WHO Guideline on Country Pharmaceutical Pricing Policies A plain language summary
HIGHLIGHTS
For policymakers responsible for
promoting affordable access to health
products
* Consult stakeholders to understand the conditions within country context before full adoption
WHO GUIDELINE
Conditional*
recommendations for the policy
Tendering and negotiation
Main points
Tendering and negotiation set prices according to the best offer from suppliers.
Price level should be considered alongside other factors, including product quality, availability and reliability of supply, and additional charges along the supply chain.
Pros
Many countries are experienced in tendering and negotiation, and have established public procurement processes.
Cons
Tendering and negotiation processes that award only on price may neglect product quality, and awarding to a single supplier may reduce market competition over time.
Lengthy tendering and negotiation processes may slow down access.
Countries with smaller markets may not attract enough interest from suppliers to tender for the provision of certain products.
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WHO suggests that countries use tendering for pharmaceutical products under the following conditions: Price level should be considered alongside other criteria, including product quality, product characteristics, availability, supply security, supply reliability and charges along the supply chain.
Tendering should be used in conjunction with other pricing policies to improve affordability and availability.
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WHO suggests that countries use price negotiation to complement tendering as well as other pricing policies.1/2
THINGS TO CONSIDER
Implementation
Do we have the capacity, resources and expertise to carry out all the functions required for an effective, competitive procurement process?
Is our procurement process transparent? Are our criteria for awarding contracts clear and explicit?
Is our planning and monitoring adequate? Can we identify potential disruptions to supply?
Do we have adequate resources in place to support a procurement process?
Do we have procedures and systems in place to ensure that the drugs purchased are quality assured?
Can we ensure that purchasing groups will buy all contracted products from the contract holder?
Is there a group of potential suppliers pre‑selected on the basis of quality, service reliability, delivery time and financial viability?
How can we continue to develop the negotiating skills and capacity to carry out this process?
Methodology
Is our procurement process limited to essential drugs or a national/local formulary?
Do our documents list products by generic names rather than brand names?
Are the quantities of drugs specified based on a reliable estimate of actual need?
Is our tender structured in the largest quantities to maximize savings?
Does our tendering process enable us to make best use of market size and our financial resources to secure supply?
Is the duration of agreements linked to the frequency of calls for tender?
Have we clearly specified the minimum amount of information required to initiate a tender?
Have we considered the patent status of the products and the number of supply sources to determine whether a tendering and negotiation process is appropriate?
Do we have clearly defined rules setting out when and how penalties would be applied for illegal or unethical conduct on the part of suppliers?
For more information
See the WHO Guideline on Country Pharmaceutical Pricing Policies for more information, including an overview of the evidence about
tendering and negotiation and nine other pharmaceutical pricing policies.
https://www.who.int/publications/i/item/9789240011878
What is the policy?
Tendering is any formal and competitive procurement process through which tenders (offers) are requested, received and evaluated for the purchasing of products such as medicines or vaccines. The process is based on predetermined criteria, including price, product quality and value for money.
Negotiations are discussions aimed at reaching an agreement with potential suppliers. The contract is awarded to the suppliers making the best offers.
Why is the policy implemented?
The purpose of tendering is to encourage competition among potential suppliers. Negotiation is used to establish the terms and conditions of procurement and to resolve disagreements.
How is the policy implemented?
Tendering is a multi‑stage process. It involves:
enacting relevant legislation
selecting the pharmaceutical products for the tender
preparing and publishing documents to invite offers from potential tenderers
collating offers
evaluating supplier selection in preparation for awarding the contract
monitoring the performance of suppliers
enforcing contract terms if necessary.
Negotiation is less structured and depends on factors including contract size and complexity; number of parties involved; existing relationships with suppliers; and other health‑care, regulatory, legal and commercial requirements.
Tendering and negotiation may be done separately or together, or to supplement other pricing policies.
How commonly is the policy used?
Tendering and negotiation is a common method of procurement worldwide. It is particularly common in lower‑income countries, and among international agencies procuring on behalf of lower‑income countries.
In higher‑income countries, tendering has been used primarily in hospital settings and public services (e.g.
pandemic plans and human papilloma virus vaccines).
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Tendering and negotiation: WHO guideline on country pharmaceutical pricing policies. A plain language summary
ISBN 978‑92‑4‑002465‑6 (electronic version)
ISBN 978‑92‑4‑002466‑3 (print version)
© World Health Organization 2021. Some rights reserved. This work is available under the CC BY‑NC‑SA 3.0 IGO licence.
