As Canada only represents two per cent of the global healthcare marketplace, our national membership spanning seven provinces and the territories is vital in implementing strategies that reduce the impact of supply disruptions, which to date have helped avoid over 80 per cent of medication shortages for its members.

With input from both members and suppliers, HealthPRO recently revised its injectables contract strategies.

Split Award Strategy 

Under HealthPRO’s Split Award strategy, contracts are awarded to two suppliers ensuring that a secondary source of supply is readily available during temporary supply disruptions. Each supplier’s market share is assigned by province with the foundational principle that the products have a similar product quality profile and are readily interchangeable.

In the past, HealthPRO’s Split Award contracts were based on a 60/40 split, however after consultation with both members and suppliers, coupled with our own analysis based on data and experience, HealthPRO revised this strategy and will be moving forward with a 50/50 split ratio when deemed to be appropriate.

The new 50/50 split ensures a balanced obligation on the part of both suppliers to support the market during a supply disruption, resulting in a more stabilized supply of vital medications for our members.  

Key Benefits:

• Products vetted through rigorous product evaluation, assuring both products are high quality
• Better assurance of supply with equal responsibility to ramp up during a supply disruption
• More stabilized supply chain with focus on split awards for critical drugs
  

HealthPRO maintains our members best interests when revising supplier contracts. Our goal is to reduce supply chain disruptions while providing members with the best options in securing vital medications.


Substitute Supplier Strategy 

Through HealthPRO’s new Substitute Supplier strategy, suppliers who bid but are not awarded the primary contract will now be awarded a Substitute Supplier contract.

Previously, if the contracted supplier experienced a supply disruption, alternative suppliers would sometimes charge up to 1,000% more to purchase their products off contract. This triggers temporary surges in hospital operating costs (until such time as HealthPRO recovers the difference through CDRS claims) and leaves the contracted supplier vulnerable to unreasonable differential payments, which in the long term increases overall cost to the system. By submitting a response to HealthPRO’s Pharmacy RFPs, the Substitute Supplier will agree to limit charges up to the lesser of three times (3x) their bid price or their list price, when the contracted supplier faces a supply constraint.

The price predictability and lower cost to the overall system resulting from this strategy is only possible when suppliers have access to a market the size HealthPRO offers.

 Key Benefits:

• Lower initial expense when purchasing products from a non-contracted supplier
• Price stabilization for suppliers encourages them to bid on our contracts, fostering assurance of supply for members

Critical Drugs Strategy 

HealthPRO works alongside its members to identify which medications they deem critical and to prioritize those medications for greater inventory holding requirements by suppliers.

HealthPRO’s Critical Drug strategy, whereby a list of vital medications is compiled before the RFP, allows suppliers to better prepare their operations to meet the established demand.

As part of HealthPRO’s Critical Drug strategy, suppliers are now required to hold 90 days of inventory in Canada, ready for sale to minimize the risk of supply challenges. Also, there are increased reporting requirements from suppliers so members can implement mitigation strategies in the event of supply disruptions.

 Key Benefits:

• Lower initial expense when purchasing products from a non-contracted supplier
• Price stabilization for suppliers encourages them to bid on our contracts, fostering assurance of supply for members

For more information, please contact:

Sara Saral
Business Director, Pharmacy 
ssaral@healthprocanada.com