NTA Level 5 • Semester 1 • PST05101

Procurement Methods

Medicines and Medical Supplies Management • Source Session/Topic 10

Full source-text version: all educational wording from the extracted learning source is retained; only presenter/tutor metadata and web-layout noise are removed, while formatting is improved for readability.

Session 10: Procurement Methods

Total Session Time: 120 minutes

Prerequisites

• None

Learning Tasks

By the end of this session students are expected to be able to:

• List methods for procurement of medicines and medical supplies

• Identify criteria for selecting a procurement methods

• Identify procurement models

Resources Needed:

• Flip charts, marker pens, and masking tape

• Black/white board and chalk/whiteboard markers

SESSION OVERVIEW

SESSION CONTENTS

STEP 1: Presentation of Session Title and Learning Tasks (5 minutes)

READ or ASK students to read the learning tasks and clarify

ASK students if they have any questions before continuing.

STEP 2: Methods for Procurement of Medicines and Medical Supplies (55

minutes)

|Activity: Buzzing (5 minutes) |

| |

|ASK students to pair up and buzz on the following question for 3 |

|minutes |

| |

|What are the methods for procurement of medicines and medical supplies?|

| |

|ALLOW few pairs to respond on the question and let other pairs add on |

|points not mentioned WRITE their response on the flip chart/board |

| |

|CLARIFY and SUMMARIZE by using the content below |

The following are the methods for procurement of medicines and medical

supplies;

Open tender

• Open tendering is a formal procedure by which quotes are invited from any

supplier’s representative on a local or worldwide basis, subject to the

terms and conditions specified in the tender invitation. For example,

International competitive bidding, as specified in World Bank (2000;

2004b) guidelines, is a tender open to all interested international

manufacturers from World Bank member countries.

Restricted tender

• In a restricted tender, interested suppliers must be approved in advance,

often through a formal prequalification process that considers adherence

to good manufacturing practices, past supply performance, financial

viability, and related factors. The prequalification process is often

open to any supplier that wishes to apply.

E-procurement and reverse auction

• E-procurement is Internet-based tendering. In the reverse auction

approach (which is a variation of restricted tenders), qualified bidders

submit an initial offer; the lowest offer received is posted publicly

without naming the bidder after the first round; and then qualified

bidders are invited to offer lower prices than that posted low price. The

process continues round-by-round until no more prices are submitted; then

the lowest posted bid wins the contract. This approach has rarely been

used for pharmaceutical procurement (with most experience in Latin

America); however, it may gain traction as global Internet capacity and

use increase. Pharmaceutical quality assurance requirements and related

factors may limit the use of this model, at least in its current form.

Competitive negotiation

• In competitive negotiation, the buyer approaches a limited number of

selected suppliers (typically at least three) for price quotations.

Buyers may also bargain with these suppliers to achieve specific price or

service arrangements. This procurement method is used primarily in the

private sector, because public-sector procurement organizations are

generally forbidden from negotiating or bargaining with suppliers. For

example, global organizations such as UNICEF, the Clinton Foundation, and

SCMS have successfully negotiated reduced prices of antiretroviral (ARV)

medicines with manufacturers.

International or local shopping

• As with competitive negotiation, in international or local shopping, the

buyer obtains at least three quotes from suppliers; however, bargaining

or negotiation of any kind are generally not permitted.

Direct procurement

• The simplest, but usually most expensive, method of procurement is direct

purchase from a single supplier, either at the quoted list price or at a

negotiated standard discount off the list price. For single-source

medicines (generally those under patent with no licensing agreements that

allow other firms to manufacture the medicine), the buyer basically has

three choices—negotiated procurement, direct procurement, or selection of

an alternative drug product.

STEP 3: Criteria for Selecting Procurement Methods (35 minutes)

|Activity: Small Group Discussion ( 15 minutes) |

| |

|DIVIDE students into manageable groups |

| |

|ASK students to discuss in groups on the following question: |

| |

|What are the criteria for selecting a procurement methods? |

| |

|ALLOW students to discuss for 15 minutes |

| |

|ALLOW each groups to present |

| |

|CLARIFY and SUMMARIZE by using the contents below |

The following are criteria for selecting procurement methods:

• Funding sources(government and donors)

• Reorder frequency models

• Annual review

• Scheduled review

• Perpetual review

• Cost of prized tender

• Assured quality, efficacy and safety of the items

STEP 4: Identification of Procurement Models (15 minutes)

|Activity: Small Group Discussion ( 15 minutes) |

| |

|DIVIDE students into manageable groups |

| |

|ASK students to discuss in groups on the following question: |

| |

|What are the criteria for selecting a procurement methods? |

| |

|ALLOW students to discuss for 15 minutes |

| |

|ALLOW each groups to present |

| |

|CLARIFY and SUMMARIZE by using the contents below |

The Procurement model commonly practices or used:-

• Scheduled purchasing

• Perpetual purchasing

o Example : Impress system

▪ : Two bin system

• Annual purchasing : Purchase once a year

• Modified optional Replenishment: it is a combination of the above

STEP 4: Key Points (15 minutes)

• There are numerous mechanisms by which governments, non-governmental

organizations (NGOs), and other organizations manage their in-house

procurement of pharmaceuticals.. These are Open tender, Restricted

tender, E-procurement and reverse auction, Competitive negotiation,

International or local shopping and Direct procurement

• Some procurement offices use a combination of methods: open or restricted

tender for large-volume items, and competitive negotiation or direct

procurement for lower-volume or emergency supplies

• There criteria for selecting a procurement method includes; Funding

sources(government and donors), reorder frequency models, annual review,

scheduled review, perpetual review, cost of prized tender and assured

quality, efficacy and safety of the items

STEP 5: Evaluation (10 minutes)

• What are the methods for procurement of medicines and medical supplies?

• What are the criteria for selecting a procurement methods?

References

MSH and WHO (2012) Managing Access to Medicines and Health Technology,

3rd Edition. Kumarian Press

World Health Organization (WHO), Regional Office for Africa

Brazzaville 2004, Management of Drugs at Health Centre Level Training

Manual.

United Republic of Tanzania Ministry of Health and Social Welfare,

Strategy for Development and Implementation of an Integrated Logistics

System for Essential Health Commodities: Government Printers, Dar es

Salaam

USAID | DELIVER PROJECT, Task Order 1. 2011. Tanzania: 2020 Supply

Chain Modeling—Forecasting Demand from 2020–2024. Arlington, Va: USAID

| DELIVER PROJECT, Task

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