Objective

1



One-Year Assessment of Joint Procurement of
Pharmaceuticals in the Public Health Sector in
Jordan
Ibrahim Alabbadi Abdelraouf Qawwas Mahmoud
Jaafreh Taher Abosamen and Maisa Saket
Background Jordan is one of the fastest growing
and modernizing countries in the Middle East. The
budget of the Jordanian Ministry of Health
represented 6.1 (about US 300 million) of the
general governmental budget. More than 72 of
Jordanian drug expenditure occurs in the private
sector, and the remaining 28 is in the public
sector. The public sector represents the Ministry
of Health (MoH 37) (which is composed of
tertiary hospitals, primary health care centres,
and rural health posts), the Royal Medical
Services (RMS military sector 27), Jordan
University Hospital (JUH 21), and King Abdullah
University Hospital (KAUH 15). The Jordanian
pharmaceutical market is made up of almost 74
imported medicines, most of which are branded
products (either still patented or off patent)
and a few of which are generic products 26 are
locally manufactured products, which are mostly
generic products but are usually sold under a
trade name (i.e., branded generics). About 5 of
the local production is covered by license
agreement with the brand manufacturers, and there
is some subcontracted manufacturing (labelling
and packaging) in which products are supplied in
bulk by the brand manufacturers. According to
national and international documents, the
pharmaceutical sector in Jordan suffers from
several inefficiencies. These include double
purchasing in the public sector (i.e., the
government pays for more as public health
institution buying the same drug in the same year
at different prices), irrational use of
medicines, and the absence of planning for needed
quantities of medicines. These problems have led
to an inadequate pharmaceutical financial system,
higher spending on drugs, wasting of public
money, and poor availability of medicines
throughout the year for beneficiary citizens. In
view of these challenges and the unjustified
escalation in spending on medicines, a joint
procurement process was established in Jordan in
2004 and introduced to the 4 participating
parties (MoH, RMS, JUH, and KAUH) in July 2006.
The first tender was awarded in 2007 for the 4
participating parties for about 15 of the annual
pharmaceutical public-sector purchases in Jordan.
The goals of the joint procurement process were
to unify the purchase of drugs and medical
supplies among the participating parties, to
reduce the cost of purchased drugs by buying in
large quantities, to manage operations
electronically, to enhance patients' confidence
in medicines consumed in the public sector, to
reduce waste, and to optimize the allocation of
scarce resources for health services in Jordan.
ABSTRACT Background About 10 of the gross
domestic product in Jordan is spent on health
care, and almost one third of that is spent on
pharmaceuticals. The public health sector in
Jordan has 4 main governmental parties that
purchase medicines independently through annual
tenders (i.e., the process of bidding, being
awarded, ordering, paying for, and receiving
drugs) issued in the generic (or scientific) name
of the medicines or therapeutic groups. Double
purchasing is a problem that leads to higher
spending on drugs and poor availability of
medicines throughout the year. To remedy this
problem, a joint procurement process was
established in Jordan in 2004 and went into
practice in 2006. Objective The aim of this
research was to assess the first year of
purchasing pharmaceuticals in the public health
sector in Jordan through the joint procurement
process for the participating parties in
comparison with purchasing pharmaceuticals
independently before the institution of joint
procurement. Methods The first tender under the
joint procurement process was issued in 2007 for
15 of annual pharmaceutical public sector
purchases in Jordan. A research committee
solicited lists of purchased quantities and final
purchase prices of these pharmaceuticals obtained
in 2006 by each participating group and in 2007
through the joint procurement process. The
quantity comparison method was used to compare
the costs of drugs purchased in 2006 and 2007,
and estimated cost savings were calculated for
each product for each party for 2006 and 2007
under the assumption that the same quantities
purchased by each participating party in 2006
would be purchased through joint procurement
(prices of 2007). Results Purchasing through the
joint procurement process achieved an estimated
savings of 2.4. This savings increased to 8.9
after excluding 1 item (a cephalosporin), the raw
material price of which increased markedly in
2007 compared with 2006 because of an
international shortage of raw materials.
Conclusion Based on these initial findings,
applying a joint procurement system for
pharmaceuticals in the public health sector in
Jordan has potential to reduce expenditures for
the purchase of medicines and provide treatment
continuously throughout the year.
Objective The aim was to assess purchasing
pharmaceuticals in the public health sector in
Jordan through the joint procurement for
participating parties (MoH, RMS, JUH, and KAUH)
in comparison with purchasing pharmaceuticals
independently before.
Results
Table 1 Products involved in the comparison and
the estimated savings achieved from the purchase
of drugs through JPD (2007) in comparison with
the purchase of drugs through each participating
party by itself (2006)
The data received pertained to 174 of the total
229 awarded products in the 2007
pharmaceutical purchase (Table 1) Assuming that
the same quantities Purchased by joint
procurement in 2007 were purchased by each
participating party independently (using prices
of 2006), then the estimated savings achieved
from the purchase of all drugs through joint
procurement based on the quantity-comparison
method was 2.4 (Table 2) increased to 8.9
after excluding one Item (a cephalosporin), for
which the raw material prices increased markedly
in 2007 because of an international shortage.
Participating party No. of products awarded in 2007 No. of products involved No. of products not involved Cost of quantities purchased in 2007 Cost of quantities purchased in 2007 Estimated savings Estimated savings
Participating party No. of products awarded in 2007 No. of products involved No. of products not involved Based on 2006 prices paid by each party Based on 2007 price paid by JPD JDs
MoH 85 55 30 5,864,914 6,141,397 276,483 -4.7
RMS 66 64 2 2,884,867 2,641,624 243,244 8.4
JUH 35 29 6 544,403 448,216 96,187 17.7
KAUH 43 26 17 787,258 608,396 178,862 22.7
Total 229 174 55 10,081,442 9,839,632 241,810 2.40
Methodology Comparison of Pharmaceutical
Procurement Methods Research committee

• Representatives of participated parties
  provide lists of purchased
• quantities and prices for drugs under
  investigation i.e. for 2006.
• The same was obtained for 2007 through the
  joint procurement process

Data Collection

• Drugs purchased by each participating party were
  classified according to
• the rational drug list unique code
• All products purchased for 2006 and 2007 were
  listed by trade name,
• concentration, dosage form, and the unit price
  for each item
• The price difference per unit for each item was
  calculated for all products
• purchased for 2006 and 2007
• The cost of the pharmaceuticals purchased by
  joint procurement was
• calculated by determining the unit price for each
  item in 2007 and comparing
• it with the unit price in 2006 for each
  participating party for the same item
• Estimated cost savings were calculated based on
  the difference (if any)
• in the total cost of purchasing pharmaceuticals
  between 2006 and 2007

Table 2 Estimated savings achieved from the
purchase of all drugs (except oral
cephalosporins) through JPD (2007) compared with
the purchase of all drugs independently by each
participating party (2006)
Participating party Cost of quantities purchased in 2007 Cost of quantities purchased in 2007 Estimated savings Estimated savings
Participating party Based on 2006 prices paid by each party Based on 2007 prices paid by JPD JDs
MoH 5,392,914 5,152,397 240,517 4.5
RMS 2,803,079 2,472,813 330,266 11.8
JUH 544,403 448,216 96,187 17.7
KAUH 787,258 608,396 178,862 22.7
Total 9,527,654 8,681,822 845,832 8.9
Quantity Comparison Method