Public Procurement of Medicines and Medical Products: Back to Old or Continue Reform

23/ 04/ 2018

Dmytro Aleshko, partner at Legal Alliance Company Alexander Bondar, senior associate at Legal Alliance Company Apteka.UA On March 1st, 2018 the last year of procurement of medicines and medical products with the involvement of specialized procurement organizations begins. Yes, it is March 31st, 2019, that is determined by legislation as the deadline for such procurement. Since the international specialized organizations need about a year to fully comply with their obligations and complete all procedural issues, they must begin preparations for the transfer of such procurement now. However, is the country ready for such a transfer? Undoubtedly, the classic expression comes to mind – rather no than yes. However, procurement reform in the medical sector is a complex process that requires a comprehensive and balanced approach. After all, the question is not only in the area of procurement, but also in the approaches to forming the nomenclature, accounting of procured medicines and medical products, the mechanism for monitoring residues, etc. All of this, of course, takes time and work. And if we take into account the fact that not all, both at the political level and in the business environment, are in favor of such changes, and, accordingly, the implementation faces a certain impediment, it is not surprising that the work on the reform of procurement of medicines and medical products has not yet been completed, and the centralized procurement organization has not yet been created and tested properly. Establishing a centralized procurement organization and setting its effective work at the appropriate level involves not only working out its organizational structure, attracting and training highly professional specialists, setting up internal mechanisms and practices, but also providing the basis for its effective activity at the legislative level: adoption of the relevant law and by-laws. In particular, as international experience shows, the implementation of long-term contracts and the possibility of procuring it through negotiation procedures is of paramount importance for the effective operation of such an organization. It needs to be settled at the legislative level. There are a number of other issues that will need to be clearly outlined and worked out, first of all within the framework of the working group on reforming the system of public procurement of medicines and medical products, and discussed at the highest level in the Ministry. At the moment, significant, but only the first steps in this direction have been made. On August 23rd, 2017, the Cabinet of Ministers of Ukraine by Order No. 582-p approved the Concept for Reforming Mechanisms of Public Procurement of Medicines and Medical products, which provides for the establishment of a centralized procurement organization. By the same order, the Cabinet of Ministers of Ukraine has obliged the Ministry of Health to create a legal entity that will be subordinated to the Ministry and responsible for the functions of the centralized procurement organization within the framework of the Concept implementation. The Ministry was also instructed to develop and submit to the Cabinet of Ministers of Ukraine for approval an action plan for the implementation of the Concept. So, we started to move, but all work is still ahead. As already mentioned above, the formation of a mechanism for the procurement of medicines and medical products through a centralized procurement organization is a time-consuming process. Hurry up carefully, working out all the details. After all, unwarranted haste can destroy all the best intentions and turn the centralized procurement organization into a subsidiary of the tender committee of the Ministry of Health. In such circumstances, the transfer of procurement from international specialized organizations, in our opinion, seems premature and can lead to the restoration of the procurement mechanisms that existed before with all the relevant consequences and corruption risks. Continuing procurement with the involvement of international specialized organizations for a certain period could allow uninterrupted provision of patients with the necessary qualitative drugs, on the one hand, and provision of the necessary time for the creation of a quality procurement organization, on the other. However, in this case, it will be necessary to pre-solve some of the complexities or issues that have been identified during the international procurement. The most painful of these is probably to ensure shorter delivery times for medicines and medical products. The state and international specialized organizations will need to find solutions that would allow the delivery of such goods in significantly shorter time periods so that patients can be provided with the necessary medicines and medical products in a timely manner. Therefore, in the near future, the relevant state authorities will need to make complex and important decisions. Lets hope for the better. Contact the author: Dmytro Aleshko, partner, [email protected]

Dmytro Aleshko, partner at Legal Alliance Company

Alexander Bondar, senior associate at Legal Alliance Company

Apteka.UA

On March 1st, 2018 the last year of procurement of medicines and medical products with the involvement of specialized procurement organizations begins. Yes, it is March 31st, 2019, that is determined by legislation as the deadline for such procurement. Since the international specialized organizations need about a year to fully comply with their obligations and complete all procedural issues, they must begin preparations for the transfer of such procurement now. However, is the country ready for such a transfer? Undoubtedly, the classic expression comes to mind – rather no than yes.

However, procurement reform in the medical sector is a complex process that requires a comprehensive and balanced approach. After all, the question is not only in the area of procurement, but also in the approaches to forming the nomenclature, accounting of procured medicines and medical products, the mechanism for monitoring residues, etc. All of this, of course, takes time and work. And if we take into account the fact that not all, both at the political level and in the business environment, are in favor of such changes, and, accordingly, the implementation faces a certain impediment, it is not surprising that the work on the reform of procurement of medicines and medical products has not yet been completed, and the centralized procurement organization has not yet been created and tested properly.

Establishing a centralized procurement organization and setting its effective work at the appropriate level involves not only working out its organizational structure, attracting and training highly professional specialists, setting up internal mechanisms and practices, but also providing the basis for its effective activity at the legislative level: adoption of the relevant law and by-laws. In particular, as international experience shows, the implementation of long-term contracts and the possibility of procuring it through negotiation procedures is of paramount importance for the effective operation of such an organization. It needs to be settled at the legislative level.

There are a number of other issues that will need to be clearly outlined and worked out, first of all within the framework of the working group on reforming the system of public procurement of medicines and medical products, and discussed at the highest level in the Ministry.

At the moment, significant, but only the first steps in this direction have been made. On August 23rd, 2017, the Cabinet of Ministers of Ukraine by Order No. 582-p approved the Concept for Reforming Mechanisms of Public Procurement of Medicines and Medical products, which provides for the establishment of a centralized procurement organization. By the same order, the Cabinet of Ministers of Ukraine has obliged the Ministry of Health to create a legal entity that will be subordinated to the Ministry and responsible for the functions of the centralized procurement organization within the framework of the Concept implementation. The Ministry was also instructed to develop and submit to the Cabinet of Ministers of Ukraine for approval an action plan for the implementation of the Concept.

So, we started to move, but all work is still ahead. As already mentioned above, the formation of a mechanism for the procurement of medicines and medical products through a centralized procurement organization is a time-consuming process. Hurry up carefully, working out all the details. After all, unwarranted haste can destroy all the best intentions and turn the centralized procurement organization into a “subsidiary” of the tender committee of the Ministry of Health.

In such circumstances, the transfer of procurement from international specialized organizations, in our opinion, seems premature and can lead to the restoration of the procurement mechanisms that existed before with all the relevant consequences and corruption risks.

Continuing procurement with the involvement of international specialized organizations for a certain period could allow uninterrupted provision of patients with the necessary qualitative drugs, on the one hand, and provision of the necessary time for the creation of a quality procurement organization, on the other. However, in this case, it will be necessary to pre-solve some of the complexities or issues that have been identified during the international procurement. The most painful of these is probably to ensure shorter delivery times for medicines and medical products. The state and international specialized organizations will need to find solutions that would allow the delivery of such goods in significantly shorter time periods so that patients can be provided with the necessary medicines and medical products in a timely manner.

Therefore, in the near future, the relevant state authorities will need to make complex and important decisions.

Let’s hope for the better.

Contact the author: Dmytro Aleshko, partner, [email protected]