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The Role of Forecasting, Price Negotiation and Procurement Management in Determining Availability of Antiretroviral Medicines (ARVs) in Mexico

  • Adesina, Adebiyi Ola-Oluwa
Publication Date
Jan 01, 2010
eScholarship - University of California
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Ensuring an adequate supply of antiretroviral (ARV) medicines is a crucial part of providing uninterrupted treatment to people living with HIV/AIDS (PLWHA). Since adoption of a mandate to provide universal access to HIV care in 2003, Mexico has made considerable effort to provide PLWHA with access to antiretroviral treatment and medicines. In 2008, increasing concerns about supply chain efficiency, ARV availability and rising costs led the Mexican government to create an Inter-Institutional Commission to negotiate prices of ARVs and to improve the efficiency of forecasting, procurement and distribution of these medicines. The aim of this dissertation is to provide a descriptive analysis of ARV forecasting, price negotiation and procurement processes and practices among major health care providers in Mexico with the goal of identifying problems related to supply chain efficiency and ARV availability. This research utilized estimated demand volume, procurement volume, and procurement price data for the most commonly prescribed ARVs in Mexico from 2003 to 2009. The global optimization model, which draws upon a comprehensive analytical framework, was used to assess performance, information integration, organization, and overall efficiency of the supply chain. The quantitative analysis is linked with qualitative data generated from a review of pharmaceutical and ARV policy documents and interviews with key informants. Interviews were conducted with physicians, pharmacists and program managers involved in decisions surrounding ARV supply at the national and hospital levels. The majority of informants were staff from the Secretaria de Salud (SSA) /Ministry of Health and the Instituto Mexicano del Seguro Social (IMSS) health systems, which together serve more than 90% of PLWHA in Mexico. Secondary data were also obtained from interview notes with representatives of pharmaceutical companies in Mexico. Findings from the study were presented for two periods - pre-inception (January 2003 - September 2008) and post-inception (October 2008 - November 2009) of the Commission. Pre-Commission findings indicate a paucity of data on ARV supply chain in Mexico, which reflects the dearth of information on the drug supply chain generally. The limited data available indicate that when patient ARV need is compared to volume procured, both of Mexico's health systems experience varying levels of shortages and surpluses of ARV. Shortages of ARVs in the SSA health system appear to have been alleviated by the introduction of SALVAR - the patient and ARV management information system (MIS). For IMSS, the lack of a similar standardized MIS and lack of access to forecast and procurement data made it difficult to assess ARV shortages beyond one year. In IMSS, more so than in SSA, procurement of single ARV pills to compensate for combination ARV pills, as well as surplus procurement of ARV, indicate limited integration of information between forecasting and procurement stages of the supply chain that likely leads to waste of resources. Analysis of annual price and volume data from 2003 to 2008 showed that despite a substantial increase in the annual volume of ARVs procured, ARV prices did not decrease. Additionally, a comparison of ARV prices in Mexico to other upper-middle income countries showed that Mexico has been paying substantially higher prices for ARVs. Overall, the findings indicate inefficiencies in the ARV supply that are likely to be detrimental to patient well-being and costly to the health systems, which have limited resources.Post-Commission findings show that the Inter-Institutional Commission successfully negotiated lower ARV prices in 2008 and 2009. Despite these savings, Mexico continues to pay more for ARVs than comparable countries. Additionally, costs associated with procurement of surplus ARVs and lack of overall changes in organizing and integrating information across stages of the ARV supply chain suggest the Commission has yet to implement a comprehensive approach to improving efficiency in the purchasing and delivery of ARVs. Lastly, the overall estimated cost of surplus ARVs exceeded initial savings from lower prices, further suggesting that there is a need for cost containment strategies that go beyond price negotiation.In conclusion, factors hindering efficiency of ARV delivery identified in the findings are discussed with recommendations for improving supply chain efficiency. To improve efficiency of ARV delivery and availability the Mexican government should 1) improve data collection and coordination of information across stages of the supply chain by strengthening information management capacity, 2) establish a support system to monitor and provide feedback concerning to the quality of patient treatment and 3) strengthen the Commission's role by providing additional resources and ensuring clarity in its tasks, responsibilities and goals. While this study is not exhaustive in accounting for every aspect of the ARV supply chain in Mexico, it addresses the need for a better understanding of the delivery of ARVs and identifies areas for future research relating to ARV supply chain management.

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