64% Savings by Essential Drugs Revolving Fund: the Formed Experience. Essential Drugs Monitor No. 008 (1989)
(1989; 1 page)


An essential drugs revolving fund (FORMED) was established in 1986 to facilitate drug procurement at significant savings for Central American countries. The Fund was made possible through donations from the governments of Netherlands and Sweden. FORMED allows prompt payment of suppliers and gives countries a grace period in which to make reimbursements. This initiative aims to reduce cost by purchasing drugs in larger quantities, increase regional cooperation and promote local industry participation. Sixteen essential drugs were selected for an essential drugs list based on a set of criteria outlined in the article. This list can be updated based on changes in national morbidity and mortality profiles. The article details the costs saved by each country. The substantial savings were made through competitive international bidding, prompt payment in dollars, purchases packaged in economical units, bulk buying and economical modes of transportation. FORMED was able to overcome initial obstacles through adjustments in the purchasing process and the countries’ overall motivation to make the initiative a success. Orders for the second round of drugs were US$2.3 million less than the first round, indicating that there is limited foreign exchange for reimbursing the Fund. This difficulty may threaten the success of the Fund.

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