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Health insurers and hospitals leave full potential of collective procurement of prescription drugs untapped

Hospitals and health insurers are not yet taking full advantage of the potential benefits that their collaborations in drug procurement are able to offer, in particular with regard to the strengthening of their bargaining positions. To this end, they can put the room that the Dutch Competition Act offers for collective negotiations to better use. These findings are the result of the evaluation of the ‘Guidelines on collective procurement of prescription drugs’, commissioned by the Netherlands Authority for Consumers and Markets (ACM).

Martijn Snoep, Chairman of the Board of ACM, explains: ‘What we see is that purchasing groups of drugs are less afraid to work together. But we also see that hospitals and health insurers still experience difficulties with regard to implementing an effective preference policy together. For the effective procurement of prescription drugs, the bargaining position of the buyer needs to be strengthened. In that context, competition rules do not stand in the way of such improvements. We are still going to clarify several parts of the guidelines. In this way, ACM contributes to keeping drugs affordable and accessible.’

What was the evaluation about?

Research and consulting firm SiRM evaluated the ‘Guidelines on collective procurement of prescription drugs’, drawn up in 2016. These guidelines explain the possibilities that hospitals and health insurers have with regard to collective procurement of drugs. By means of collective procurement, they are able to create a stronger bargaining position vis-à-vis drug manufacturers. ACM wished to know what the effects of the guidelines were, and whether the guidelines could be improved upon.

What are the results of the evaluation?

SiRM concludes that clarification of the competition rules has indeed helped in the negotiations with drug manufacturers, but that this is not the silver bullet for lowering drug prices. Aspects other than the rules, too, impede effective procurement. The guidelines were an important incentive for hospitals and health insurers to work together, especially when buying drugs for which alternatives exist. However, such collaborations also led to more complexity, thereby reducing their effectiveness On the other hand, with regard to drugs for which no alternatives exist, health insurers were able to obtain stronger positions. This has led to lower costs and, possibly, lower prices to some extent.

SiRM also concludes that, in order to avoid any legal risks, market participants are often careful, and stay well within the limits for such collaborations. At ACM’s request, SiRM also looked into a possible expansion of the guidelines. SiRM expects that, in particular, a more detailed explanation of the competition rules regarding collective procurement of medical devices and products may help reduce costs.

What will ACM do?

ACM will clarify the guidelines. This means that ACM will clarify in more detail what room the competition rules offer, for example regarding the ability to set additional criteria for admission to a purchasing group. In addition to this, ACM will assess how it can explain to buyers of medical devices and products what room the competition rules offer with regard to collective procurement.