Answers to frequently asked questions about medicine procurement through international organizations

Today, we explain why the Ministry of Health of Ukraine asked specialized international organizations for support to procure vital medicines to Ukraine. We also outline the specific requirements and process peculiarities, the evaluation of compliance with the quality and shelf line requirements, the procurement results for the budget funds in recent years.

Why did the Ministry of Health of Ukraine decide to start the procurement of medicines and healthcare products through international organizations?

Before 2015, the procurement of medicines and medical products was a very sensitive issue for Ukraine, as according to the Security Service of Ukraine, up to 40% of the procurement budget was overspent or plundered. In that context, few patients received essential medicines and necessary treatment. Moreover, the funds in the amount of UAH 52.6 million allocated to the procurement of HIV/AIDS medicines were transferred to distributor companies, but have not been used for the intended purpose to date: these companies have not delivered medicines yet, and no funds have been returned to the budget.

In 2014, the critical situation related to corrupt practices and limited competition led to the delayed public procurement of overpriced medicines and vaccines across Ukraine and this became the crucial point for the procurement reform implementation. Therefore, in 2015 Ukraine adopted the law on procurement of medicines and healthcare products through specialized international organizations.

Which specialized organizations support Ukraine in the procurement of medicines and healthcare products?

For the fourth consecutive year, the United Nations Development Program (UNDP), the United Nations Children’s Fund (UNICEF) and the UK procurement agency Crown Agents implement the procurement of medicines and healthcare products to Ukraine.

All organizations were selected pursuant to the current legislation, the Law of Ukraine on Public Procurement in particular, and have extensive medical procurement experience. For example, UNICEF works in more than 190 countries and territories, and is a world leader in vaccine procurement. UNDP operates in 170 countries, deals with sustainable development challenges and helps to eradicate poverty in the world. Crown Agents operates in more than 100 countries and has more than 185 years of experience in developing efficient public procurement systems.

Has medicine procurement through international organizations helped Ukraine reduce corruption practices?

According to the estimates of the Accounting Chamber of Ukraine (the ACU’s decision as of August 22, 2017), cooperation with specialized international organizations in medicine procurement resulted in 39% savings of the allocated budget funds. When comparing prices, in 2015 international organizations managed to purchase some medicines and healthcare products at up to 67 times lower prices than the Ministry of Health of Ukraine.

Moreover, international organizations procured about 70% of additional medicines for some government programs using the saved funds. More than 60% of medicines and healthcare products were purchased from manufacturers, which means that Ukrainians now receive quality products at market prices.

The results of the monitoring of medicine procurement for oncology programs through international organizations and through the ProZorro e-procurement system showed a 300% price difference in local tenders for medicines of the same manufacturer.

Did the Ministry of Health of Ukraine consider recommendations of the Accounting Chamber of Ukraine?

The Accounting Chamber of Ukraine confirmed the effectiveness of medicine procurement through specialized international organizations and suggested several recommendations regarding organization of the procurement process. Accordingly, the Ministry of Health of Ukraine improved the procurement process, in particular, by having accelerated procurement at all stages, having simplified the bureaucratic procedures that slowed down the procurement process, having improved the criteria for the selection of specialized international organizations, having revised the agreements with international organizations and the mechanisms for delivery and distribution of medicines and healthcare products to the regions. As a result, in 2018 the procurement processes began 6 months earlier, when compared to previous years.

What are the results of procurement through international organization for the 2015 budget funds?

Specialized international organizations procured 100% of quality medicines and healthcare products for the 2015 budget funds, based on a list of products ordered by the Ministry of Health of Ukraine, which stipulated the required quantities and the available budget. UNICEF and Crown Agents have already delivered all products, UNDP is currently completing the delivery of HIV diagnostic test-systems, which were additionally purchased using the saved funds in the amount of about 5 000 Euros, or 0.007% of the total 2015 procurement budget. Delivery delays occurred due to a long registration process.

What are the results of procurement through specialized international organization for the 2016 budget funds?

Under the procurement budget allocated by the Ministry of Health of Ukraine in 2016, specialized international organizations procured 100% of medicines and medical products in quantitative terms (i.e. the ordered list of products). Meanwhile, in monetary terms, only 88.1% of the allocated funds were used. Such differences are due to unspent balances, which are currently used to purchase additional medicines and healthcare products.

What are the results of procurement through specialized international organization for the 2017 budget funds?

Since 2014, there has been a shift in the procurement schedules. As a result, many hospitals partly have available in stocks medicines procured for the budgets funds allocated in the previous years. As of the beginning of May, many healthcare facilities have medicine balances worth UAH 2.7 billion, which is almost equivalent to the amount transferred to specialized international organizations for the medicine procurement in 2015 or approximately 70% of the 2016 procurement budget. Deliveries to a number of regions were delayed due to the availability in stock of medicines or healthcare products in particular healthcare facilities (for example, pediatric and peritoneal dialysis, blood donation). Specialized international organizations procured 78.89% of medicines and healthcare products for the 2017 budget funds, 57.5% of which have already been delivered to Ukraine.

What are the results of procurement through specialized international organization for the 2018 budget funds?

In 2018, the procurement processes began much earlier than in previous years. For example, formation of the separate nomenclatures for centralized procurement of medicines and healthcare products started in November 2017 and the agreements between the Ministry of Health and specialized international organizations were signed in April. Within a short time, specialized international organizations announced tenders.

The Ministry of Health of Ukraine has already received estimates for a number of procurement programs. The first medicines and healthcare products procured for the 2018 budget funds are expected to be delivered in July 2018. Given that deliveries of medicines, vaccines and healthcare products for the 2017 budget funds are still underway, the Ministry plans to implement phased deliveries in 2018 to prevent excessive stocks of medicines in the regions. An important innovation of the 2018 procurement consisted in implementation of the new mechanism for estimating the yearly demand – unspent balances of medicines and healthcare products, as well as all planned deliveries were taken into account.

What payment model is used?

In 2018, the Ministry of Health of Ukraine has improved certain aspects of the agreements with specialized international organizations. In particular, the new agreements envisage changes in payment terms and introduction of progress payment for each program. From now on, the Ministry will pay for medicines at the stage of signing agreements with respective international organizations and medicine suppliers (manufacturers and distributors). Relevant estimates will also include information on the medicine delivery schedules.

It is also worth noting that all international organizations that support the Ministry of Health of Ukraine in the procurement of medicines and healthcare products are non-profit organizations. This means that these organizations cannot spend the procurement funds for purposes other than intended. Therefore, savings are often used to purchase additional medicines or healthcare products, while unspent funds are transferred to the state budget.

Will UAH 5.9 billion of allocated funds cover the 2018 demand in medicines and healthcare products?

The Ministry of Health of Ukraine procures medicines and healthcare products for funds allocated from the state budget, annually approved by the Verkhovna Rada of Ukraine (UAH 3.4 billion in 2016, UAH 5.9 billion in 2017, and UAH 5.9 billion in 2018). In 2018, international organizations will procure about 500 medicines and more than 700 medical products under 40 government programs.

On average, about 45% of the total procurement demand is covered by the national sources – funds allocated from the state budget. For instance, the Adult Oncology program is approximately 30% funded by national sources and the Pediatric Dialysis program – by almost 100%. Centralized medicines procurement through specialized international organizations allows negotiating on prices, and therefore, increasing the purchase volume. For example, for the first time in years the procurement covered 100% of the demand for Imatinib – the medicine for chronic myeloid leukemia (CML) treatment.

Do medicines and healthcare products procured by international organizations meat all quality standards and requirements?

The quality and efficacy of all medicines and medical products procured by international organizations are certified in compliance with relevant international or EU standards, as specified in international treatment protocols. For example, all vaccines and anti-retroviral drugs procured by UNICEF need to be prequalified by the World Health Organization.

To prevent overpayment, only companies that offer competitive prices can participate in tenders.

Moreover, the Ministry of Health of Ukraine regularly consults with special expert groups, who develop and implement each government program.

Are there any shelf-life requirements for the medicines and healthcare products to be procured?

No expired medicine or healthcare product has been procured to Ukraine during the entire period of cooperation with specialized international organizations. The manufacturing process takes on average 4 to 6 months. In some cases, later deliveries are purposely scheduled with the aim to ensure availability of medicines throughout the year and guarantee sufficient shelf life at the moment of medicine use.

In rare cases, medicines with a short shelf life are delivered only upon receipt of written confirmation from the Ministry of Health of Ukraine or relevant MoH structural unit that the quantities delivered will be used within the scope of the remaining shelf life. When medicines with a shorter shelf life are accepted, this is only done to ensure presence of life-saving medicines in health facilities stock while waiting for newer batches to be made available.

In case of mistakes in the estimation of the procurement demand at the regional level, and for the effective use of procured medicines and healthcare products, healthcare facilities are obliged to inform the Ministry of Health about the excessive stock of products they won’t use within a period of five months before the expiration date. Then, the Ministry of Health redistributes such products to the regions experiencing shortages or asks international organizations to replace these products. However, in practice, most hospitals and healthcare facilities fail to notify the Ministry in a timely manner.

Does Ukraine procure sufficient amount of vaccines?

For the first time in 7 years, Ukraine procured sufficient amount of vaccines for immunization of the population according to the recommended vaccination schedule. All vaccines are prequalified by the World Health Organization, which means that these products conform to current international standards.

As of May 1, 2018, Ukraine has the following vaccines:

• 2 334 773 diphtheria, tetanus, and acellular pertussis (DTaP) vaccines, 601 515 tetanus and diphtheria vaccines and 5 519 923 reduced antigen-content diphtheria-tetanus vaccines;
• 597 406 IPV vaccines (given by injections) and 1 389 682 OPV vaccines (oral);
• 1 995 500 Hepatitis B vaccines;
• 46 864 Haemophilus Influenzae Type B vaccines;
• 2 668 126 TB vaccines (BCG);
• 998 000 MMR vaccines (as of May 17).

Live vaccines require careful maintenance of the vaccine cold chain. The vaccine delivery schedules are specified in the relevant agreement with UNICEF, taking into account all transportation and storage requirements.