Improving Rational Use through Efficient Procurement: Review of the Existing Evidence

Libby Levison, Richard Laing, Brenda Waning, Warren Kaplan Boston University School of Public Health, WHO/EDM Review paper for RPM-Plus

Study goals Review literature on pharmaceutical procurement Summarize evidence on procurement methods Identify factors that impact procurement performance Identify health systems which are “best method” examples Identify future research priorities

Methods Medline, EMBASE & International Pharmaceutical Abstracts Articles published 1995 - 2004 Internet: Discussion groups: E-Drug, IP-Health Web-published papers from NGOs Comparison with other disciplines: General procurement & supply chain management at Business School Library NGOs: WHO, UNICEF, The World Bank, Management Sciences for Health, John Snow, Inc., etc

Outline Participants & system structure Procurement process Planning: coordination & resources Recent developments Research priorities Quantity of available literature indicated from + to +++

1. Participants & structure Public sector + Private non-profit + Private for-profit + Public-private partnerships ++ System structure Centralized/decentralized +++ Regional/pooled procurement +++ Pluses indicate roughly the volume of publications on this topic

Procurement process Selection ++ Quantification + Tender format + Pre-qualification (+)+ Tender quantities + Market intelligence + Analyzing costs ++ Many of these are covered by the same 3 or 4 papers…

Procurement process Payment + Contract specification (+) Adjudication Reception & quality control + Monitoring procurement + Continued quality monitoring Contract: excellent reference publication, not case study: World Bank contractual documents

Example: Van der Veen & Fransen Studied final cost variations for different tendering methods of STD drugs Prices of generics 3-6 times higher for ministries doing national tendering than for international procurement agencies

Planning and resources Procurement planning + Human resources Access to adequate resources + Evidence for HR in other procurement lit, not in pharm procurement

Lessons learned Scarcity of published evidence Little evidence for well-established procedures Need for easily accessible case studies Need metric to assess and compare procurement systems

How to improve rational use: Decentralization sub-optimal for procurement Base selection on EML Reduce work and prices with pre-qualification and restricted tender Implement QC at reception: 0.39-0.53% of procurement cost Access to market data lowers costs Strengthen Purchaser terms in contracts Improve communication in system Provide training, resources to procurement Decentalization: see MSH Philippines data Selection: see DSPRUD QC: DSPRUD and Bangladesh Market data: Includes Internet Contracts: no info Communication: between parties.

Future studies: Over 60 study outlines listed in paper Focus on gathering evidence to inform implementation choices Each proposed study contains: Problem description Previous studies Required knowledge Outline of study with suggested variables New developments provide new options for who procures, what is procured, and processes available to carry out procurement

Study: Tendering Type Cross-sectional comparative Population Proc offices: public, private, NGO Sample size 20-25 Variables: Cost differences among tender formats Impact tender format on efficiency? On cost? Relationship between tendering method and order delays Goal Understand how tender process determines price variations

Study: Taxes Type Cross-sectional comparative Population All countries Sample size As many as possible Variables: What taxes are levied? What form of taxes (VAT, GST) Exemptions: by product, by purchaser Cost of tax and exemption system? Tax system history Goal Gather knowledge of tax systems to inform policy decisions on EMs

Conclusion: goals achieved Limited literature on pharmaceutical procurement Summarized documented procurement methods in practice Identified the few factors that impact procurement performance Found <10 health systems which are “best method” examples Suggested future research priorities