The Netherlands Authority for Consumers and Markets (ACM) sees anticompetitive risks in some markets for medical devices. With regard to high-technological medical devices in particular, there are relatively few providers, and new providers face high barriers to entry. For example, hospitals can choose scanners from only a limited number of suppliers. Furthermore, medical specialists prefer certain brands, thereby making it harder for hospitals to switch suppliers. That may lead to higher prices, reduced quality, and less innovation.
In addition, the market for medical devices is currently undergoing major changes. Since the European Union will impose stricter requirements on the safety of medical devices, all manufacturers over the next few years will have to invest significant amounts of time and money in order to comply with those requirements. That may be a reason for manufacturers to stop producing certain medical devices, which will lead to fewer providers and more anticompetitive risks.
These risks and changes have been revealed by a study conducted by research and consulting firm SiRM and commissioned by ACM into the market for medical devices. ACM will use these insights as the basis for its oversight over these markets, for example, in investigations into possible illegal practices by businesses, or into the effects of mergers and acquisitions.
What are medical devices?
Medical devices is a collective name for over 500,000 different products: from face masks to blood test devices, and from pacemakers to surgical instruments. Medical devices are vital to health care: for research purposes (for example an MRI scanner), treatments (heart valves and prostheses), and aftercare (exercise equipment and walkers). The study focuses on possible risks to competition in the Netherlands on the different markets for medical devices.
Differences in risks to well-functioning markets
The medical devices were first classified into 63 submarkets, and subsequently assessed for possible risks to competition. For 31 out of these 63 submarkets, those risks were assessed as low. These include relatively simple medical products such as bandage or incontinence products. Many manufacturers are active in these markets, or the barriers to entry are relatively low for new entrants.
On the other 32 submarkets, the study found different causes for anticompetitive risks. For example, the number of manufacturers can be low, thereby making it easier to coordinate or making it more difficult to enter that submarket. Strong manufacturers are sometimes also active in multiple submarkets. That can lead to illegal tying: in those situations, health care providers must also buy related products from a dominant manufacturer.
Another cause of anticompetitive risks is a lack of transparency in the procurement process. That may be the case if a specialist not only has an advisory role but also an executive role in the decision-making process regarding what device will be purchased, while it is the hospital that pays for it. In addition, various markets also have high switching costs. That is because, when switching, there is a transition period where both the old and new equipment and materials must be present in order to safeguard continuity of health care.
Three submarkets with a high risk to competition have been examined in greater detail: radiotherapy equipment, heart prostheses and implants, and dialysis equipment and plasmapheresis materials (blood purification).
Do you have any comments?
Would you like to comment on this study’s results? You can! ACM would like to hear your ideas: vragen [punt] zorg [at] acm [punt] nl. We also like to hear any reports or tip-offs you may have regarding any anticompetitive practices: Submit your tip-off to ACM.
- 02-12-2022 Exploratory study into the functioning of the markets for medical devices and products (in Dutch with an executive summary in English)