there could be proper clinical input. It varies by hospital, region and clinician. There is clinical preference but not in a formal way.

Deputy Arthur Morgan

Last week, we held a committee meeting with the Minister for Health and Children, Deputy Mary Harney, the chief executive of the HSE, Professor Drumm, and senior officials. They assured us they would not allow prescriptions for cancer medication, a short course of which costs €250,000, in the foreseeable future. Enterprise and innovation are supposed to get people working but that is the reality they brought to our committee last week.

Chairman

We should follow one of the recommendations. It is amazing that there is no joined-up thinking in the approach. We cannot lose anything by advocating that a joint ministerial and industry body to review and co-ordinate Government strategy be set up. Is there another word we can use rather than "review"? "Review" is an excuse for people to long-finger things. Maybe I have a cynical mind.

Deputy Damien English

There is no need for a review. It is the strategy that matters.

Chairman

It needs to be co-ordinated.

Deputy Damien English

It has taken between 18 months and two years. If this is needed then it does not have to take very long to put a strategy in place. Jobs are at stake while better equipment is available but not used.

Deputy Richard Bruton

Could the IMSTA give us one pilot scheme, which could be set up in a given location?

Chairman

Can the IMSTA get back to us on that? In principle, we agree to pursue this line and Deputy Bruton's suggestion is for a particular pilot to be set up which could be implemented without going through a tortuous process. One of the criticisms levelled at politicians is that we are into talk shops and reviews. We have to cut out such things and we have reviewed ourselves to death in this country. Now we need to review ourselves into action. We should immediately set up a joint ministerial and industry group to co-ordinate a Government strategy. Within that, we can have a prototype such as advocated by Deputy Bruton which could achieve a tangible result. We are all into value for money and this could yield tangible results from that perspective and for people's lives.

Mr. Padraic Dempsey

Yes.

Mr. Justin Carty

That would be very welcome and we would be very happy to do that. It would be in line with what they are doing in the UK, where an innovation procurement programme for medical technologies is in place and has been shown to deliver cost savings. We would be very happy to come back with a recommendation.

Chairman

Next week we are holding a meeting on a different topic but we could adopt the proposal at that time. I do not want to put a time line on the task but if the delegates could come back to the secretariat in the next three or four days we will follow it up.

Mr. Justin Carty

We would be delighted to do that.

Chairman

I thank the delegation. We have to acknowledge that 30,000 employed in good jobs, contributing €6 billion to the economy each year, is very impressive. IMSTA members are one of the successes of the Celtic tiger era and appear to have largely weathered the recent storm. There are a few shipwrecks in every storm but IMSTA members have done better than most.

Deputy Richard Bruton

Can IMSTA supply us with a list of its companies?

Mr. Justin Carty

I will supply all members with a list. We have 86 companies, from diagnostic companies to device manufacturers.

Chairman

There was a recent announcement by Pharmadel to establish a pharmaceutical centre of excellence in Tralee, which means more jobs are on the way. Being parochial, I wish they were coming to Westmeath but I wish the people of Kerry well. They deserve their good fortune in that regard.

We have had an informative meeting. It is important that we are made aware of these developments and we are grateful to the delegates for coming before us. We will certainly pursue the matter as this committee is one of the committees that does pursue things. Government is big and unwieldy so Deputy Bruton's suggestion to set something up whose progress we can track is appropriate. I thank Mr. Carty and Mr. Dempsey and look forward to their response

Mr. Justin Carty

I thank the Chairman, Deputies and Senators.

Sitting suspended at 2.58 p.m. and resumed at 3 p.m.