Bid solicitation and contract negotiation

Abstract

The process of soliciting bid prices for drug products and of negotiating contracts with pharmaceutical vendors is reviewed. The primary purpose of bid purchasing is to obtain drugs at the lowest price and to have these prices remain fixed for a predetermined period of time. A successful bid-purchasing process depends on the institution's implementation of a formulary brand-standardization policy, prior identification of acceptable vendors and drug products, and establishment of criteria for evaluating drugs under a bid-purchasing system. Specific information to be included in the invitation to bid and useful data other than drug prices that may be solicited from vendors are outlined. Manual and computerized systems for organizing bid-request data are described. Bid evaluations should maintain the confidentiality of bid and contract prices. Selection of winning bids is based on lowest price or, in cases where prices are identical, on selected vendor characteristics or services. Negotiation of unacceptable bid prices should be conducted with a thorough knowledge of the needs and goals of the institution and the vendor. Procedures for establishing contracts and the timing of various phases of the bid process are discussed. An optimal bid-purchasing system is achieved only when the system is carefully planned and designed and when each prospective vendor is given an equal opportunity to establish a contractual relationship with the institution.