In 2016, the Netherlands Authority for Consumers and Markets (ACM) published the Guidelines on the collective procurement of prescription drugs. ACM drew up these guidelines to give hospitals and health insurers more clarity about the room that the competition rules offer for collective procurement of prescription drugs for medical specialist care. ACM expected that, through collective procurement, lower drug prices and better conditions could have been negotiated, which would have benefited patients and the insured. In 2019, Dutch research firm SiRM carried out an evaluation of the guidelines.
What did the evaluation find?
SiRM concluded that further explanation of the competition rules has indeed helped in the negotiations with drug manufacturers, but that it is not a magic formula for lower drug prices. Other aspects than competition alone stand in the way of effective procurement, too.
For oligopolistic drugs (drugs for which only few alternatives exist), these guidelines acted as a strong incentive for hospitals and health insurers to join forces. However, such collaborations also led to increased complexity, thereby reducing their clout. With regard to monopolistic drugs (drugs for which no alternatives exist), health insurers were able to obtain stronger market positions. This has resulted in lower costs, and possibly in some price reductions.
SiRM also concludes that, in order to avoid any legal risks, market participants are often quite careful, and leave many opportunities for cooperation untouched. At ACM’s request, SiRM also looked into possibly expanding the guidelines. SiRM expects that more explanation in particular about the competition rules with regard to collective procurement of medical equipment can help reduce costs.
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