Global Outsourcing and Local Tendering Supply Chain Systems in the Public Healthcare Sector: A Cost Comparison Analysis, Namibia

Abstract

ObjectivesTo compare supplier prices for local tendering and global outsourcing supply chain systems that are used to purchase pharmaceutical products by the Ministry of Health in Namibia and to compare the supplier prices for both systems to the international reference buyer median prices. MethodsThis study was quantitative in design and compared local and international supplier prices for a basket of vaccines, antiretrovirals, and anti-tuberculosis (TB) drugs from 2015 to 2020. Prices were retrieved from the procurement documents obtained from the Central Medical Stores division of the Ministry of Health, Namibia. The study also compared local and international supplier prices with the international reference buyer median prices obtained from the Management Sciences for Health International Drug Price Indicator Guide (2015 edition). ResultsIt was found that 77% of all the pharmaceutical products in the study were more expensive when obtained from the local suppliers than from international suppliers—that is, vaccines (70%), antiretrovirals (86.6%), and anti-TB drugs (67%). More than 50% of all the pharmaceutical products had local and international supplier prices, which were higher than the international reference buyer median prices. The price differentials were found to be higher for pharmaceutical products that were newly introduced into TB and human immunodeficiency virus treatment guidelines. ConclusionsThe study has concluded that local suppliers were costlier than international suppliers for vaccines, antiretrovirals, and anti-TB drugs. The international price comparisons have shown that there is a need for improving the pricing mechanisms in Namibia to reduce the prices of several essential medicines.