Transcript Slide 1

One-Year Assessment of Joint Procurement of Pharmaceuticals in the Public
Health Sector in Jordan
Ibrahim Alabbadi ; Abdelraouf Qawwas; Mahmoud Jaafreh; Taher Abosamen and Maisa Saket
ABSTRACT
Background: About 10% of the gross domestic product in Jordan is spent on health care,
and almost one third of that is spent on pharmaceuticals. The public health sector in Jordan
has 4 main governmental parties that purchase medicines independently through annual
tenders (i.e., the process of bidding, being awarded, ordering, paying for, and receiving
drugs) issued in the generic (or scientific) name of the medicines or therapeutic groups.
Double purchasing is a problem that leads to higher spending on drugs and poor availability
of medicines throughout the year. To remedy this problem, a joint procurement process was
established in Jordan in 2004 and went into practice in 2006. Objective: The aim of this
research was to assess the first year of purchasing pharmaceuticals in the public health
sector in Jordan through the joint procurement process for the participating parties in
comparison with purchasing pharmaceuticals independently before the institution of joint
procurement. Methods: The first tender under the joint procurement process was issued in
2007 for 15% of annual pharmaceutical public sector purchases in Jordan. A research
committee solicited lists of purchased quantities and final purchase prices of these
pharmaceuticals obtained in 2006 by each participating group and in 2007 through the joint
procurement process. The quantity comparison method was used to compare the costs of
drugs purchased in 2006 and 2007, and estimated cost savings were calculated for each
product for each party for 2006 and 2007 under the assumption that the same quantities
purchased by each participating party in 2006 would be purchased through joint
procurement (prices of 2007). Results: Purchasing through the joint procurement process
achieved an estimated savings of 2.4%. This savings increased to 8.9% after excluding 1
item (a cephalosporin), the raw material price of which increased markedly in 2007
compared with 2006 because of an international shortage of raw materials. Conclusion:
Based on these initial findings, applying a joint procurement system for pharmaceuticals in
the public health sector in Jordan has potential to reduce expenditures for the purchase of
medicines and provide treatment continuously throughout the year.
Background
Jordan is one of the fastest growing and modernizing countries in the Middle East. The budget of the Jordanian Ministry of Health
represented ~6.1% (about US $300 million) of the general governmental budget. More than 72% of Jordanian drug expenditure occurs in
the private sector, and the remaining 28% is in the public sector. The public sector represents the Ministry of Health (MoH; 37%) (which is
composed of tertiary hospitals, primary health care centres, and rural health posts), the Royal Medical Services (RMS; military sector:
27%), Jordan University Hospital (JUH; 21%), and King Abdullah University Hospital (KAUH; 15%). The Jordanian pharmaceutical
market is made up of almost 74% imported medicines, most of which are branded products (either still patented or off patent) and a few
of which are generic products; 26% are locally manufactured products, which are mostly generic products but are usually sold under a
trade name (i.e., branded generics). About 5% of the local production is covered by license agreement with the brand manufacturers, and
there is some subcontracted manufacturing (labelling and packaging) in which products are supplied in bulk by the brand manufacturers.
According to national and international documents, the pharmaceutical sector in Jordan suffers from several inefficiencies. These include
double purchasing in the public sector (i.e., the government pays for more as public health institution buying the same drug in the same
year at different prices), irrational use of medicines, and the absence of planning for needed quantities of medicines. These problems
have led to an inadequate pharmaceutical financial system, higher spending on drugs, wasting of public money, and poor availability of
medicines throughout the year for beneficiary citizens. In view of these challenges and the unjustified escalation in spending on
medicines, a joint procurement process was established in Jordan in 2004 and introduced to the 4 participating parties (MoH, RMS, JUH,
and KAUH) in July 2006. The first tender was awarded in 2007 for the 4 participating parties for about 15% of the annual pharmaceutical
public-sector purchases in Jordan. The goals of the joint procurement process were to unify the purchase of drugs and medical supplies
among the participating parties, to reduce the cost of purchased drugs by buying in large quantities, to manage operations electronically,
to enhance patients' confidence in medicines consumed in the public sector, to reduce waste, and to optimize the allocation of scarce
resources for health services in Jordan.
Objective
The aim was to assess purchasing pharmaceuticals in the public health sector in Jordan through the joint procurement for participating
parties (MoH, RMS, JUH, and KAUH) in comparison with purchasing pharmaceuticals independently before.
Methodology
Comparison of Pharmaceutical Procurement Methods: Research committee
Results
The data received pertained to
174 of the total 229 awarded
products in the 2007 pharmaceutical
purchase (Table 1)
 Representatives of participated parties provide lists of purchased
Data Collection
quantities and prices for drugs under investigation i.e. for 2006.
 The same was obtained for 2007 through the joint procurement process
the rational drug list unique code
Quantity
Comparison
Method
Purchased by joint procurement in
2007 were purchased by each
(using prices of 2006), then the
estimated savings achieved from
 All products purchased for 2006 and 2007 were listed by trade name,
the purchase of all drugs through
concentration, dosage form, and the unit price for each item
joint procurement based on the
 The price difference per unit for each item was calculated for all products
No. of
Participating
party
No. of
No. of
quantity-comparison method was
Cost of quantities purchased in 2007
Estimated savings
products products products
awarded
involved not
in 2007
involved
Assuming that the same quantities
participating party independently
 Drugs purchased by each participating party were classified according to
Table 1: Products involved in the comparison and the estimated savings achieved from the purchase of drugs
through JPD (2007) in comparison with the purchase of drugs through each participating party by itself (2006)
Based on 2006
Based on 2007
prices paid by
price paid by
each party
JPD
JDs
%
MoH
85
55
30
5,864,914
6,141,397
276,483
-4.7%
RMS
66
64
2
2,884,867
2,641,624
243,244
8.4%
JUH
35
29
6
544,403
448,216
96,187
17.7%
KAUH
43
26
17
787,258
608,396
178,862
22.7%
Total
229
174
55
10,081,442
9,839,632
241,810
2.40%
Table 2: Estimated savings achieved from the purchase of all drugs (except oral cephalosporins) through
JPD (2007) compared with the purchase of all drugs independently by each participating party (2006)
Participating
party
Cost of quantities purchased in 2007
Based on 2006
Based on 2007 prices paid
Estimated savings
JDs
%
purchased for 2006 and 2007
2.4 % (Table 2) increased to 8.9%
 The cost of the pharmaceuticals purchased by joint procurement was
after excluding one Item
MoH
5,392,914
5,152,397
240,517
4.5%
calculated by determining the unit price for each item in 2007 and comparing
(a cephalosporin), for which the raw
RMS
2,803,079
2,472,813
330,266
11.8%
it with the unit price in 2006 for each participating party for the same item
material prices increased markedly
JUH
544,403
448,216
96,187
17.7%
 Estimated cost savings were calculated based on the difference (if any)
in 2007 because of an international
KAUH
787,258
608,396
178,862
22.7%
in the total cost of purchasing pharmaceuticals between 2006 and 2007
shortage.
Total
9,527,654
8,681,822
845,832
8.9%
prices paid by each party
by JPD