Containing rapidly growing health care costs in the Latin American and the Caribbean region, especially amid the COVID-19 pandemic, requires an in-depth analysis of prices from a novel perspective. This paper documents hitherto understudied variations in prices paid for pharmaceuticals, equipment, and medical supplies within countries and markets. It also identifies effective procurement strategies for lowering prices within existing regulatory frameworks. The analysis uses public procurement data gathered by governments’ electronic procurement systems in nine countries and territories across the region. The data are uniquely detailed and complete, encompassing the minute detail of purchasing decisions and processes made across all regulated public entities in the study countries and territories. Traditional regression analysis and machine learning (random forests) methods are used to explain prices as a function of procurement decisions and outputs, such as the number of bidders. Based on in-depth discussions with policy makers, the paper also devises realistic policy interventions, which in turn can be used to estimate savings scenarios. First, the findings show that the prices paid vary greatly across and within countries. The latter is surprising given that the regulatory and institutional framework is largely fixed within each country. Second, a high proportion of within-country and -market variation can be explained by standard features of procurement policy implementation, such as the length of advertising tenders. Third, the explanatory models point to the potential for lowering prices across the region by about 14 percent by implementing low-level, yet impactful changes to how purchasing is done.
Details
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Author
Fazekas,Mihály, Oliveira,Alexandre Borges De, Regös,Nóra
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Document Date
2021/06/04
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Document Type
Policy Research Working Paper
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Report Number
WPS9689
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2021/06/04
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Disclosure Status
Disclosed
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Doc Name
Lowering Prices of Pharmaceuticals, Medical Supplies, and Equipment : Insights from Big Data for Better Procurement Strategies in Latin America
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Keywords
unit price; international public management; delivery of health services; quality health care service; market concentration; procurement pharmaceutical; Value for Money; framework agreement; medical supply; unit of measurement; impact on price; global health; health care cost; electronic procurement system; health care system; purchase decision make; Health Care Delivery; Public Procurement System; health care purchasing; health care pricing; health care products; high population density; risk of corruption; health care market; public health expenditure; health service coverage; public procurement authority; public health center; cost of road; stable economic growth; diversity of products; capacity building training; fixed price contract; requirement use; linear regression model; ministries of finance; explanatory factors; lower price; price impact; explanatory power; average price
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Citation
Fazekas,Mihály Oliveira,Alexandre Borges De Regös,Nóra
Lowering Prices of Pharmaceuticals, Medical Supplies, and Equipment : Insights from Big Data for Better Procurement Strategies in Latin America (English). Policy Research working paper,no. WPS 9689,COVID-19 (Coronavirus) Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/110791622827821491/Lowering-Prices-of-Pharmaceuticals-Medical-Supplies-and-Equipment-Insights-from-Big-Data-for-Better-Procurement-Strategies-in-Latin-America