Municipal Consortia for Medicine Procurement: Impact on the Stock-out and Budget

The study evaluated the impact of the consortia on the budget and shortage of medicines for the basic pharmaceutical assistance component in Indaial municipality, Southern Brazil. The number of items with a stock out for at least one day decreased by 12% Health Prices Database from the Ministry of Health. The procurement of medicines by the consortia decreased stock outs and represented an economy of scale, allowing for the procurement of a greater quantity of products with the same budget.


INTRODUCTION
The decentralization of health policy in Brazil caused a signifi cant increase in the amount of activities and participation of municipalities in the provision of health services.There was a new reality for many municipalities, such as a lack of human and fi nancial resources, diffi culty to access and use technologies and lack of adequate physical infrastructure.
Given these diffi culties, consortiums in the health fi eld encountered favorable conditions to develop, especially in small scale municipalities.They could resolve limitations of the regionalization process in medium complexity care, provision of specialty medical consultations, diagnosis and therapy. 2,3cording to the decentralization process of the Sistema Único de Saúde (SUS -National Unifi ed Health System), procurement of essential medicines became a municipal responsibility, along with the inherent diffi culties in operationalization.Also, despite fi nite public fi nancing, medicine costs have increased over the years. 5 2008, the municipalities of the Association of Municipalities of the Itajaí Middle Valley (AMMVI) in Santa Catarina state, Southern Brazil, began to use the Intermunicipal Health Consortium (CIS-AMMVI) for medicine procurement.This new procurement model sought to reduce operational costs for municipalities, as well as to secure lower prices.
This study aimed to analyze the impact, of medicines procurement by the CIS-AMMVI consortium, upon stock-outs and cost of medicines in the Basic Pharmaceutical Assistance component.

METHODS
The retrospective study in Indaial municipality, Southern Brazil, from 2007 to 2009 was based on document research.Documents from the competitive bids during the period were utilized to identify the medicines procured, quantities, per unit price, bidding process and frequency of purchases.
Comparisons of costs and stock-outs were performed with a sample of medicines from the Municipal Medicine Reports.The medicines common to the three lists during the study period were used to classify the items on ABC and PQR curves.The former consisted of three groups of medicines according to the value of demand in a period (economic point of view); and the latter concerned the frequency of usage of the items (popularity classifi cation).The sample consisted of 38 medicines from classes A and P.
The impact on stock outs was obtained through a survey of medicines that were missing at any point.
The per unit cost of medicines procured through solicitations in 2007 (without consortium), 2008 (mixed) and 2009 (consortium) were compared to the percent difference per unit; the percent of items with decrease, increase or no change in cost per unit; and the average cost of the Health Prices Database/Ministry of Health (BPS/MS) in 2009.
The impact on costs from procurement was obtained by the estimate of the total procurement cost for the sample, using average annual consumption multiplied by per unit cost for each year and BPS/MS 2009.

RESULTS
In regards to the number of items with stock-outs for at least one day, there was a decrease of approximately 12.

DISCUSSION
Participation in the consortium for procurement of medicines allowed for reduced costs, thereby guaranteeing greater supply of medicines and less stock-outs in the Basic Pharmaceutical Assistance component.
In regards to stock-out, there were decreases in the average days each medicine was lacking and in the number of items missing, which had a positive impact on the management of medicines in the municipality.
The reduction can be explained, in part, by the new consortium purchasing mechanism that increases pharmacists management of the process, including the ability to issue and send purchase orders to the provider, whereas before this was performed by a purchasing section.Another advantage is the contract model involving registration of prices, with a quote valid for a period of 12 months.The price registration helps to anticipate demand and better ration the available budget at the start of the contract and not at the beginning of the solicitation.This model also reduces the number of bidding processes, allowing reduced prices by economies of scale; increases fl exibility in the procurement process, with increased speed to contract; and allows for physical stocks to be reduced.
The prices of medicines tend to decrease with economies of scale and bargaining power increases with greater volumes negotiated.According to Ferraes & Cordoni Junior, 1 the Paraná State Health Consortium was a management decision that provided an economy of scale and competitive prices.
Our calculations were performed with 38 items, for one municipality with approximately 50 thousand residents.In practice, the decreased costs could be even greater when calculated as a percent: a 33% reduction in total procurement costs when comparing purchase by consortium (2009) to municipal purchase (2007), and an 18% reduction in the total procurement cost by consortium (2009) in relation to the average prices of the BPS/MS 2009.
Municipalities that do not use consortium for medicines procurement had some advantages, which can be attributed to municipal purchases.These include: change of the bidding process on prices to an electronic auction; utilization of the price registry system; application of permitted sanctions when contracts are not fulfi lled; and greater autonomy for pharmacists to issue and send purchase orders.These modifi cations probably do not lead to economies of scale seen in consortium but can provide greater fl exibility in medicine procurement.
According to Reis & Perini, 4 it is essential to incorporate modern concepts of material logistics in order to avoid stock-outs of medicines due to internal factors, such as inadequate planning or ineffi cient management 0% in 2008 in relation to 2007 and of 48.0% in 2009 in relation to 2007.The number of medicines unavailable for more than 90 days was 11 (2007), three (2008) and two (2009).Per unit prices paid in 2008 for the procurement of medicines, already under the infl uence of the consortium, were systematically lower than in 2007 (63% of items).Per unit prices in 2009, with medicine procurement by consortium, decreased in comparison to the 2007 price for 76% of items.Despite the increased unit cost of some items, the total cost of procurement of medicines by consortium, considering the prices obtained in 2007, 2008, 2009 and BPS/MS 2009, would be R$ 302,962.00,R$ 247,734.62,R$ 203,022.32 and R$ 247,148.44,respectively.