FAS Russia suggests to optimize the medical equipment market

On 26 November 2018, the working group on Competition and Regulation of OECD Competition Committee held a Round Table on “Developing State-Financed Healthcare Market”.

The Organisation for Economic Co-operation and Development (OECD) is an intergovernmental economic organisation with 36 member countries created to promote policies that will improve the economic and social well-being of people around the world.

Andrey Tsyganov, Deputy Head of The Federal Antimonopoly Service of Russia (FAS Russia) discussed medical equipment circulation at OECD Competition Committee. He reported that Russian market of medical products and related markets are highly concentrated due to the specifics of participants conduct as well as shortcomings of systemic legal regulation.

Andrey Tsyganov, Deputy Head of FAS Russia, stated:

“Modern medical equipment is not simply products form metal and plastic, it is a sophisticated software-hardware complex, a combination of “hardware” and “software”, working with which requires huge volume of specialized knowledge and information. The market of maintenance and repair of medical products remains relatively closed event for economic entities that are licensed for market of such operations, since suppliers of medical products do not provide full required information, software, keywords and passwords not only for third-party contractors to perform the necessary scheduled maintenance and repair, but also to buyers – medical organizations that own the relevant medical products. Thus, the owners depend on suppliers, who form prices at their discretion, determine the work timelines, and executors of maintenance and repair works. Such a policy of manufacturers and suppliers is nothing but artificial market monopolization. It can lead to decreasing the quality of services since allocating exclusive rights to any service company by no means always means, that it is the best company.”

FAS Russia suggests to formalize the obligation of medical products suppliers for providing the information (keys, passwords, etc.) necessary to maintain and repair a medical product. Thus ensuring the rights of the facility owner to properly own, use and dispose of its property (medical products) and choose suppliers of services for equipment assembly, tuning-up, repair and maintenance. To achieve the necessary servicing standards and minimize possible adverse consequences for patients and medical facilities, the antimonopoly authority proposes to solve the issues of access to the maintenance market using self-regulation tools.

“We believe that in transition to the self-regulation system, one of the functions of self-regulated organizations involved in service equipment of medical products will become control over observance of in-house norms and rules by the participants. The rules adopted by self-regulated organizations must be consistent with regard to economic entities, with the same set of requirements for servicing each type of medical products and serious liability measures. The risks of financial penalties coupled with reputational risks must become efficient tools for preventing possible violations of contractual obligations, in-house rules and regulatory norms set by the state, as well as an actual danger to be included in the “black risks” of unfair suppliers continue being an important deterring factor”, said Andrey Tsyganov.