ObjectiveThe 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.

MethodologyComparison of Pharmaceutical Procurement Methods: Research committee

Results

BackgroundJordan 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.

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 SaketABSTRACTBackground: 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.

The data received pertained to

174 of the total 229 awarded

products in the 2007 pharmaceutical

purchase (Table 1)

Assuming that the same quantities

Purchased by joint procurement in

2007 were purchased by each

participating party independently

(using prices of 2006), then the

estimated savings achieved from

the purchase of all drugs through

joint procurement based on the

quantity-comparison method was

2.4 % (Table 2) increased to 8.9%

after excluding one Item

(a cephalosporin), for which the raw

material prices increased markedly

in 2007 because of an international

shortage.

QuantityComparison

Method

Drugs purchased by each participating party were classified according to

the rational drug list unique code

All products purchased for 2006 and 2007 were listed by trade name,

concentration, dosage form, and the unit price for each item

The price difference per unit for each item was calculated for all products

purchased for 2006 and 2007

The cost of the pharmaceuticals purchased by joint procurement was

calculated by determining the unit price for each item in 2007 and comparing

it with the unit price in 2006 for each participating party for the same item

Estimated cost savings were calculated based on the difference (if any)

in the total cost of purchasing pharmaceuticals between 2006 and 2007

Representatives of participated parties provide lists of purchased

quantities and prices for drugs under investigation i.e. for 2006.

The same was obtained for 2007 through the joint procurement process

Data Collection

Participating

party

No. of

products

awarded

in 2007

No. of

products

involved

No. of

products

not

involved

Cost of quantities purchased in 2007 Estimated savings

Based on 2006

prices paid by

each party

Based on 2007

price paid by

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 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)

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 Estimated savings

Based on 2006

prices paid by each party

Based on 2007 prices paid

by JPDJDs %

MoH 5,392,914 5,152,397 240,517 4.5%

RMS 2,803,079 2,472,813 330,266 11.8%

JUH 544,403 448,216 96,187 17.7%

KAUH 787,258 608,396 178,862 22.7%

Total 9,527,654 8,681,822 845,832 8.9%