Topic outline

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  • Introduction

    This course gives you an introduction to inefficiencies in global health spending and how open contracting can intersect and mitigate issues. It provides case studies, statistics and explanations to help learning.

    The course, including this introduction, is in 6 parts.

    Please read through each section before continuing to the next section.

    Contents of this course:

    1. Introduction

    2. Inefficiency in Health Procurement

    3. The Impact of Inefficiency

    4. Open Contracting & Health Efficiency

    5. Corruption, Waste and Open Contracting in Health

    6. Medicine Prices and Open Contracting


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    • Inefficiency in Health Procurement

      The World Health Organisation (WHO) research suggests that the healthcare sector spends trillions of dollars every year for little benefit concluding that...


      “20–40 per cent of total spending is consumed in ways that do little to improve people’s health”


      The WHO outlines ten leading causes of inefficiency and five are, fully or partially, procurement issues. These include:

      • Paying higher than necessary prices for medicines
      • Use of substandard and counterfeit medicines
      • Overuse or supply of equipment, which can be induced by suppliers
      • Inadequate health service infrastructure
      • Corruption and waste


                

    • Open Contracting & Health Efficiency

      Improving efficiency in health procurement is a difficult job.

      Healthcare providers need access to stocks of several hundred medicines and a wide range of non-durable goods, which are all continually depleted and renewed. Meanwhile, the technical complexity of medical devices and health facility construction processes create further challenges.

      Beyond this, good work of procurement officials is continually threatened by corruption and wastage; meaning, for example, that even if specifications for drugs were perfect, collusion and bid-rigging could undermine the quality of what was actually delivered. 

      Open Contracting gives the means to improve efficiency in each of the procurement related areas defined by the WHO. It enables access to information that fosters continual learning while at the same time tackling corruption and improving competition in health procurement.

      The next two section will explore in detail how two of the problem areas defined by WHO can be improved by open contracting. These are: 

      1. Corruption and waste
      2. Paying higher than necessary prices for medicines



    • Corruption, Waste and Open Contracting in Health

      Open contracting shows who is buying what, from whom and at what price, as well as provides information about unsuccessful bids and bidders. Quantitative analysis of these simple transactions shows supplier performance and activity over time.

      It can reveal patterns and anomalies, which might indicate over-pricing and kickbacks or collusion between competitors; linking this information to other datasets can confirm such suspicions. 

      Open contracting also helps to ensure that companies on watch-lists cannot win business when they are prohibited from competing.


      OPEN CONTRACTING IN ACTION

      In Indonesia, the Open Tender platform runs a rudimentary analysis based on the contract winner, budget, cost, date of award, and other variables to detect potential fraud. 

      In 2012, the algorithm detected a corruption risk in a contract to supply medical devices to hospitals in Banten province. 

      Investigative journalists worked with a CSO partner and uncovered an overpricing scam, which drew in several public officials. 



      GLOBAL STATS & FACTS: FINANCIAL LOSSES TO CORRUPTION IN HEALTH


      EUROPEAN CASE STUDIES: CORRUPTION IN HEALTH PROCUREMENT


      AFRICAN CASE STUDIES: CORRUPTION IN HEALTH PROCUREMENT

    • Medicine Prices and Open Contracting

      Poor value for money in the medicine market is driven by “widespread lack of public access to information about the pharmaceutical sector (e.g. medicines pricing, information on quality and suppliers etc)”, according to an eight-year study of 20 countries by the WHO. Government bodies may not understand their own commercial positions and weaknesses, because they do not collect and analyse procurement data effectively.

      Open contracting enables government officials to have access to the information they need to make evidence based decisions within their procurement systems. If a supplier consistently under-performs or changes prices, for example, from county to county, Government can run simple analysis that would highlight this, meaning that contracts are awarded more on merit.
      OPEN CONTRACTING IN ACTION

      A non-profit organisation called Civio recently conducted “a journalistic investigation into access to medicines around the world”. The organisation sourced data on the prices of 14 essential, non-patented drugs in 61 countries and compared them against both international reference prices and the in-country daily wage of the lowest paid public servant - as an indicator of affordability. 

      This unorthodox methodology and country sample produced thought-provoking insights about the way global medicine markets operate. For example, “In Nigeria or Congo, 30 omeprazole (30 pills) can cost almost 13 working days. In Spain, Italy and Germany, the same treatment is paid with between 1 or 2 hours’ wages”.




      EUROPEAN CASE STUDIES: MEDICINE PRICES


      AFRICAN CASE STUDIES: MEDICINE PRICES