We are living through a complex economic period: the effects of the pandemic, the increase in prices of raw materials and energy and the cost of transport, coupled with the higher demand due to the economic recovery in the USA and China, have resulted in sudden economic changes that have had a major impact for manufacturers of medical aids.
The effects of these increases and developments will be felt between the last quarter of this year and early 2022 and will lead to major changes in the costs and availability of materials, such as to cause both a reduction in production capacity and a two-figure rise in the costs of finished products.
What are the consequences for the end users of these aids? How do we address this extraordinary situation? We asked our regulatory and public affairs officer, Alessandro Berti, who answered in his position as the President of the Medical Aids Association of Confindustria Medical Devices.
Hello Alessandro. Could you explain precisely what the current market conditions are for medical aid manufacturers?
Medical aid manufacturers are facing extraordinary difficulties. The closure of raw material extraction plants at the start of 2020 and the sharp rise in demand caused by the post-Covid economic recovery have made it difficult to find the materials and led to a huge increase in costs.
In addition, the health crisis of 2020 has also led to an imbalance in transfers of goods to the West and to the Far East. The direct consequence is an absence of empty containers for shipments, which has had an incredible impact on costs and made it difficult to ship the components and semi-finished products needed for production.
What is the impact of all this on finished products?
The study centre of Confindustria Medical Devices submitted a questionnaire to over 300 member companies, in which it asked them to quantify and describe the impact of the increased cost of the components and products needed for production (+40% on average) and transport for imports (an incredible +189%). An average increase in the cost of finished products of a full 36% can therefore be estimated.
How is it possible to reconcile this new market scenario with competitive bidding procedures?
It isn’t! Competitive bidding procedures are based on tendering that does not take this scenario into account and it is now plausible to assume that there will be delays in the contracts that are due to be awarded, specifically in Lazio and Lombardy. Business people are asking for the prices to be revised, contemplating an increase of over 30%, as envisaged by Art. 106 of Legislative Decree no. 50/2016. It is also necessary both to review the price thresholds and change the quality assessment criteria for medical aids, which are currently so basic that the price is the only key element.
What is the impact on our national health service?
There is a risk that supplies of aids and other devices made from the materials being affected the most by this crisis will stop within a matter of weeks. The price rises and the difficulties in obtaining raw materials and semi-finished products have disrupted the budgets and schedules of many manufactures and, even though they have participated in competitive bidding procedures, they are currently unable to respond to the demand for delivery of supplies.
At regional level, certain local healthcare authorities are meeting us halfway, as is the case with Liguria, but we need a major and prompt intervention at national level.
What are the consequences for people who need walkers?
In Italy, there are around 3.1 million people with physical and mental disabilities and there is currently a very real risk of being unable to guarantee delivery of an appropriate aid to someone who needs it over the coming months. This is why, here at the Medical Aids Association, we are asking for prompt and tangible answers, to protect people who have to live every day with a motor disability.