Mexico Cancels Drugs, Medical Devices Tender. What’s Next?

The Mexican Ministry of Anti-Corruption and Good Government (SABG) recently annulled the consolidated purchase of drugs and medical devices for 2025-2026, managed by Laboratorios de Biológicos y Reactivos de México (Birmex), in conclusion to an ex-officio investigation, which found significant legal and procedural irregularities. 

This decision, rooted in violations of Mexico’s public procurement laws, has far-reaching implications for transparency, accountability, and the rule of law in public health procurement proceedings. 

Legal Irregularities Identified

The SABG’s investigation, initiated on Feb. 26, 2025, revealed multiple breaches of the Federal Acquisitions Law (LAASSP), the legal framework governing public sector procurement. Key irregularities included:

• Lack of Adequate Market Investigation: According to the decision by SABG, Birmex failed to conduct a proper market investigation to establish reference prices and identify suitable suppliers, violating the LAASSP, which mandates such research to ensure competitive pricing and fairness.

• Opaque Bidding Process: The bidding process omitted critical details, such as minimum and maximum price guidelines for bidders, undermining the transparency requirements in the Law.  Additionally, unauthorized conditions were imposed, and mandatory requirements for foreign companies, such as proof of legal representation and tax compliance, were ignored.

• Flawed Auctioning Process: The subsequent discount auctions lacked formats or criteria for participation, violating procedural fairness standards. This led to contracts being awarded to companies with inflated prices, with 175 of 3,900 drug codes showing overpricing estimated at MX$13 billion (US$674 million), breaching the principle of economic efficiency mandated by Law. 

Legal Consequences

The SABG’s decision declared the entire tender as null, and not only the overpriced codes.  The legal ramifications include:

• Procurement Restart: Birmex must restart the procurement process, canceling all contracts, including those signed and those pending signature.

• Contract Reassignment: Contracts without overpricing may be reassigned via direct allocation, while overpriced codes will undergo reverse auctions, as allowed by the Law

• Administrative and Criminal Actions: Investigations will continue to determine possible actions against both companies and public officers participating in the tender. 

Broader Implications

This cancellation exposes systemic weaknesses in Birmex’s procurement, including inadequate oversight and failure to verify supplier eligibility.  While the SABG’s action reinforces anti-corruption enforcement, it risks delaying drug supplies, exacerbating Mexico’s medicine shortages. The legal framework now demands stricter adherence to transparency and due diligence to restore trust and ensure compliance in future procurements.