During the pandemic, health systems have had to react quickly to be able to respond to the multiple challenges that they have had to face. One of them was the supply of medicines in times of shortage and the disruptions in supply chains at a global level. Purchasing systems had to adapt to a context of crisis.
Now that the situation related to the pandemic is somewhat more controlled – but with an ongoing war – it is worth reflecting on how to improve the system of public purchases of medicines. This discussion is especially important if we consider that the acquisition of medicines represents between 17% and 25% of the health budgets of the OECD member countries and between 35% and 45% of the middle-income countries.
This issue has recently been analyzed by the European Commission in the report “Application and best practices of national public procurement policies in the internal market”. The document confirms that there is a preference of the public system to award the lowest price as it is considered “simpler and more objective”, and that the quality-price criterion “is applied in few cases”.
However, the evidence has shown that the notion of value of a certain health technology cannot be limited solely to price, and it is essential to also consider other variables as relevant as, for example, the sustainability of supply. A specific case: in the European Union, 83% of generic medicines that present shortages are those whose prices for a daily therapy are less than €0.10 (ten euro cents).
The lack of sustainability of the public drug procurement system is further exacerbated under single award models (known as “winner takes all”), as opposed to those in which multiple bidders are awarded. In the latter case, a better balance between price and supply predictability can be achieved, avoiding potential shortages. This is expressly included in the new “Pharmaceutical Strategy for Europe” of the European Commission, which calls for the design of intelligent and innovative contracting procedures, which seek, among others, punctual delivery, security and continuity of supply.
In Latin America, this issue has also been the subject of analysis and discussion. A group of study centers from Argentina, Brazil, Chile, Colombia and Mexico coordinated by the Geneva Network -an international research and public policy promotion organization on innovation, trade and development issues- published a document with recommendations so that Latin American countries can maximize the value of public spending on the purchase of medicines.
The recommendations aim to privilege public procurement models that consider the value of medicines throughout their life cycle, instead of focusing solely on their price. While price-based public procurement systems may achieve discounts and save financial resources in the short term, in the long term they may not be in the best interest of patients and may even cost more, given the tendency to concentrate supply and weaken the certainty or predictability of supply.
The principles of the Geneva Network also emphasize the importance of diversifying the offer, warning about the deficiencies of the single award model. They also point to the importance of transparency, predictability, national treatment (non-discrimination), as relevant factors to optimize the result of public purchases of medicines.
For its part, the Inter-American Development Bank (IDB) has placed emphasis on clearly defining the objectives that are intended to be achieved with public procurement systems, such as the quality of medicines, improving their access, the rationality of their use, as well as to regularly monitor compliance with the purchasing system, both from a qualitative and quantitative point of view.
The different international recommendations on this matter are quite cross-cutting and there seems to be a certain consensus among the experts on how to advance towards the construction of a public procurement model that is effective in the use of resources, that guarantees the sustainability of the system and that puts the patient in the center, improving health levels. This, in turn, has a relevant social and economic impact. However, when looking at the different systems that exist, we see that they deviate, to a greater or lesser extent, from the aforementioned recommendations.
This is explained, in important part, by the fact that a more efficient public drug procurement system leads to a long-term strategic view, while political cycles encourage short-term solutions, which tend to be incompatible with the above.
Political will is required from governments to move towards a change of approach in this matter. The traditional mechanisms for public contracting that focus exclusively on the price of medicines, and not on their value, will be insufficient to face the new challenges that are coming in health in our region. The population in Latin America lives longer, and we are going to see a significant increase in chronic diseases, such as cardiovascular diseases and also cancer.
The challenge for governments will then be to obtain more value from health spending. A change in the public procurement model could undoubtedly contribute to better coping with this challenge, making the system more efficient, more sustainable and more healthy, always putting the patient and their well-being at the center.
*The author is an expert in public health policies, director of the Chilean Association of Health Law and has been an academic at various Chilean universities on issues related to health systems.
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