Manufacturers of Blood Sugar Monitoring Devices and Test Paper

Case:

Key Words:

blood glucose monitors, test paper manufacturers

Reference:

Fair Trade Commission Decision of July 6, 2011 (the 1026th Commissioners' Meeting), Letter Kung Er Tzu No. 1001360676

Industry:

Other medical device and product manufacturer (3329)

Relevant Laws:

Article 19(iii) and Article 24 of the Fair Trade Law

Summary:

1. A report was presented during an FTC affairs meeting of August 26, 2010 on the issue of whether medical sales staff for blood glucose monitoring devices and blood glucose test paper manufacturers in the sale and promotion of blood glucose monitors and blood glucose test paper caused the trading counterparts of competitors to do business with themselves by coercion, inducement, or other improper means, or otherwise violated regulations of the Fair Trade Law. Upon receipt of the report the FTC initiated an ex officio investigation.
2. Findings of the FTC investigation:
   (1) At present there are approximately 13 providers of blood glucose monitors and test paper products on the domestic market, offering 24 device models. Sales channels include medical device chain stores and large chain pharmacies and drug stores.
   (2) At present the three main products sold domestically consist of blood glucose monitoring sets, blood glucose test paper, and trade-ins of new units for old units.
   i. Blood glucose monitoring sets: As blood sugar measuring requires the simultaneous use of a blood sugar monitor and test paper, most blood glucose testers on the market are sold together with free blood glucose test paper. The top three major brands sold in Taiwan are Accu-Chek by Roche Diagnostics, One Touch by Johnson & Johnson, and Optium by Abbot, sold for NT$3,000-4,000 per set, whilst local brands sell for under NT$3,000. In addition, sales prices for a given brand's product differ from pharmacy to pharmacy, varying by several hundred NT dollars.
   ii. Blood glucose test paper: As blood glucose test paper cannot be reused, and the test paper cannot be universally used with different brands and models, consumers ordinarily continue to use the test paper from a given brand. Market competition is fairly intense in Taiwan, where the sales price for blood glucose test paper ranges from NT$650-1200, varying in price by up to NT$200 from one pharmacy to another. Compared to prices in other countries and regions, blood glucose test paper is relatively inexpensive in Taiwan.
   iii. Trade-ins: At present most proprietors offering old for new unit exchanges do not specify the brand of the old unit traded in exchange for a new one in the effort to win over the business of patients from other brands' old units. Trade-in specials range in price from NT$850 to $2,450, and most firms offer related products enabling patients to exchange old units for new blood glucose monitors free of change or for a very low price, lowering the cost of switching brands.
3. Grounds for non-disposition:
   (1) At present the free gifting of monitoring units is generally limited to charity donations for Type 1 diabetes patients or a small number of disadvantaged patients, in which cases patients are not required to purchase blood glucose test paper or exclude free offers from other brands. Accordingly, donation recipients can receive free units from multiple brands and select blood glucose test paper from various brands at regular retail outlets. In addition, the Bureau of National Health Insurance began reimbursing Type 1 diabetes patients for blood glucose test paper from June 1, 2010, enabling patients to autonomously select National Health Plan participating medical institutions or present a prescription to participating pharmacies to receive blood glucose test paper. Consequently, the free gifting of blood glucose monitors to this type of patient does not constitute restriction of competition or damaging fair market competition.
   (2) The free gifting of blood glucose monitors serves merely to reduce the consumption cost of first-time blood glucose monitor purchase or switching to another brand for diabetes patients, permitting patients to freely decide which brand monitor and test paper to use. Further, given the insignificant differences between the blood glucose monitors offered by the major brands, consumers can take advantage of free giveaways or trade-in offers to switch to another brand for a low cost, thus businesses must ultimately differentiate themselves from others through such factors as the accuracy and functionality of blood glucose monitors, and the price of blood glucose test paper in order to compete. In light of the available facts, it is difficult to deem such conduct to violate the terms of Article 19(iii) and Article 24 of the Fair Trade Law.

Summarized by Tseng, Huei-Yi; Supervised by Lin Gin-Lan