Expenditure on healthcare products and services accounted for almost 10% of GDP in 2024 in the OECD, with increases of about one-third in the last ten years in some OECD countries (OECD, 2025[1]).1 Moreover, one out of nine jobs across the OECD is in health or social care (OECD, 2025[1]).2 For households, OECD data show that healthcare goods and services represented 3.2% of their total spending in 2023 (OECD, 2025[1]).3 All these figures are projected to increase further,4 driven by factors such as an aging population.
Beyond the economic importance of the sector, access to affordable healthcare is necessary for quality of life and society’s well-being, as well as to enable individuals to lead a productive life. However, the characteristics of the sector make it prone to market failures, for example information asymmetries and externalities, which make the outcome produced by markets alone not optimal. In particular, patients do not have information on the quality of the service provided by doctors or hospitals when they select a service provider. In fact, due to the complex and specialised nature of the service, they are not able to assess quality even after they have been provided a service (“credence” good) and they cannot assess whether prescribed treatments are necessary. Moreover, there are benefits to society from a healthy population, but individuals are unlikely to take these broader benefits into consideration when they choose the quantity and quality of service to consume, for instance with respect to vaccination or prevention.
Due to market failures, and to promote affordable access to healthcare, governments intervene in the market by providing, funding and regulating services. The government’s role is substantial in most health systems, and healthcare makes up 15% of government spending in the OECD (OECD, 2025[1]).5 In addition to providing services and funding, governments shape healthcare markets through “the application of minimum regulatory standards, and the careful use of choice and competition” (OECD, 2018[2]). As a result, markets in different countries may look significantly different, depending on the government’s health policies and the extent and nature of government intervention.
There are several reasons for focussing on the sector. Its importance in social and economic terms and the rising expenditure in healthcare for households and governments were already mentioned above. Given limited government budgets, competition can help deliver services more efficiently and make the best use of scarce resources. Indeed, pro-competitive reforms in OECD countries have been introduced to help control costs and incentivise efficiency (OECD, 2012[3]), while continuing to promote quality. Another reason for a discussion of healthcare regulation is that, given the serious market failures in the sector, government regulation is not temporary but is a long-term phenomenon (OECD, 2018[2]). For this reason, it is especially important that it is proportionate, does not restrict competition more than necessary, and indeed works hand in hand with competition to help spur efficiency and incentivise quality, as any positive changes to regulation will have long-term benefits. Finally, health systems vary significantly across countries and there is no altogether ‘best’ system among the available models (OECD/The Health Foundation, 2025[4]). Given this, the aim of this policy paper is not to propose one specific system or to question any of them but to suggest that small changes improving policy in any system can deliver better services to society.
Given the specificities of the sector, it is important to clarify that competition is not a synonym of entry by private suppliers or by financial investors, even though in some cases there may be merit in both. Moreover, competition is introduced in the context of a detailed regulatory framework that promotes affordable access to good-quality healthcare.
The topic of this background paper is related to several roundtables held by the OECD Competition Committee and the Global Forum on Competition (GFC). Most recently, the GFC discussed “Beyond price in healthcare markets: Access, quality and equity (OECD, 2025[5]) and “Risks across the pharmaceutical value chain” (OECD, 2025[6]). Working Party No. 2 on Competition and Regulation (WP2) held a roundtable on “Designing publicly funded health markets” (OECD, 2018[2]) and one on “Competition in hospital services” (OECD, 2012[3]).
More generally, this topic is related to the OECD Competition Assessment Recommendation [OECD/LEG/0455] and Toolkit (OECD, 2019[7]), which provides a methodology to identify and review regulations that unnecessarily restrict competition, and to develop alternatives that still achieve the policymakers’ objective.6
While the earlier WP2 work focussed on policy choices to inject competition into health markets, this policy paper and session will take as a given that some market-based mechanisms have been introduced in the healthcare system and investigate regulatory barriers that unnecessarily constrain competition in the market. It will provide evidence, when available, to support competition authorities’ advocacy. Given the very wide variation in healthcare systems, some regulatory barriers may be specific to a certain system and conclusions may therefore not be generally applicable. Nonetheless these case studies aim to guide the reader into how a competition lens was applied to a healthcare regulatory barrier and to suggest potential barriers for competition authorities to assess.
The remainder of the paper is organised as follows. Section 2 provides some context about the sector, reviews the main characteristics of demand and supply, and discusses the evidence on the impact of competition in healthcare, thus motivating pro-competitive regulation in the sector. Section 3 summarises the OECD methodology for identifying and reviewing regulatory barriers to competition and suggests areas where competition authorities could advocate for pro-competitive regulation. Section 4 concludes.