UNITED STATES OF AMERICA

Medicare, created in 1965, with open affiliation criteria for persons over 65, has a single benefit plan that is free, or a variable plan for which a premium is paid. There are three plans in Medicare: A, B and C (or Choice plan). Each one implies greater care, as B recognizes some prescription medicines, but A does not. A fee must be paid for inclusion in one of the prescription plans. Part A is free to all those eligible. Those who are not eligible may buy it. Part B is voluntary and requires the payment of a premium. Due to the fact that the premium is mostly paid by the government, more than 95% of those over 65 get part B. Plan C is new and not much is yet known about it. However, another system, Medigap, has recently been created to cover expenses not covered by Medicare.

Medicare includes medications in hospitals and those not self-administrable. Plan B recognizes some prescription-only medicines, while A does not. Prescriptions may be written with brand names, which is the usual practice, and with discounts on the public sale price from 25% to 50%, regulated by government authority.

In general, neither the provider nor the insurer is involved in the manner in which the drug reaches the insured. The insured person goes to any commercial pharmacy that accepts his type of insurance and makes the purchase, paying the deductible part if it is the first time during the calendar year, or the co-payment if it is not the first time.

GUATEMALA

Reform of the health system was promoted in 1996 with a sector loan from the Inter-American Development Bank (IDB) conditional on increasing the public health budget, decentralizing some health functions and making changes to the health code that permit private providers to operate in the provision of public health services. Unfortunately, few advances have been made in any of these areas. As a result, a coordinating unit of the Health System Improvement Program has been established and attempts are being made to broaden coverage by contracting with private health providers in places not covered by the Ministry. This will be done basically with the participation of NGOs in reference to public bidding, beginning with US$14 per capita in accordance with a defined package of services. One of the reforms introduced was the rationalization of drug purchasing which was chaotic, (decentralized, slow payment). Details will be described below. The reform brought the total amount spent on drugs down by 60%, but it went up 70% when Social Insurance came on line.

The Guatemalan Social Security Institute (IGSS) operates four programs that cover 15.7% of the total population, equivalent to 25.7% of the economically active population. Created in 1946, it now has a variable benefits plan that offers care of high complexity to more than 851 thousand affiliates (76.6 % of the total cared for by all the systems in Guatemala) and 918 thousand beneficiaries, with a tendency to grow. Common sicknesses, maternity and accidents are covered only in the larger cities.

The contribution is based on income. Workers pay 4% and employers 10% of the payroll amount. There is no co-payment. It may be said that 85% of the services are provided in the Institute's own facilities and the rest, those services which the IGSS does not have immediately available, are contracted with private enterprises at the first level of care, basically since 1996. However, an evaluation (description of demand, effective cost, for example) of such services is not available at the present time. IGSS offers a more generous package (US$100 per capita) than the Ministry of Health (US$18).

In regard to pharmaceuticals, not only the IGSS but also the private insurers include them, and their prescription must be written, in the case of the IGSS, using the generic name and correspond to a basic list of some 300 drugs. In the case of private insurers, all medicines are included and there is no obligation to prescribe a generic product. In practice, the brand name is used. Medicines associated with alternative therapies are not recognized.

In the case of insurance companies, the service provider buys the drug. There are no procedures for bulk purchasing. Prices are negotiated with the hospital, clinic, etc., generally with a discount in the area of 25% of the regular sale price to the public. In the case of the IGSS, however, the purchase procedure is by means of Open Contract under which large quantities of medicines may be bought from a catalog of providers with established prices valid for one year. If the drug is not listed in the contract it may be acquired through any distributor in small quantities. Purchases are permitted in amounts not to exceed 10,000 Quetzals (US$1,600). Should the drug not be available when the patient needs it, the pharmacy is authorized to send the prescription to a private pharmacy, where the Institute will pay for the drug at the private market price with a 12% discount.

The Open Contract method allows the acquisition of medicines in large volumes and quantities up to a total of Q. 1,000,000 (US$150,000).

The Open Contract is an administrative tool with centralized negotiation and decentralized implementation, where the administrative and executive units of the public health sector acquire medicines and other supplies directly under their responsibility in accordance with their needs, programming an approved budget without the need to go through other traditional procedures such as asking for bids and holding competitions. It has thus transformed buying procedures into direct purchase that ensures the quality of the products acquired at prices previously defined at the central level. The Open Contract is in the form of a catalog of providers, valid for one year, where one or more contractors supply the medicines during the period of validity. Periodic price adjustments are allowed for in conformity with fluctuations of the dollar.

The adoption of this system has allowed national institutions to buy drugs at favorable prices, with an adequate quality control system. It was put into practice in early 1997.

The main characteristics of the purchasing system include:

a) Establishment of frameworks for the development of transparent, participatory competition overseen by the bidders themselves.

b) Clear, objective standards of general application that allow the system to work transparently.

c) Optimization of resources to favor the broadening of coverage.

d) Standards to acquire medicines in accordance with the specifications of the Pharmacopoeia Americana.

e) Drug quotations by International Nonproprietary Name

f) Standards for the qualification and adjudication of providers and products.

g) Establishment of a procedure and guarantee of payment to successfully guarantee relationships (payment within a minimum of 30 days after the receipt of the product, price compensation for exchange variations, payment of interest on bills paid late).

h) Establishment of sanctions for non-compliance with quality and time-of-delivery agreements (maximum sanction expulsion for up to five years as supplier to the State).

i) Establishment of a maximum of 3% deviation above the minimum price offered for the adjudication of a maximum of eight providers.

j) Establishment of an inter-institutional commission to oversee compliance with the Open Contract and apply sanctions under the chairmanship of the Minister of Finance in case of non-compliance. A representative from the private sector to sit on the commission as an observer.

k) Process of public adjudication with the participation of personnel from the administrative and executive units of the public health sector and with observers from the private producing sector and professional (medical and pharmaceutical) colleges.

l) To facilitate the different processes and make them more transparent, an automatic program has been developed to unify the presentation of offers, acceptance of offers and sequential ordering and adjudication within the limits mentioned above. Moreover, the issuing of lists of products adjudicated for use in the different administrative and executive units of the public health sector is automatic. There is also an automatic program to update prices in relation to changes in the rate of exchange between the quetzal and the dollar.

The Ministry of Finance is responsible for the payment of supplier invoices.

The IGSS dispenses drugs, for the most part, from the Institute's Pharmacies. Each medical unit has a pharmacy and a warehouse. Each unit has its own budget and must plan its requirements to ensure that the medicines are dispensed to the patient. It must be noted that the IGSS always provides the medicines, unlike the insurance companies, who do not recognize some, such as vitamins. However, they do provide medicines for the treatment of AIDS and cancer.

The Access to Medicines Program (PROAM) was created in 1997. It provides for centralized purchase of pharmaceuticals through the SIAS, keeping rural one-person stores stocked at a surcharge and, finally, the consumer gets the medicines. Pharmaceuticals are also supplied to the NGOs (social sales) to extend services. There has been a complaint from the pharmaceutical industry that this constitutes a parallel market but, in fact, the industry sales have risen.