Efficiency of Public Procurement of Medicines in the Philippines Klara Tisocki, Douglas Ball Health Action International

Background  Prices of medicines are high in the Philippines  Out-of pocket expenditures are high,  Stock-outs, shortages of essential medicines common in public clinics  Most medicines are purchased in private outlets  Social Health Insurance (PhilHealth) coverage for medicines cost is limited  Medicines procurement in the public sector  devolved with government decentralization  Limited to centralized procurement for vertical programs e.g. vaccines,  Fragmented procurement of essential medicines at provincial, district and municipal level  Lots of political attention to price/affordability – diverging solutions tested and failed

Objectives To assess efficiency of public procurement of medicines – across various levels of the health system – by looking at procurement prices of basket of essential medicines

Methods WHO/HAI survey methodology: Total of 5 DOH, 6 Provincial, 5 Municipal facilities – Selected List (basket) of 50 medicines Specific ingredient, dosage form and strength Originator brand and lowest-priced generic – Obtain validated procurement prices Review original invoices, payment records to obtain procurement price, quantities – Calculate MEDICINE PRICE RATIO, MPR as an indicator of procurement efficiency MPR = MSH supplier price/ local procurement price

Overall MPR Originator Brand (n= 33) Generic (n= 39) Median MPR * 25 th – 75 th %ile 4.9 – – 5.3 Min MPR0.9 Max MPR Originator brands were obtained at almost 16 times the international procurement price Generics procured at 3 times MSH prices 50% of generics procured between 1.9 and 5.3 times the ref. price Inclusive of PITC, BLOM

MPRs by procurement entity – generics

DOH vs. Provincial vs. Municipal – generic procurement prices

Generic medicines – variation between facilities in a region

Ranitidine 250mg tab/cap generic

Discussion & Conclusions High variability of procurement prices unrelated to volume of procurement, – WHY? incompetence/inefficiency and/or possible corruption ? Public procurement is relatively inefficient and procurement efficiency is affected by level of government Summary MPR for generics = Jordan 1.0 Ghana 1.1 Malaysia 1.5 China 1.7 Indonesia

Recommendations –FINANCING Increase financing of health & reform payment mechanisms –PROCUREMET MECHANISMS: Use more efficient procurement methods Centralise?, pool, revolving funds? –TRANSPARENCY Develop efficient monitoring systems to ensure greater accountability and transparency by local entities (LGU level anti- corruption measures) –CAPACITY DEVELOOPMENT Increase capacity for technical and financial aspects of the medicines procurement processes. –QULITY ASSURANCE Assure quality and improve acceptance of generics FDA – cGMP inspections, bioequivalence, post-marketing surveillance

Acknowledgements Health Action International Global – Marg Ewen – Aiza Morales-Buncag –research assistant, Manila DOH – Atty. Alexander A. Padilla, Dir. Maylene M. Beltran, Dr. Robert Louie P. So, Dr. Dennis Quiambao Governors, Mayors, LGU officials Doctors, pharmacists, nurses, administrators, etc. Reports available:

Thank you Maraming salamat po