Rafael Gual
Director General
National Chamber of the Pharmaceutical Industry – CANIFARMA
Expert Contributor

The Deficient Process of Medicine, Medical Devices Procurement

By Rafael Gual | Mon, 06/28/2021 - 13:01

The system for procurement of medicines and health supplies that prevailed in Mexico from 2013 to 2018, led by IMSS (the Mexican Social Security Institute), represented great advantages for the health sector, as not only was it supported by the participation of the OECD and several other observers, but it was also continuously revised and improved with the implementation of consolidated bids, which included different mechanisms that increased competitiveness in the market year after year.

The results of the changes to the scheme in June 2019 under the charge of the Administrative Office of the Ministry of Finance and Public Credit (SHCP), and replicated later in December for the supply of 2020, left much to be desired. A serious lack of planning and knowledge about the operation and requirements to manufacture pharmaceuticals and medical devices were the main causes of these poor results, reflected in 62 percent unquoted pharmaceutical items in the June 2019 bid, and 30 percent in December.

Even though in 2020, because of late bidding in 2019, it was possible to extend contracts assigned by IMSS in the 2018 acquisition for the supply of the first months, the procurement of medicines and medical devices was marked by a large proportion of direct adjudication, as much as 82 percent of the acquisitions, a figure that exceeds by far the less than 7 percent average of recent years.

By definition, direct adjudications are not the ideal mechanism to obtain the best conditions, and there is a tremendous lack of transparency in the procurement process. In fact, the Auditor General of the Federation in fiscal year 2020 pointed out, among other observations, that it was not possible to evaluate the contribution to guaranteeing the right to health, due to the absence of measurement and evaluation instruments in the SHCP and the Ministry of Health (SSA). The overall requirement of therapeutic goods demanded by the participating public institutions was not fully met, and no document was issued to demonstrate any savings achieved in the purchase of the goods.

In light of this situation and the failure of these last two bids, the legal framework underwent significant modifications, the most important being the amendment to Article 1 of the Law of Acquisitions, Leases and Services of the Public Sector (LAASSP), which exempts the procurement of medicines from the bidding process. 

Besides, modifications were also made to allow purchases through intergovernmental international organizations. The regulatory framework was reformed to recognize the equivalence of sanitary registrations awarded by foreign agencies, as well as to grant a sanitary registration to any foreign therapeutic product as long as it has such registration in its country of origin.

The modifications noted above were aimed at promoting the participation of UNOPS in the acquisition processes. By mid-2020, a cooperation agreement was signed between UNOPS and the Ministry of Foreign Affairs (SRE) and shortly thereafter, a contract was signed between the Institute of Health for Wellbeing (INSABI) and UNOPS for the procurement of health supplies for 2021.

These agreements with UNOPS were heralded as the ideal mechanism to guarantee the supply of medicines for Mexico and transparency in the fight against corruption. The results today leave much to be desired indeed. There is a dire shortage of medicines and medical devices that had never before been experienced in the country, and as has been mentioned, direct adjudications seem to be the norm.

There is consensus in the Congress to urge INSABI and UNOPS to report on this serious situation and how it will be remedied. It is evident that the process lacks adequate planning and transparency, since even though it formally began in August 2020 with the signing of the agreement, it was not until December that the first bid for patented, single-source products and critical supply products for the first months of 2021 was carried out. The first adjudications for these 381 pharmaceutical items were awarded in February, and the first contracts were signed in March, with some still pending.

The remaining 1,600 pharmaceutical items, out of which 1,183 are medicines, would be acquired starting in March. The event for the submission of quotations for medicines was held on February 5, and for medical devices on February 12, and given the situation, it was expected that the assignment decision and contract signing would be made soon.

On May 25, after more than three months, UNOPS sent individual communications to the companies to inform them of their assignments. However, these notification letters stated that the information was not legally binding, so they should not start any manufacturing process until there was a contract between the parties. More than four months after the submission of bids, UNOPS has not yet issued a decision.

In June, UNOPS sent a communication to INSABI informing that 653 items were not quoted and therefore it was unable to acquire them, which represents 55 percent of the total to be procured, a result that is similarly deficient to that obtained by the Administrative Office of SHCP.

To address this serious situation, INSABI issued a call for 675 items on June 10, requesting that they be quoted within 24 hours. To date, the outcome of the exercise is unknown, and the situation is further complicated by INSABI's heavy debt to the industry, which amounts to more than MX$3 billion (US$150 million).

It should be noted that 88 percent of the 530 pharmaceutical items awarded correspond to companies established in Mexico, and represent 98 percent of the volume awarded, according to INEFAM data, which demonstrates the strength of the Mexican pharmaceutical industry, and reaffirms its commitment to the health of the Mexican population.

Photo by:   Rafael Gual