April 19, 2023 | 1

Paul Strengers, MD, FFPMSanquin Blood SupplyAmsterdamThe Netherlandsp.strengers@sanquin.nl

Blood services: monopoly versus competition

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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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Quality and Safety for:• Collection• Testing• Processing• Storage• Distributionof human blood and blood components

Essential medicines connects to the basic functions of blood establishments

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Quality management and regulatory oversight is needed for improvements ....

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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.

Additional functions of blood establishments

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Blood components (whole blood and red cells)Blood components (whole blood and red cells)

on the WHO Model List of Essential Medicineson the WHO Model List of Essential Medicines

A major step forwards !!!A major step forwards !!!

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Points to consider ……

• ……..• ……..• Competition

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Blood transfusion is participation in a blood and plasma chain:

bloodblood donordonor

whole whole bloodblood

donationdonation

Red cells,Red cells,platelets,platelets,plasmaplasma

componentscomponents

recipients

BTCs / blood banksBTCs / blood banks fractionation

hospitals

National Regulatory Systems and National Regulatory Authorities

plasmafor

fractionatio-nation

plasma derived

medicines

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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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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

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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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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

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Public interest:• 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

General remarks on public interest and market failure I

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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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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

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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

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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

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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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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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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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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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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