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News Article

Poor Medication Supply Puts Public Health at Risk

By Antonio Gozain | Thu, 09/09/2021 - 11:49

Medicine shortages are not a new phenomenon but have been increasing during past years in Mexico after new policies affected the industry’s operations. Compromised medicine supply threatens the healthcare system as a whole by causing additional costs in the search for replacements and putting patients at risk, agreed industry experts.

“Mexico used to buy medicines and medical supplies through a centralized system to avoid different prices for every institution and state. The new administration changed everything aiming to avoid intermediaries and buy directly from the pharmaceutical companies, which caused considerable logistic problems. The supply problems we are living now began with these decisions made during the past three years,” said Juan Luis Serrano Leets, Partner of Life Sciences at Sánchez Devanny.

Centralized purchases helped Mexico in the past. Remote, rural communities used to receive medicines later and at higher costs. The ability to purchase large quantities of supplies, organize them and then distribute them through a third party helped keep prices down and supplies available despite the complexities of Mexico’s healthcare system.

Globally, healthcare systems have been facing trouble supplying a wide range of medications, including as antibiotics, anesthetics, cancer medicines and cardiovascular medicines, according to WHO. To address this problem, WHO recommended a supplier base that did not depend on one single supplier or manufacturer, implementing a risk-based public health approach, procuring fair prices, ethical medicine use, regulation and a patient-centric approach. The recent changes in Mexico’s medicine acquisition systems step away from WHO’s recommendations, leading to shortages. “Mexico is becoming unable to provide medicines to the ones that need them the most,” said Rafael Gual, Director General of CANIFARMA.

The main challenge for the pharmaceutical industry on these turbulent times is to keep its prices fair, said Enrique Liñero, Country Head at Sandoz. He stated that Mexicans are seeing a worrying increase in their out-of-pocket expenses in healthcare matters, which increased from MX$2,358 (US$118) to MX$3,299 (US$165) per quarter between 2018 and 2020, according to the Economic Budget Investigation Center (CIEP) .

The industry has made big efforts to keep its lowest possible prices as many people are turning to the private sector. “We have not stopped trying to strengthen communication between the industry and government institutions, looking for transparency that allows us to keep responding to the country’s needs,” said Orlando Aguirre, Government Sales Director, Market Access & Pricing at Merck Group. But for pharmaceutical companies, it became challenging to do correct planning with their suppliers and clients, given the uncertainties, explained Aguirre.

Mexico’s government signed an agreement with the UN Project Services Office (UNOPS) and WHO for the consolidated purchasing of medicines, vaccines and medical equipment abroad back in July 2020. Jorge Alcocer, Minister of Health, said that the goal is to let the UN office guide and provide technical assistance on tenders to INSABI to secure the best market conditions. This decision was criticized by the national industry. The sector has not stopped investing and trying to work as a team, according to Benjamin Vega, Commercial Director in Allen Laboratories.

“The industry continues investing and trying to work as a team with all actors involved. We look to create synergies between suppliers, laboratories and manufacturers to keep the best possible prices. It is difficult to have direct communication with the complex system and UNOPS, making it very difficult to negotiate raw materials with our suppliers,” said Vega.

The decision to cut intermediaries taken by the Federal Government ended with 20 years of centralized purchases. The system used favored the creation of “concentrators,” distribution companies that offered very specific services such as taking medical supplies directly to surgery rooms and hospitals in general. Before 2019, in Mexico there were over 1,000 distributors, with roughly 60 of them focused on public institutions, according to El Economista.

These distributors used to take care of the complex logistics of millions of units, that were usually made by different laboratories to successfully cover the great demand. In centralized purchases, even transportation prices were included. The new administration did not understand the complexity of the distribution system, said Jesús Arenas Wiedfeldt, Corporate Communication Director at Maypo.

“Distributors do a very complex job. The new administration did an incomplete diagnosis and now faces logistic problems. Large quantities of medicines and supplies need to be handled in different inventories by institution, dispatched depending on consumption frequencies, with a very detailed picking and packing. We are trying to explain to decision-makers how important our job is,” said Arenas.

From February 2019, the Mexican organization Zero Shortage has received 4,504 reports of shortages of medicines or medical supplies in public healthcare institutions across Mexico. From January to April 2021, the organization covered 30 states, 94 percent of the country, and received 773 shortage reports from patients and healthcare workers. Reports from the first four months of 2021 increased by 33 percent compared to 2020’s last four months.

The medicine supply problem affects everyone involved, from the government to the industry and patients. An integral solution can only come from efficient, transparent communication. Eliminating shortages is crucial for the development of Mexico, said Arenas, because health means productivity, longer life expectancy and efficiency.

“As an industry, we can do our best effort, but it is necessary to work as partners of the government, as a team, always with a patient-centered focus. We need interaction, communication and exchange of ideas,” said Aguirre.

The changes also hit Mexico’s economy, with transnational companies being discouraged from coming to Mexico and national companies seeing fewer possibilities to go out to the international market, according to Serrano. To thrive, the sector needs good communication between the private and public sectors and a long-term mindset when making decisions.

Antonio Gozain Antonio Gozain Journalist and Industry Analyst