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CCC contributes to the Second Working Group Meeting of UNCTAD/SELA on Trade and Competition in Lima, Peru, 18-19 June, 2012

THE HEALTH SECTOR AND COMPETITION IN CARICOM

The health sector in CARICOM is one in which there has been very limited research or information on competitive constraints that may exist. The health sector in CARICOM can be characterised as being dominated or monopolised by the government sector in the majority of Member States.

In most of the smaller Member States of CARICOM there may exist only one national hospital owned and operated by the government. Private hospitals or fee for service hospitals operate in most of the larger countries of CARICOM. Private sector involvement or interaction is in the provision of ancillary or specialist services, provision of private health insurance, medical practitioners, pharmaceutical companies, and drug distribution firms. A vibrant and successful health sector is greatly dependent on the successful interactions of all stakeholders whether they are patients, medical professional, private sector, or governments.

The world in which this Second Working Group Meeting of UNCTAD/SELA on Trade and Competition meets is one where the health sector faces severe financial, institutional, legislative, administrative and human resource constraints in most Member States. These constraints cannot all be ameliorated by enforcement of an effective competition policy and law framework but it can have a valuable impact in reducing costs, delivering greater benefits, and increasing quality and type of service to customers. This would accord with some of the major aims of health sector reforms which sought to drive down costs while delivering improved quality and services especially to the less fortunate in our populations.

In the CARICOM there have been successful measures to reduce costs primarily with respect to specific diseases and healthcare challenges. At the regional level there is the Pan Caribbean Partnership against HIV and AIDS (PANCAP). In the organisation of Eastern Caribbean States (OECS) sub-region there is the Pharmaceutical Procurement System (PPS) utilised by all member states of that sub-regional group to facilitate group purchases. Nationally other Member States such as Barbados utilise a National Drug Service to coordinate procurement of drugs on behalf of the Government.

CARICOM continues its work on the creation of a fully integrated regional market for the movement of labour, capital, goods and services. In this expanded economic space national firms can expand across borders to create regional companies with global reach. Expansion and consolidation has been seen in the financial services sector. There have been mergers or acquisitions of indigenous private insurance companies in the region. Two examples of this include Sagicor Life acquiring the assets of Life of Jamaica, and Sagicor Life Jamaica acquiring Blue Cross Jamaica in November 2008.

The acquisition by Sagicor Life Jamaica acquisition of Blue Cross Jamaica in particular consolidated the market for the provision of private health insurance products in Jamaica. Sagicor Life Jamaica was the market share leader and Blue Cross Jamaica had the second largest market share in Jamaica. The transaction resulted in Sagicor Life Jamaica consolidating its dominant position with more than 90 per cent market share. This transaction due to the lack of merger provisions in the Jamaica Fair Competition Act did not require notification to the competition authorities prior to completion for merger assessment of the competitive impacts on the market for private health insurance. Competition in this sector has been further constrained by this transaction. There is a need to monitor activity in this sector to ensure there is no abuse of dominance.

There are aspects of the provisions of the CARIFORUM-EU Economic Partnership Agreement that have strengthened the requirements for enforcement of Intellectual Property Rights (IPR). Market studies and competition cases in the EU and USA suggest that pharmaceutical companies can abuse or seek to utilise the administrative arrangements for enforcement of IPR to delay the introduction of generic versions of drugs whose patents are about to expire.

In Barbados there has been some work done on the issue of fee setting by professionals including those in the medical professions. This is also an area that has been the subject of market studies in the EU and the USA. The setting of fees for services can raise the costs incurred by patients, private insurance companies and governments that pay for the services of specialists or sub-contract to service providers.

The Commission considers efficient and transparent government procurement systems as a key component of ensuring competition and value for money in the provision of “public goods and services” to the less fortunate. Competition complaints/cases in the EU and USA have clearly shown the higher costs incurred by governments, businesses and ultimately consumers when instances of bid-rigging and collusion are uncovered among firms that submitted what were originally believed to be competing bids.

Given the foregoing, the Commission has identified areas for future research and monitoring by LAC countries in the health sector that can include but not be limited to:

1. Intellectual Property (IP) frameworks - provisions in most new FTAs strengthen national/regional IP frameworks but could create barriers or slow the introduction of generic drugs into national/regional market
2. Fee setting by medical professionals
3. Information/market sharing among stakeholders in health sectors i.e. Pharmaceutical companies, drug distribution firms, insurance companies
4. Government procurement systems for pharmaceutical and medical equipment
5. Market consolidation among providers of private health insurance

The health sector is one where the benefits from the enforcement of an effective competition policy and law framework in the administration and management of such a critical sector can bring tremendous benefits to governments and the general public.