1. monopoly versus competition
Blood services:
monopoly versus competition
Paul Strengers, MD, FFPM
Sanquin Blood Supply
Amsterdam
The Netherlands
April 20, 2017 | 1

2. WHO Model list of Essential Medicines
Proposal of AABB :
Whole blood and red cell concentrates on WHO Model list of Essential Medicines
Supported by Regulatory Authorities, such as WHO BRN, FDA, Health Canada, Swiss Medic, Paul Ehrlich Institute, etc.
Supported by the International Conference of Drug Regulating Authorities (IDRA)
Supported by Canadian Health Services, South African BTS, etc
Support requested from other national and international blood transfusion organizations/services, such as ISBT, EBA, IPFA, ABC, etc.
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3. Essential medicines connects to the basic functions of blood establishments
Quality and Safety for:
Collection
Testing
Processing
Storage
Distribution
of human blood and blood components
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4. Quality management and regulatory oversight
is needed for improvements ....
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5. Additional functions of blood establishments
Patient blood management
Knowledge of the primary process of the client
Sufficient supply of blood
Optimal usage of blood
Client relations
Creating of costumer intimacy
Haemovigilance
Research
Offering excellent services to the customers
Blood is a medicine with special characteristics.
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6. Blood components (whole blood and red cells)
on the WHO Model List of Essential Medicines
A major step forwards !!!
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7. Points to consider ……
……..
Competition
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8. Blood transfusion is participation in a blood and plasma chain:
hospitals
recipients
components
blood
donor
whole
blood
donation
Red cells,
platelets,
plasma
plasma
for
fractionatio-
nation
plasma
derived
medicines
BTCs / blood banks
fractionation
National Regulatory Systems and National Regulatory Authorities
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9. What about blood transfusion organizations ?
Type of blood service organizations
National BTS organizations
Regional BTS organizations
Local BTS organizations / blood transfusion services
Hospital-based blood banks
…..
Objectives:
Serving public interest : physicians and patients
Supply blood products in a market
Competition ?
In most countries, BTSs do not encounter competition
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10. Blood Transfusion Service as a monopolistic operation I
From organizational point of view, BTCs are :
Non-profit
Voluntary non-remunerated donations
Tradition
Best way to serve public interest
Intend to guarantee security, safety of supply, and optimal quality
Fair prices
Self-sufficiency
April 20, 2017 | 10

11. Blood Transfusion Service as a monopolistic operation II
From market point of view : no market mechanism.
Does this work well ?
Are market drivers for the demand met ?
Are the costs under control ?
Are prices disciplined ?
Is the focus laid on clients ? Patients ? Physicians ?
Is the quality of the products always optimal ?
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12. Plasma fractionation area faces competition
Source material (plasma)
Price of plasma
Price of final product
Markets
And also competition on:
Sufficient supply of plasma derived medicines
Donors: Voluntary, non-remunerated versus remunerated/paid; Viral safety; Frequency of donation and effect on donors’ health (IgG level);
Recruitment of donors
Public service and private good
April 20, 2017 | 12

13. General remarks on public interest and market failure I
Guaranteed security of supply
Fair prices
Optimal quality
If the required assumptions do not hold, if it is unable to realize these interests : the market fails
Reasons:
Lack of competition
Information asymmetry and transaction costs
External effects
Public good
April 20, 2017 | 13

14. General remarks on public interest and market failure II
Full competitive equilibrium can be Paroto efficient: No position of a market actor can be improved without worsening the position of another
Market fails if :
- Lack of competition: dominant market position, no incentives for sufficient security of supply, good quality, efficiency and innovation.
Government intervention needed for monopoly regulation.
- Information asymmetry and transaction costs: consumers cannot assess quality properly, so no incentives to offer an optimal price-quality ration. Poor-quality providers may price good-quality providers out of the market.
Government intervention needed otherwise increasing price-quality spiral.
- External effects. Consequence: overproduction or underproduction
- Public good. Non-rivalry and non-exclusiveness.
Government intervention needed
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15. Concerns on competition in blood:
Blood becomes a commodity
Competition may copy the plasma experiences
However:
Growing pressure of commercial companies
Paid donors
Negative impact from this competition for donor recruitment
Commercial blood banks may focus only on bulk products, and will not deliver specialized products such as irradiated cells, red cells with rare blood groups, etc.
Protection of donors’ health and maintaining a safe donor base
Ethically unacceptable
Developments are threatening the current blood structure
April 20, 2017 | 15

16. Blood Transfusion Services in competition I
In USA, competition between not-for-profit blood banks
Competition on donors
Competition on deliveries of components to hospitals
Competition on markets
Market movements in supply (reduction of red cell consumption)
Consequences:
Bankruptcy of blood banks
Merges between blood banks
Quality issues and official warnings from FDA
April 20, 2017 | 16

17. Blood Transfusion Services in competition II
In Europe, competition between not-for-profit and for-profit blood banks
2006 Austria : blood supply shortage resulting from unregulated competition between non-profit and for profit blood service, when a commercial blood service went bankrupt
2007 Germany : for profit company withdrew abruptly from collecting blood and supplying hospitals in Prenziau and Brandenburg.
Only 17% of the paid donor returned to the not paying blood services
Infection risks. Germany Competent Authority closed commercial blood centre due to elevated frequency of infectious disease markers in its donor population
April 20, 2017 | 17

18. Competition : Effects on demand and supply
Represented by the hospitals
Guarantee of safe blood, in-time deliveries, security of supply, setting of quality standard.
May vary unpredictably
Supply : minimum stock of blood must always be readily available
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19. Supply ? Supply of blood too low to meet demand
Red cells: - hemorrhagic shock (bleeding at childbirth or from trauma)
- correction of anaemia (malaria, haemoglobinopaties, such as thalassaemia, sickle cell disease)
IVIG: - patients with PID while new immune modulating indications arrive
Clotting factors: - haemophilia (WFH: 75% of haemophiliacs do not get treatment)
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20. Competition : Effects on quality
Quality of blood components regulated
Blood components standardized
Quality management
GMP in blood establishments
Inspection by authorities
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21. In summary: monopoly versus competition ….
Consider a BTS as a pharmaceutical organization without the aim of profit making and external share holders
Continue with VNRBDs
Work according GMP manufacturing
Implement and work under Quality Management (be up to date : ICH Q10)
Put yourself in the position of your clients
Fulfill the wishes of your clients
Have an optimal price-quality
Consider collection of blood, plasma or other substances of human origin as a service of general economic interest.
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22. Recommendations
Work according the highest standards of efficiency, safety and supply
- security of the society
- transparency
- regulation on quality
- meeting demands
- no exploiting of the donors
- no commercialization
April 20, 2017 | 22