New pharmaceutical contracting strategy
Assurance of supply and marketplace competition at heart of
national procurement strategy
Government and healthcare leaders, policy experts, journalists and frontline care givers across the country have rightly called for action in the wake of the 2012 supply shortage of medically necessary single-source and multi-source injectable drugs. The time for all healthcare stakeholders to work together toward an open and transparent solution is now.
As Canada’s healthcare group purchasing organization, HealthPRO Procurement Services Inc. is uniquely qualified to play a leadership role within this issue of national importance. To help stabilize the Canadian pharmaceutical supply chain, HealthPRO and itsPharmacy Advisory Council (PAC) – a national group comprised of pharmacy management representatives from member hospitals across the country – have implemented a new pharmaceutical procurement strategy that will improve access to supply and preserve market competition. Informed by consultations with government and healthcare leaders, healthcare management experts and member stakeholders from coast to coast, HealthPRO’s enhanced Request for Proposal process now includes weights and levers that will deliver a more responsive supply chain environment. These include award criteria for assurance of supply, strict notification standards and action for failure to meet obligations.
Through our extensive consultation process, HealthPRO has developed a nationally-approved list of medically necessary drugs that can be targeted as priorities within the system. Effective September 1, 2012, HealthPRO is introducing split award contracts for these high priority items to strengthen the supply chain and support a vibrant market capable of retaining and attracting suppliers.
Split award contracts have been introduced for approximately 35 items. Members will be assigned, by province, a primary and secondary supplier under a split contract. HealthPRO will work with primary and secondary suppliers to ensure consistent and continuous supply of medically necessary, high obligation products. Should the primary supplier advise of an imminent shortage, members may procure their requirements from the secondary supplier until the primary supplier’s stock has stabilized. In all split award contracts, the product quality profile for products from both suppliers has been determined by HealthPRO’s PAC to be acceptable and interchangeable.
As a result of HealthPRO’s nationally committed volumes, the new split award strategy has resulted in an overall average invoice savings of 17 per cent on the split award group of products compared to previous contract prices.
HealthPRO’s new pharmacy procurement strategy of split award contracting will strengthen market competition and preserve choice for Canadian healthcare facilities while mitigating against future supply shortages.
In the medium and longer term, HealthPRO will work to proactively engage new suppliers seeking to enter the Canadian market, as well as encourage existing suppliers to offer alternatives where there is now a sole supplier. A contracting strategy that encourages competition and, where needed, market entry, will not only ease the impact of drug shortages on patient care, but will help reduce the financial impact of shortages on Canada’s healthcare system.
HealthPRO is committed to working openly with its national members and healthcare stakeholders to protect the supply of medically necessary products in Canada. Implementing split award contracts will allow us to do this by finding procurement solutions that preserve high-quality patient care while supporting a vibrant and competitive pharmacy marketplace. Drug shortages continue to be a complex global problem, but, together, we are confident we can find a way forward.
For information, please contact:
Vice President, Services