The Pharmaceutical Procurement Service (PPS)

Submitted by katharina on 28 October 2011 - 11:36am

The OECS Pharmaceutical Procurement Service (PPS) has played a significant role in reducing the cost of popular pharmaceutical and medical products across the OECS region, through the model of pooling demand to facilitate procurement in bulk for onward distribution. For over two decades, it has provided the Member Countries with a reliable supply of safe and effective pharmaceuticals, from approved, pre-qualified reputable manufacturers, through an international competitive tender system.

Key Information
28 October 2011
Timeframe: 
Ongoing since 1986
Case Study
Background: 

The core function of the OECS/PPS is the pooled procurement of pharmaceuticals and medical supplies for nine Ministries of Health (MOHs) of the OECS countries. Through this service, the OECS has been able to combine the limited purchasing capacities of the individual Member Countries into one larger, consolidated pool, which has resulted in an estimated 35% reduction on the unit cost of the medical products. Most of the drugs used by public sector entities, including those required in the fight against HIV-AIDS, are procured through this mechanism. The OECS is routinely being asked by other countries in Asia and Africa, as well as those in CARICOM, for assistance in setting up this approach to joint procurement.

Results Achieved: 

• The value of procured goods has almost tripled in the last decade from $8 million to $21 million.
• During the 2001/02 tender cycle, the annual survey on a market basket of 20 popular drugs showed that the regional prices were 44% lower than individual country prices. The continuous annual cost-savings have reinforced OECS/PPS as an excellent cost-benefit model of economic and functional cooperation among OECS member countries.
• The regional procurement of a harmonized portfolio of 700 medical products has produced collective annual cost-savings to the OECS Member States of approximately $3 million.

Main Activities: 

• OECS/PPS has been able to solicit tenders from large, renowned suppliers who ordinarily would have considered the individual Member Country markets too small to warrant any interest.
• The steady annual increase in pharmaceutical purchases has demonstrated the steadfast confidence and commitment of OECS Governments in this regional program.
• Following a WHO-sponsored workshop in the Fiji Islands in April 2001, seven islands in the pacific have developed a three-year action plan to pursue the pooled procurement of pharmaceuticals along the OECS/PPS model.

Future Replicability
Lessons Learned: 

The experience of the OECS/PPS, after years of successful centralized tendering for pharmaceuticals and related medical supplies, has demonstrated that improved procurement can reduce costs and enhance the efficiency of health service delivery.

Key to Success for Future Replicability: 

Political will and financial commitment were essential ingredients for PPS’s success.

Contacts: 

Focal point(s) in lead country/organization
Len Ishmael
OECS Director General
1-758-455-6327 / 1-758-455-6300
lishmael@oecs.org