Paul Strengers, MD, FFPM Sanquin Blood Supply Amsterdam The Netherlands p.strengers@sanquin.nl

1. Blood services: monopoly versus competition Paul Strengers, MD, FFPM Sanquin Blood Supply Amsterdam The Netherlands p.strengers@sanquin.nl

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.

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

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

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.

6. Blood components (whole blood and red cells) on the WHO Model List of Essential Medicines A major step forwards !!!

7. Points to consider …… • …….. • …….. • Competition

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

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

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

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 ?

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

13. General remarks on public interest and market failure I 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

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

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

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

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

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

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)

20. Competition : Effects on quality • Quality of blood components regulated • Blood components standardized • Quality management • GMP in blood establishments • Inspection by authorities

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.

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