Consolidating Pharmaceutical Purchasing Across National Boundaries: A Pragmatic Role for Our Public Institutions?

Multi-national pharmaceutical companies have long operated across national boundaries, and exercised great power because of the breadth of depth of their market control. The relationship between supply and demand can be better balanced by consolidating purchasing power across borders (and within countries), thus increasing access to essential medical products within each participating country. In those few models that consolidate purchasing across national boundaries, benefits have included: 1) reductions in unit purchase prices; 2) improved quality assurance (through preventive screening out of substandard and counterfeit products); 3) reduction or elimination of procurement corruption; 4) rationalized choice through better-informed selection and standardization; 5) economies of scale in procurement operational efficiency; 6) increased equity between members; 7) strengthening the degree of pragmatism in the role of the host public institution. Despite the potential benefits of consolidating purchasing power, there are many barriers to inter-country collaboration, from language and politics to geographic distance and the stability of national monetary systems. However, key barriers are eliminated when the procurement mechanism is established within a regional or international public institution. Establishing a group purchasing mechanism within these public institutions allows participating countries to opt into the system voluntarily, and it is typically the case that those countries with good governance profiles are apt to opt in at an earlier stage. This allows the mechanism to expand from a solid foundation and perhaps (as better unit prices and better quality assurance are highlighted) encourage other countries to join through the politics of embarrassment. For some consolidated purchasing mechanisms, grant funding is available for specific categories of products, and the attraction of grant funding can leverage good governance in procurement at the level of the individual country. This paper is based on a literature review and interviews with key stakeholders, with a focus on four established international models, two of them operating within the UN system.