Medicine Procurement Prices and Processes in the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA)
(2011; 66 pages)

Abstract

In 2010, UNRWA spent about US$ 18.31 million on medicines. Of this, US$ 15.4 million came from their General Fund. With budget constraints and increasing demand (primarily medicines to treat diabetes and cardiovascular disease), there was a need to assess the efficiency of the medicine procurement process, in particular the procurement price of medicines.

Of the 143 medicines that UNRWA procured in 2010 from the General Fund, 80 were initially selected for price comparisons (equating approximately to the top 80 medicines by expenditure). Of these, 77 were purchased centrally (by tender). Their prices were compared with median supplier prices in Management Sciences for Health’s (MSH) International Drug Price Indicator Guide, prices offered by IDA Foundation, and 2010 tender prices for Jordan’s Joint Procurement Department (JPD) and the Gulf Cooperation Council (GCC).

Overall, UNRWA prices were equal to or less than MSH, JPD, GCC and IDA (blister packs), and 12% more than IDA prices (bulk packs). Based on the quantities purchased and price of each medicine, overall expenditure would increase if UNRWA purchased at IDA, JPD or GCC prices. However, if a limited list of 9 medicines could be purchased at comparator prices, savings of about US$ 1.6 million might be achieved (about 10% of General Fund medicine expenditure). There are a few cases where companies are charging UNRWA a higher price despite larger quantities procured than they charge JPD or GCC.

Across all medicines procured locally and centrally, Jordan field and Syria field are paying 7% and 20% less respectively when procuring locally. Overall Lebanon, West Bank and Gaza are paying 83% to 128% more than the central tender price when procuring locally. However, in all cases except Syria few medicines were purchased locally, and some fields, in particular Gaza and West Bank fields are limited in the number of suppliers they can purchase from.

Two major issues were identified when reviewing the procurement process. The first is the lack of clear criteria when prequalifying suppliers and limited product quality testing which pose a potential risk that UNRWA could purchase and distribute substandard products. That said, quality tests on products supplied to Jordan field have not detected problems for many years. The second is that while the number of pre-qualified suppliers of medicines has increased over the last few years, currently numbering 100 companies, expansion would be beneficial especially from outside the region where prices may be more competitive.

Other procurement issues include fields wanting to procure locally due to the tardiness of the tender process, quantification based on consumption rather than need, and a lack of transparency on awarded tenders. The current IT system is not efficient. Not all health centers are computerized and where they do operate, there is no integration with the Central Pharmacy and headquarters. It appears that demand side issues are not given as much focus as supply issues. UNRWA pharmacists appear to focus predominantly on inventory management. There is a need for pharmacists to work more with patients and health care providers to improve the use of medicines.

Key recommendations include exploring options to reduce the prices for a limited list of medicines, and annual monitoring of the prices of the top 20 medicines by expenditure. A priority should be the development of minimum regulatory standards for prequalifying suppliers and product quality assurance. Consideration should be given to identifying suppliers particularly from outside the region who are supplying products registered with competent regulatory authorities and are likely to have competitive prices. Efficiencies could be gained with a more user-friendly and integrated computer system, and pharmacists involved in medicine use issues.

 
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