Monopolization in Healthcare Could Affect Access to Quality Treatment

Consolidation and the threat of monopolization in healthcare are rising. The pharmaceutical industry has experienced a wave of accelerated consolidation since 2010. In 2019, the industry saw a record-breaking 1,276 pharmaceutical M&A’s, representing a total value surpassing $411 billion. Monopolistic practices within healthcare and pharmaceutical industries not only hurt a healthy economy, but they also ultimately limit patients’ choices when it comes to healthcare options, further eroding trust. 

And it’s not just in healthcare. Big tech companies like Google, Apple and Meta, have been subjected to numerous antitrust laws, most recently Google being sued by the DOJ and eight states over its alleged monopoly on the digital advertising market. Friendly and fair competition, no matter the industry, encourages marketplace diversity and should be encouraged. More companies in a field drive innovation and give consumers the luxury of having options, while monopolization can take away creativity and purpose leaving consumers fearful and less trusting. Healthcare needs to take a lesson from other industries already in the throes of monopolies to prevent a decrease in competition and ultimately, a disaster for patients. 

Monopolistic Practices in Healthcare Have Harmful Side Effects 

While technology has profoundly and positively chipped away at big pain points like affordability in healthcare, an overwhelming majority, 85% of patients surveyed, still say medical costs are a big concern. Higher costs are a prominent side effect of consolidation.

Monopolization leads to absolute power and fixed pricing. Without market competition, healthcare power players have freedom to raise prices of treatments, medications and insurance coverage as they please. Conversely, competition within the healthcare market benefits patients because it helps regulate and contain prices as pharmaceutical and marketing companies compete for sales. 

In a report on the benefits of fair competition, the Federal Trade Commision provided an example of how a pharmaceutical company’s exclusive contracts with their suppliers of a key ingredient prohibited generic drug makers from receiving the same ingredient. Without competition from the generic companies, that pharmaceutical company had free reign to increase prices by 3,000%, meaning a $5 prescription would have cost patients $150. These contracts were challenged and resulted in a $100 million court settlement awarded to the patients who purchased the prescription. 

Common industry practice today allows small groups of large, powerful pharmaceutical manufacturers to drive new drugs through regulatory processes, acting as the gatekeepers to achieve FDA approval. In 2017, only four companies were responsible for 50% of generic pharmaceutical drug production. This is potentially problematic as many of these large production companies have the means and incentive to maintain their market share by only pushing through the pharmaceuticals that will financially benefit them, instead of thinking of the public interest. 

The lesson to be learned here is that, if left unchallenged, large companies can and, in some cases will, exploit their power to monopolize healthcare solutions. This not only hurts business but puts people’s lives in jeopardy. 

Monopolization limits patients’ options and breeds meager care

In addition to cost containment, a diverse market provides patients with more options for quality care. During the past 20 years, hospitals have consolidated and merged at an increasingly rapid rate, especially since 2010. This rapid merging could drastically reduce a consumer’s access to multiple pricing options while giving companies the opportunity to negatively affect standards of care. 

A study on hospital market concentration found between 2007 and 2017, one single hospital system was serving 19% of the market — 11.2 million Americans. Highly concentrated markets are typically found in low-income areas and do not provide a sufficient supply of qualified physicians for the population they serve. With no other options, these patients must use the care that is accessible to them, regardless of its quality. The capabilities presented by online medical solutions can help combat some of these concerns, such as providing more options to patients for specialist consultations that may not be available locally. It is important to exercise caution with the concentration of the telemedicine as it could lead to additional care issues.  

Patient care will only continue to depreciate if there is no enforcement of basic checks and balances within the healthcare industry. Monopoly hampers a healthy environment that gives patients a choice and control of their care.

Consolidation squanders healthcare innovation

As is the case with most industries, the healthcare industry is propelled by innovation. The world relies on new studies, treatments, drugs and solutions — without them, we could not move forward or execute the latest development. Competition is the factor that drives innovation. Companies are pushed to come up with better, more efficient solutions than their counterparts, thus producing improved practices, products and treatments. Monopolization negates that innovation and leaves the industry with either dated and uninspired solutions or an influx of hyper-specific treatments. 

The current wave of consolidation in healthcare has led to an increase of “orphan drug” production as many of the industry’s acquisitions are of smaller start-ups that specialize in the research of rare diseases. Orphan drugs are classified as those that treat diseases affecting less than 200,000 people. While this research is important, it overshadows the research and innovations needed for more common health concerns that plague the larger population such as diabetes, reproductive health, heart disease and more. In 1998, only 10% of all new drugs produced were classified as “orphan drugs”. In 2018 that number jumped up to 60%. The healthcare industry must address monopolization in order for innovation and technological advances to improve healthcare outcomes for the general population. 

Consolidation is not easy to reverse. The industry would be hard-pressed to find an institution that will simply break up and reform multiple entities. The solution to the rapid market concentration is through companies joining together not in business, but in mission, to voice their concerns surrounding competition. As companies continue to speak out against market concentration, regulatory bodies must acknowledge their concerns and act in favor of the larger good of the industry. 

While the FTC works against anticompetitive behavior and enforces antitrust law compliance, there is still a great deal of work to be done. Healthcare professionals can contact lawmakers and offer an active voice to the monopolization conversation and the effects on the industry. A failure to do so could spell disaster for companies within the industry and ultimately damage the quality and level of care provided to patients.

About Harshit Jain, MD

Harshit Jain  MD is the Founder and Global CEO of Doceree, the First Global Network of Physician-only Platforms for Programmatic Marketing. With Doceree, he is aiming to address the acute problem of rising cost of healthcare by bringing in efficiency and effectiveness in marketing to Physicians by pharma brands on digital platforms with methodical use of data and creativity. 

A healthcare innovator, he is driving health transformation across the globe, delivering life changing, creative and sustainable ideas. Recognized as Elite 2020 Disrupter Award by premier global PM360 Magazine for his venture, Dr Harshit has addressed some of the biggest health challenges – Immunization, Vitamin D deficiency, Diabetes by creatively and innovatively using data. In his over 13 years of professional journey, he weaved together his domain expertise of medicine and his marketing acumen to come up with out-of-the box ideas and campaigns in the healthcare space

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