PROCUREMENT OF ANTI-RETROVIRAL DRUGS: THE BOLIVIAN EXPERIENCE.   [Policy]
Col. Dr. Gilvan Ramos, MD, MPH      
Member of the Bolivian Society of Public Health, Bolivia; Member, National Pharmaco-therapeutic Committee on HIV, Bolivia.



[emedpub – International Public Health :   Vol 1:2]                   [Date of Publication: 07.08.2011]
ISSN pending

July 8, 2011 at 3:35 PM

Abstract:

Global HIV epidemic brought a set of responses, both with the advent of antiretroviral (ARV) drugs and the management models needed to purchase them. Medication management is an indispensable process in response to any epidemic. In case of HIV in many countries it was learning through trial and error; at the beginning of the epidemic. However, in recent years there have been great strides in the international management of drugs, many of them motivated by the dynamics of antiretrovirals. According to preliminary information from the Clinton Foundation, Bolivia is the country that is buying ARVs at the lowest price in the region. This is contrary to the usual logic of procurement process, since Bolivia is also one of the countries that buys the least amount of medications.

This article summarizes the positive and negative experiences of Bolivia in the process of procurement of these drugs and also describes the factors that contributed and those that hindered the process.

Background:

The first case of HIV / AIDS in Bolivia was diagnosed in 1984, from then to date the cases steadily increased until 2007. With the entry of rapid diagnostic test in the country, the number of diagnosed cases has increased exponentially. Bolivia currently has 3873 people living with HIV, of whom 758 are receiving ARV treatment.

The Global Fund began ground activities in Bolivia in 2004. Since then the highly active antiretroviral therapy (HAART) has been used by most people living with HIV/AIDS in Bolivia. Before the start of the Global Fund’s activities in Bolivia, availability of ARV drugs was sporadic, often with single drug therapy, in some cases two drug associations and in very few cases triple therapy (HAART). Most therapies were intermittent and depended on who got the “donations “of ARVs. Notably, Brazil supported Bolivia providing free treatment for a large number of Bolivians over several years and continues to do so.

The Ibis-Hivos Association is an NGO, and is the Principal Recipient of HIV / AIDS Component of the Global Fund. It is an accidental partnership between two Non Governmental Organizations: (i) The Humanist Institute for Cooperation with Developing Countries “Hivos” from Holland, and (ii) IBIS from Denmark, a Danish NGO whose main areas of work is the Rights, Education and Development. Ibis-Hivos Association was the winning institution in a competitive bidding process to be the Principal Recipient of Global Fund as part of its functions, it has to purchase all products needed to care for people living with HIV / AIDS in the country, according to the provisions of the Procurement Plan.

Initially ARV drug management in Bolivia was done only through procurement agents. IDA Foundation helped procurement of ARV until 2007. From that year, after signing the memorandum of understanding between Bolivia and the Clinton Foundation, Ibis-Hivos began the procurement of drugs directly, i.e. without intermediary agents in 90% of the products. Bolivia is paying the best prices available for all ARV (figures 1, 2).

Figure 1:

Figure 2: Overprice paid by many South American countries for ARV.

Factors  Influencing Management Of ARV:

a. ARV production companies or legal representatives in Bolivia.

Bolivia has no ARV manufacturers or established legal representatives of the companies, whether generic or innovative. This enables the international procurement of these products, ie without intermediary. Some countries (like Bolivia), stipulate in their regulatory laws, that if there is a legal representative, or a producer in the country, the institution must first issue a national bid for the acquisition of the drugs, and only if the bid has no winner, then the institution can make an international procurement.

b. Patents and intelectual rights.

Bolivia has not given any intellectual property rights, or patents, nor has it registered any ARV (the process for one drug had been started, but then it was dismissed by the company that applied for it). On August 8, 2007 the government approved a Bill “3729 Act for the Prevention of HIV / AIDS, Human Rights Protection and Comprehensive Multidisciplinary Assistance for People Living With HIV / AIDS”, which states in it 39th article that all the required paperwork for the registration process for ARV will be made easier.

All this allows the registration of all ARV entering the country as an incoming item, for which one needs to get a new record each time a new batch of products enter. This process takes between 24 and 48 hours and requires only a photocopy of the original invoice of the supplier, a photocopy of the packing list of the provider and the Certificate of Analysis of the product lot.

c. Taxes:

Ibis-Hivos Association was able to get tax exemptions in Bolivia by issuing free gift certificates, from the partner office: “HIVOS” The Netherlands legalized certificates for the other office partner “IBIS” Denmark, and thus products are free from taxes. Also subscribed to the agreement with the Global Fund, all products bought with these resources should enter the country duty free. It is worth mentioning that Article 39 of the Protection Act 3729 for people living with HIV/AIDS provides for the exemption of tax for all products that are purchased for the treatment or care of persons living with HIV.

However, the regularization of this process of tax exemption is not yet complete and in some cases, although there is the Law, there have been some setbacks for the customs clearance of goods (see below factors which complicate the management). Upon obtaining the tax exemption on ARVs, the procuring agency only paid storage costs while remaining in customs, agent fees and customs broker. This procedure also decreases the time that products are stored in customs with an average of 3 days, and a maximum of 5 days for most of the cases.

d. Purchase procedures:

The Ibis – Hivos Association draws up a list of products required, and sends it to all generic and innovative producers, as well as the IDA Foundation, specifying the technical specifications and conditions. Once quotations are made, a technical analysis is done. It provides the quality parameters (according to the rankings of the Global Fund: A, B, Ci, Cii), delivery times, product life and background of the supplier (ie if the involved supplier’s purchases earlier met the deadlines) among the most important criteria. Subsequently, an economic evaluation of eligible companies is carried out.

All quotations are CIF / CIP, which means that the price of products includes shipping and transport to the airport in El Alto in the city of La Paz, Bolivia. Custom clearance costs are borne by the purchaser and there is insurance on the goods, which in the case of CIF price is offered by the company providing the transport, and the CIP price if transporter is hired by the company makes the sale. This process is quite versatile and the approximate time from the request for quotation to the award is about three weeks.

e. Providers:

During the purchase process, invitations are sent to innovative suppliers, generic suppliers and the IDA Foundation. The IDA foundation is the only procurement agent invited. The majority of innovative suppliers do not participate (by submitting a quotation), in some cases because the amount of ARV drugs that Bolivia purchases is not attractive to them, and does not cover minimum purchase fee. During this procurement in 2009, we purchased for the first time from Hoffman La Roche Laboratories in Basel, Switzerland. Generic suppliers are all in India; so far purchases have been made with the following: Cipla, Aurobindo, Matrix, Hetero Drugs, Rambaxy, and we expect to work with other companies in the future.

f.  IDA Foundation:

IDA Foundation is an internationally known procurement agent, and was the procurement agent for ARV prior to the awarding of Ibis – Hivos Association. From 2008, IDA Foundation participated in the buying process as one of the bidders. The participation of IDA Foundation is low because Bolivia purchases ARV drugs only in very small amounts, because the number of patients in treatment is less, for this reason it is very difficult to get the innovative producer interested in the sale of such small amounts, and often these products are not available from generic producers, or they do not meet the required quality criteria.

IDA Foundation is able to negotiate for these volumes with innovative producers, and although they have a minimal purchase fee, it is usually less than the other innovative laboratories have and allows the purchase of a great variety of innovative products. Another advantage of working with the IDA Foundation is that if any generic manufacturer refuses to sign a contract (which has happened in our experience) the drugs can be ordered from IDA Foundation (who always sign the contracts for the purchase of products) from this generic drugs supplier.

g. Clinton Foundation :

The Clinton Foundation is an international NGO that assists many countries in their process of procuring ARV Drugs, and also helps generic producers achieve quality standards that allow them to sell their drugs to programs financed through the Global Fund, thus the Clinton Foundation pre negotiates “roof” prices with the generic producers.

The Ministry of Health and Sports of Bolivia signed the Memorandum of Understanding with the Clinton Foundation in 200. From 2008, Bolivia made the direct purchase notifying suppliers that Bolivia is a member of the consortium and that will purchase the drugs with the accorded prices set by the Clinton Foundation. It is important to note that not all providers that Bolivia buy from are members of the Clinton Foundation, which indicates that even those non-member suppliers are willing to match with similar prices. It is also important to note that on several occasions Bolivia managed to get lower prices than those pre negotiated by the Foundation.

Factors That Hindered ARV Procurement.

a.Taxes:

Bolivia is a country that is in a change process; this has caused that at certain times, Customs Authorities, or from the Treasury Department, have hindered the custom clearance process, mainly because of frequent change of personnel, and the new personnel may be unaware of exemption for ARV drugs.

b. ARV suppliers:

In many cases generic suppliers do not have all the innovative products and if they do, a quality test has to be performed to meet the Global Fund criteria. Thus causing a delay of about 3 months for the delivery of the product. For this reason it is necessary to have a procurement agent like IDA Foundation, as most of the time the innovative producers will not sell a quantity that does not meet their minimum purchase fee. Some providers refuse to sign a contract with the acquiring institution which hinders the buying process itself; in this case Bolivia can use the services of an intermediary such as the IDA Foundation.

LESSONS LEARNT

a. Procurement:

International Procurement of ARV must consider a lag time of at least 6 months from the time of creation of demand of medicines to delivery of the goods at the Central Warehouse. For this reason it is important to have an adequate stock before starting the procurement process. One must have an estimate of 3 month production for generic providers, and in the case of innovative it can take even more, depending on the amount of pending orders they might have.  If one needs to buy drugs with Ci or Cii rating, one must add an additional 3 months from the date of production which is the average time for quality control by the laboratory hired by the Global Fund.

Always consider a percentage of loss in shipment; approximately 70% of the dispatches arrive with missing items, although not significant amounts. Once the procurement process is made and the awards are sent, it is necessary to monitor suppliers regularly.

Most providers accept a payment after the delivery for the products, but there are some that require a prepayment rate (IDA Foundation) or full payment in advance, as is the case with most of the original suppliers. These facts must be taken into account when deciding the purchase. Most providers do not have problems with payments by wire transfer (T/T).

b. Public policies:

One must have a solid legal support for the import and custom clearance of ARV; one must have all the legal guarantees of support in at least the following aspects:

Intellectual Property: Some countries allow the patenting of ARV drugs; this can lead to serious conflict if generic drugs are imported for protected products.

Payment of Taxes: In some countries there are laws, such as in Bolivia, which exempt taxation on ARV products.  If not so, alternative mechanisms, such as a donation to the Ministry of Health or a specific program that would allow a free customs clearance, or alternatively perform a cost-benefit assessment. In most cases it is even cheaper to pay the taxes to buy out the middleman.

International Logistics: You must ensure that products purchased will be accepted by the recipient, and will be adequately distributed to people who require them (PLWHA). The fact that the goods have been placed does not mean the purpose has been fulfilled.

Discussion:

The price negotiation should not be seen as a negotiation with the purpose of “saving” but rather as a negotiation with the possibility of acquiring more products with the same amount of money, and thus to provide treatment to a larger number of people.

Why does Bolivia have to pay less than its neighboring countries? Is a difficult question to answer, it is possible that in many cases in the neighboring countries there are legal representatives, or even branch-producing companies in the country itself; in such case the purchase of these intermediaries will always have a higher cost to the price of producing companies. However, this price should not exceed the import costs to be paid by way of customs duties and a percentage of profit for the intermediary. Unfortunately the reality is that often the intermediaries increase their local sales price by 100 to 200%, a fact that causes the final purchase prices to be much higher than the purchase price of a direct provider, and returning to the initial analysis results that the cost of treating one person could have covered three.

Regarding legislation many countries have laws, rules or regulations that “force” national institutions, and in some cases even NGOs to procure at the local level first, and only after it is ascertained that there are no local suppliers, one can procure internationally. Such laws, rules or regulations, in some cases, are effective only for governmental institutions; in these cases it is the state that ends up paying a much higher price for the same product. In other cases it is also due to convenience, it is easier and less complicated making a purchase at the local level than making international procurement, and payment processes are simpler, besides one can also exert more pressure on a local provider than on an international provider.

Another factor that may be important is the number of buyers that are there are in a country.  In Bolivia, 90% of all ARV drugs are purchased by the Global Fund Principal Recipient, the Ibis-Hivos Association. The reality can be quite different in other countries, where purchases are made by the Ministry of Health, Social Security Institutions, other government agencies, some civil society organizations and other NGOs. Obviously if one made only one purchase for all of these institutions, international negotiations could get a much lower price than those of Bolivia, however we understand that the process of consolidating consumer information, and planning for the procurement of medications, and final distribution logistics can be a very challenging; but the result could be considerable savings for all institutions that participate in the purchase, and the possibility of acquiring more treatments.

Conclusions:

Each country must analyze in context the factors that most influence their procurement processes and understand why the prices at which they obtain their drugs. The laws of each country can and, if necessary, should be reviewed and amended, as the efficient management of medicines is in favor of the state, which in many countries is the main buyer.

The ideal procurement would be to concentrate all purchases in a single process for better results in the price negotiation, but this procedure should be made only if the country is able to fulfill the required conditions. Success in the international procurement management of Bolivia is due a combination of (i) purchasing strategies of the Ibis Hivos Association, (ii) price negotiations of the Clinton Foundation, and (iii) the current legislations in Bolivia.

Acknowledgment:

The author wishes to thank staff of the Ibis-Hivos Association for their collaboration in these processes and their contributions in preparing this article.

References:

1. Progress Reports Ibis-Hivos Association Q18:

2. Clinton Foundation reports: http://www.clintonfoundation.org/download/?guid=8261818e-ca75-102b-81f3-00304860f676

3. Global Reports PQR: http://pqr.theglobalfund.org/PQRWeb/Screens/PQRLogin.aspx

4. WHO Global Price Reporting Mechanism: http://www.who.int/hiv/amds/price/hdd/index.aspx

5.  Law (3729) for the Prevention of HIV / AIDS, Human Rights Protection and Comprehensive Multidisciplinary Support People Living With HIV / AIDS. Gaceta Oficial de Bolivia.

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