World Health Organization
 
Regional Committee
 
Fifty-fifth Session
11-13 September 2002

SEA/RC55/12

16 July 2002

Regional Mechanism for Bulk Purchase
Of Selected Generic Essential Drugs

CONTENTS

1. Introduction
2. Issues in Developing the Bulk Purchase Schemes

2.1 Experiences from other Bulk Purchase Schemes
2.2 What are the drugs?
2.3 Principle of Pre-qualification of Pharmaceutical Manufacturers
2.4 Evaluation of Manufacturers
2.5 Criteria for Pre-Qualification

3. Activities so Far

3.1 Health Secretaries Meeting
3.2 Potential Suppliers – India
3.3 Potential Suppliers – Indonesia
3.4 Drug Regulators in SEAR
3.5 Other Potential Benefits

4. SEARO’s Potential Role in Implementing the Potential BPS
    
5. Conclusion
    
6. Points for Consideration

6.1 Different Countries and Different Interests
6.2 Sub-Regional Coordination in the BPS
6.3 Local Partners in the BPS

Annex – Selected Essential Drugs for Bulk Purchase Scheme
   

1. Introduction

The Health Ministers recommended that "WHO should offer technical support and facilitate activities such as Bulk Purchase Schemes (BPS) for Essential Drugs by generic name, and drug quality control systems, especially for the smaller countries in the Region."

The proposed BPS has been developed after consultation with various sectors in pharmaceuticals. It is meant to complement existing purchasing systems where appropriate, and is clearly not meant to replace existing systems in a country. It is essentially a technical proposal that requires discussion and decisions by the countries to define the scope and future direction of the initiative.

2. Issues in Developing the Bulk Purchase Schemes

2.1 Experiences from other Bulk Purchase Schemes

Experiences from Bulk Purchase Schemes in other regions have shown that each scheme needed some impetus generated from the Region itself, expertise from within the region and decisions at a high political level. In the Fijian BPS, pooled purchase was a part of the existing procedures. Small Island States such as Tuvalu, Nauru, Guam, Tokelau, and Marshall Islands sold their produce as a group and also bought as a group to increase their buying and selling power. Thus, a framework and infrastructure of group activities did exist. Fiji, the biggest country in the group with a population of approximately 850 000 served as the focal point. However, in contrast to SEAR, it must be noted that the total population involved was about a million and there were no local manufacturers or well developed Drug Regulatory Authorities (DRAs).

In the Caribbean, bulk purchasing was established in the 1980s and now has very strict rules, payment procedures making the scheme self-sufficient and viable. Again, the population involved was small and the scheme was developed over time. In Africa, the Bulk Purchase Scheme was mooted by the countries and WHO AFRO provided technical support but the stewardship was by the countries. The Member Countries have agreed on specifications of about five products and, therefore, to purchase these drugs but the scheme is yet to be implemented widely.

A single successful model for bulk purchase does not appear to exist but the modality seems particularly suited to smaller countries. Schemes have to be developed using the strengths in the region and with necessary political decisions. The clear strength in SEAR is the surfeit of manufacturers; careful pre-qualification must be done to ensure quality in this situation of plenty.

2.2 What are the drugs?
 
It would not be possible to develop a scheme based on the 300+drugs in the WHO Model Essential Drug List with many formulations, in the short first phase of an year. Therefore, a list of commonly used essential drugs (oral formulations only) was identified and the first phase of the scheme would be based on this list (see Annex).

2.3 Principle of Pre-qualification of Pharmaceutical Manufacturers
 
EDM/HQ had recently developed a scheme for the UN system in which manufacturers with acceptable quality of drugs for HIV/AIDS and its complications were identified, and listed publicly. This exercise of pre-qualifying manufacturers rather than including all registered manufacturers as suppliers is increasingly being used to assure quality. It has been used with great success in vaccines for childhood immunization and also in supplies such as condoms. The World Bank has recently accepted pre-qualification and does not, as previously, insist on the lowest bid in an open tender being accepted.

Pre-qualification ensures quality. Thus, the lowest offer from manufacturers who have pre-qualified ensures a quality product in a competitive environment. The SEARO Bulk Purchase Scheme for Selected Quality Essential Drugs (BPS SQED) has pre-qualification as the centrepiece for ensuring quality. However, ensuring quality could have an impact on the cost of the product. Thus, countries need to consider the scheme in the context of limited resources available for health.

2.4 Evaluation of Manufacturers
 
It would be ideal for SEARO to inspect the manufacturing facilities of companies that would be potential suppliers to this scheme; however, it is impractical as there would be hundreds of manufacturers. The WHO Good Manufacturing Practices (GMP) Certificate scheme provides a suitable entry point for pre-qualification. WHO, in its technical role has provided the guidelines for the scheme to the countries, who, in turn, implement it through inspections by their Drug Regulatory Authorities (DRAs). The GMP certificate issued is therefore the responsibility of the DRA and not WHO and it is difficult at times to ensure a consistent quality. Thus, WHO’s GMP certificate would serve as the entry point and further steps are needed for pre-qualification.

2.5 Criteria for Pre-Qualification

As the further steps in pre-qualification, inspection and approval of a pharmaceutical manufacturing facility by an internationally recognized DRA is proposed as the first criteria. These DRAs were listed as the US FDA, UK MCA, Australian TGA and the South African Medicines Commission. There are manufacturers in SEAR that have been inspected and approved.

This is a first list and other DRAs, both from within and outside the Region, could be included as the scheme is developed. There are other pharmaceutical companies pre-qualified to supply other UN agencies such as UNICEF. Suppliers in these schemes too could be included.

The second criterion proposed is the ability of the manufacturers to maintain the standard pharmacopeial specifications such as USP, BP and Indian Pharmacopeia. The third is an export performance of at least 3 years.

These pre-qualification criteria could be modified according to the needs of individual countries.
  

3. Activities so Far

3.3  Potential Suppliers – Indonesia
 
The scheme has also been discussed with Indonesian manufacturers who were interested if the selected essential drugs were routinely manufactured by them but they would not manufacture specially for the scheme. It is hoped to discuss the scheme with Thai Pharmaceutical Manufacturers too.

The other countries in the Region do not have manufacturers that have been inspected and approved by the international DRAs that have been specified and therefore do not qualify to be suppliers on the proposed criteria. However if these manufacturers were to included with modified pre-qualification criteria, they too would be invited to participate in the scheme.

A list of pre-qualified manufacturers from SEAR would be useful to other international agencies too and for SEARO procurement itself. Presently, SEARO itself does not implement prequalification when purchasing pharmaceuticals. Multilateral initiatives such as the Global Fund for AIDS, Tuberculosis and Malaria would prefer that drugs be bought by the countries from a pre-qualified list of suppliers.
  

4. SEARO’s Potential Role in Implementing the Potential BPS

The Regional Office would, as mentioned previously, be an information provider in this scheme and its role would be to bring pre-qualified suppliers and countries together to negotiate the quantities and the prices of the essential drugs. The Regional Office would act as an "honest broker" in bringing the two parties together and assist in technical matters. In implementation terms this could be seen as a "No-hands On" model.

The Bulk Purchase Scheme for Selected Quality Essential Drugs has been developed to a technical level but there is a necessity now for discussion and decisions to be made by the countries on its future direction.
 

6. Points for Consideration

6.1 Different Countries and Different Interests
 
Some countries may see this scheme as being useful for purchasing whereas other countries may want their manufactures to be the suppliers. Other countries may see this scheme (or the process of pre-qualification) as useful for particular drugs. Some countries may wish to buy a few drugs through this scheme to compare it with existing systems and products.

6.2 Sub-Regional Coordination in the BPS
 
Due to the heterogeneity of the Region, similar countries may prefer to develop their own standards in pre-qualification. Potential buyers may develop their own pre-qualification criteria and potential suppliers could propose their pre-qualification criteria too. The political and economic impetus for such work could be through ministerial cooperation. SEARO could provide the technical and financial support needed for the meetings and other activities that will develop these pre-qualification criteria. Such activities would have the participation of the Drug Regulatory Authorities in those countries as well as the supply divisions in the respective ministries of health

6.3 Local Partners in the BPS
 
Some countries may desire greater involvement of local partners as the BPS could also be seen as an exercise in developing local capacity towards the final goal of the country developing its self-sufficiency in essential drugs. A common problem in this area is the maldistribution of pharmaceuticals which would negate what has been achieved with the BPS. If a country has no suitable local manufacturer, then in the BPS, a supplier from abroad would be inevitable. However the supplier could be required to link with a local distributor as a part of the contract to deliver the drugs, then not only quality drugs but expertise and systems to distribute pharmaceuticals will follow.
 

Annex – Selected Essential Drugs for Bulk Purchase Scheme