home
about the project
Medical news
For authors
Licensed books on medicine
<< Previous Next >>

Market power in healthcare

Like any branch of the social sphere, healthcare is

under regulatory state influence, which somewhat distorts the manifestation of market laws in the process of functioning of enterprises. The need for state regulation of market relations in healthcare is determined by the fact that the health of the nation is one of the main indicators of the level of socio-economic development of the country and its important strategic resource. State regulation of market processes in the industry occurs through the development of tax, pricing and investment policies, as well as targeted regional programs for socio-economic development (in the Russian Federation - Territorial programs of state guarantees for the provision of free medical care to the population of the subject of the Russian Federation; in England - The Patient? s Charter; in the USA - Medicait and Medicare).

At the same time, healthcare, as a sector of a market economy, proceeds from the general tasks of business and aims to maximize profits. Most clearly, market mechanisms influence the development of two sub-sectors: the pharmaceutical and medical industries.

The main sources of market power in healthcare are administrative barriers: licenses and patents. Entry into the industry is limited by the state by issuing licenses and patents for the invention. In foreign practice, patent control played a significant role in the formation of such corporations as the JOSTRA concern - an innovator in perfusion technology, SHIMADZU - X-ray equipment, computer tomographs, and angiographic units. In modern Russian practice, using this mechanism, the circle of manufacturers of individual medical devices (prostheses of vessels and heart valves, complex metal structures for osteosynthesis, etc.) is also limited.

An important mechanism of state regulation of the turnover of medicines and medical equipment, which serves as a source of increasing the market power of Russian manufacturers in the domestic market, are customs restrictions and direct import bans.

Market power in the pharmaceutical and medical industries depends on the following factors:

1. Cross elasticity of demand. For example, the demand for a drug with the international non-proprietary name “Diclofenac” will be different, depending on the price offer of manufacturers, which in the State Register of Medicines alone number more than fifty (taking into account the dosage forms of the drug) (Table 4).

The presented product is replaceable, and the demand for it is elastic, therefore, an attempt by an individual producer to increase the price will lead to a decrease in demand for its products.
That is, in this example, manufacturing companies practically do not have market power.

2. The number of firms in the market. Currently the bulk

domestic medical products (about 90%) are produced at 168 specialized (base) enterprises and organizations. They produce about 2,500 kinds of medicines and medical equipment and about 7,000 kinds of medical devices. The industry employs about 91 thousand people, including 66 thousand people at the pharmaceutical industry and 25 thousand people - medical equipment.

Table 4 -

brand name options and drug manufacturers



(on the example of INN "Diclofenac")

The regulatory impact of the state leads to a rather high degree of monopolization of the domestic pharmaceutical market (excluding imported analogues). Table 5 shows the information for 2004: 10 leading domestic manufacturers hold 84.7% of sales in the market of Russian finished dosage forms.

3. The behavior of firms in the market. Since getting high income

it is very attractive for any company, therefore the behavior of firms in the market, their price policy is regulated by the state with the help of antitrust laws, the establishment of maximum allowable trade allowances, and the regulation of the procurement of goods for state needs.

Marginal retail and wholesale trade allowances are set as a percentage of the price of the manufacturer by the administrative document of the executive branch of the Russian Federation. The restriction applies to drugs and medical devices purchased from the budget and compulsory medical insurance.

All purchases of goods, works and services worth over 2,000 minimum wages are carried out exclusively on the basis of state or municipal contracts (Article 71. BC RF). The conclusion of government contracts involves a competitive procurement process.

Table 5 -

drug manufacturers rating in 2004

*

<< Previous Next >>
= Skip to textbook content =

Market power in healthcare

  1. Sources and causes of market power. Measuring Market Power
    Sources and causes of market power. Market measurement
  2. Sources and causes of market power
    The market structure has many facets, which is reflected in its various indicators. To determine the market structure (the level of monopoly power, the freedom of entry of the company into the industry, its ability to influence the price) it is important to determine the value of the concentration of sellers in the market. With high barriers to entry into the industry, the concentration of sellers can be realized in monopoly power - the ability to establish
  3. Measuring Market Power
    The approach to the determination of market power indicators is based on a comparison of real markets with the market of perfect competition. As far as the market approaches the ideal of free competition, one can judge by the behavior of firms in terms of price and cost: the more the price set by the firm deviates from marginal cost, the more market power the firm has and the more the market
  4. Powers of federal bodies of state power, bodies of state power of subjects of the Russian Federation and local authorities in the field of health
    Powers of federal bodies of state power, bodies of state power of subjects of the Russian Federation and local authorities in the field of protection
  5. Ministry of Health and Social Development of the Russian Federation

    Department of Health Care and Resort Development

    Central Research Institute of Health Organization and Informatization. Resources and activities of healthcare institutions, 2009
    Key health indicators. Russian Federation. Network and personnel of medical organizations. Russian Federation. The distribution of medical organizations by subordination. Russian Federation. Medical staff. District physicians. District pediatricians. General practitioners. Doctors and paramedical ambulance personnel. Nursing staff.
  6. Market Orientation (Trading)
    The market orientation described by E. Fromm is taking shape in our country right before our eyes, its arrival is experienced as the emergence of new requirements for your private and professional life. There is a feeling that instead of fulfilling one’s life one needs to prove its feasibility and feasibility for other people, that is, show it so that it is in demand, that it is needed and
  7. Health Effectiveness. Determining Health Effectiveness
    The concept of the effectiveness of medical care should not be identified with the general economic category of effectiveness, with the corresponding indicators in the field of material production. In health care, even when applying the most skilled labor and using modern medical equipment, there may be a “zero” or even “negative” result. Performance indicators
  8. Concept, structure, economic boundaries of healthcare. The place of healthcare in the national economy.
    Concept, structure, economic boundaries of healthcare. Place of healthcare in the folk
  9. Lecture. Health Effectiveness. Determining Health Effectiveness, 2011
    In the lecture, the concept of health care efficiency is given, various types of health care performance indicators and their calculation are considered, much attention is paid to the health care cost-effectiveness indicator and its features in
  10. Secret power of tonsils
    When asked about the secrets of craftsmanship, the great Italian sculptor Michelangelo Buonarroti answered with the words that ascribe to his ancient Greek colleague in the craft Praxiteles: "To sculpt a perfect statue, you need to cut off all that is superfluous." Until recently, this was exactly what was done with the palatine tonsils, which caused a lot of concern to doctors and patients due to frequent inflammation. These loose lumps
  11. Article 14. Powers of federal bodies of state power in the field of health protection
    1. The powers of federal bodies of state power in the field of health protection include: 1) pursuing a unified state policy in the field of health protection; 2) protection of human and civil rights and freedoms in the field of health protection; 3) management of federal state property used in the field of health care; 4) organization of the sanitary protection system of the territory
  12. Lesson 12 Topic: DEVELOPMENT OF HYGIENE, SOCIAL HYGIENE AND HEALTH ORGANIZATION IN ALTAI KRAI. FORMATION OF DOMESTIC MEDICINE AND HEALTH IN THE SOVIET PERIOD. DEVELOPMENT OF THEORETICAL AND CLINICAL DISCIPLINES
    Goals and objectives: 1. To acquaint students with the development and establishment of healthcare in the Soviet period. 2. Find out the main directions of preventive medicine. 3. To acquaint students of the medical and preventive faculty with the creation of the republic’s sanitary authorities. 4. Acquaintance of students with the history of the development of hygiene in the region. The development of social hygiene in Altai
  13. WAS THE PATRIARCHAT PAST? SPECIFIC AUTHORITIES OF THE “WEAKER”
    In different societies and social strata, the ideas about what it means to be a man and a woman, about what roles should be played by representatives of different sexes, differ quite significantly. But, despite this, always and everywhere a woman is the one who gives birth to children, and the man is the one who fertilizes her. However, due to the development of new reproductive technologies, these foundations for gender differences
Medical portal "MedguideBook" © 2014-2019
info@medicine-guidebook.com