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Analysis

How Has the Centralized Medicine Purchasing Scheme Worked So Far?

By Miriam Bello | Wed, 07/08/2020 - 16:44

At the beginning of 2019, the Mexican government announced a new centralized purchasing scheme for medicines that aligned with President López Obrador’s general goals to fight corruption. According to an official release by the Ministry of Finance and Public Credit (SHCP), this new scheme seeks to “achieve transparency, through the participation of the United Nations Office for Project Services (UNOPS), contracting procedures, as well as the establishment of competitive mechanisms that open the door to a greater number of suppliers in this industry, promoting at all times the best conditions for the State, in terms of price, quality and opportunity.”

As described by the SHCP and the Ministry of Health, this scheme is based on an international public tender procedure for the purchase of medicines and healing materials required by the federal government and the federal entities. Minister of Health Jorge Alcocer expected that this change would allow savings of up to MX$608 million (US$26.8 million) during 2019. Up to date, this number has not been confirmed.

At the beginning of the year, President López Obrador blamed laboratories for medicine shortages at public hospitals. To understand the context, MBN spoke with legal firms about the benefits and challenges of this purchasing scheme and also gathered the opinion of many pharma laboratories on the subject.

Hogan Lovells Life Science’s experts Ernesto Algaba and Cecilia Stahlhut shared their opinions on how the scheme has been working so far for laboratories. “We are in a process of maturation, recomposing the structures and strengthening the supply of medicines for the public sector. In that sense, maybe the actions that have been taken were necessary but is worth that this is adopted with an adequate strategy for ensuring that needs are properly satisfied. The government’s goal should be to ensure that new measures stick to the law and that they respect the industry’s rights. They should also comply with the legal framework and guarantee the interests of patients, including proper supply of products,” explained Algaba. “Especially in this sector, fair competition is key. This goes beyond costs and prices. Medicines undergo a long and sometimes difficult process in Mexico to reach the market and competing with products that do not have to go through that process can distort the market and lead to shortages or unreliable distribution models that only endanger the consumer,” said Stahlhut.

Director General of S&S IP LAW, Agustin Azcatl said that the scheme could present opportunities and challenges. “The new distribution scheme has opened the market, which will boost competition and lead to lower prices. Also, it enables SMEs to participate. A lack of legal protection would put these SMEs at a disadvantage against big players, however.”

Pharmaceutical laboratories have offered clashing opinions.

To understand the impact of the decision, Roberto Bernal, Director General of Laboratorios Sydenham, explained that the “government’s plan for a centralized purchase scheme for medications mandates that every provider should ensure supply at 100 percent, which is difficult for companies. Due to the strategy of reaching more patients, the government focuses mainly on price, rather than opening windows in the current regulation, to allow the entry of medicines from other countries.”

“We received a historic 6-million-unit request from the government but with the creation of INSABI, this request grew to 13 million units. This significant growth meant that we had to double our infrastructure, hire more workers and incorporate three shifts. We took the risk to comply with all the acquisition requirements established by the government, which meant manufacturing our product because not complying with the 100 percent of the contract would mean total disqualification for the laboratory for next year, which we were not going to allow,” said Bernal.

General Manager of Chiesi Marco Ruggiero shared his opinion on how the scheme had been working so far and said change is good. “We all need to be open to change because this is how we evolve and make things better. What is missing is a clear plan for everyone to follow, as well as a timeline. In terms of communication, this year has not been the best because it has been difficult to follow all the changes that happened from one day to the other while trying to understand them with the little information that was provided.”

On a similar note, José Arnaud Coelho, Director General of Merck Group México, shared a positive opinion on the potential of this initiative. “This scheme makes all the sense in the world but the rules related to the transition have not been clear. However, it is important to mention that the industry is willing and able to supply Mexico’s pharmaceutical needs. The problem is that tender rules have been unclear. The uncertainty led to a slow learning curve. This year’s tenders, however, have been much clearer. The process will be perfected as time goes by and we will learn from the experience.”

Photo by:   Pixabay
Miriam Bello Miriam Bello Journalist and Industry Analyst