Lowering Prices of Pharmaceuticals, Medical Supplies, and Equipment : Insights from Big Data for Better Procurement Strategies in Latin America
Containing rapidly growing health care costs in the Latin American and the Caribbean region, especially amid the COVID-19 pandemic, requires an in-depth analysis of prices from a novel perspective. This paper documents hitherto understudied variati...
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| Language: | English |
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World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/en/110791622827821491/Lowering-Prices-of-Pharmaceuticals-Medical-Supplies-and-Equipment-Insights-from-Big-Data-for-Better-Procurement-Strategies-in-Latin-America http://hdl.handle.net/10986/35726 |
| Summary: | Containing rapidly growing health care
costs in the Latin American and the Caribbean region,
especially amid the COVID-19 pandemic, requires an in-depth
analysis of prices from a novel perspective. This paper
documents hitherto understudied variations in prices paid
for pharmaceuticals, equipment, and medical supplies within
countries and markets. It also identifies effective
procurement strategies for lowering prices within existing
regulatory frameworks. The analysis uses public procurement
data gathered by governments’ electronic procurement systems
in nine countries and territories across the region. The
data are uniquely detailed and complete, encompassing the
minute detail of purchasing decisions and processes made
across all regulated public entities in the study countries
and territories. Traditional regression analysis and machine
learning (random forests) methods are used to explain prices
as a function of procurement decisions and outputs, such as
the number of bidders. Based on in-depth discussions with
policy makers, the paper also devises realistic policy
interventions, which in turn can be used to estimate savings
scenarios. First, the findings show that the prices paid
vary greatly across and within countries. The latter is
surprising given that the regulatory and institutional
framework is largely fixed within each country. Second, a
high proportion of within-country and -market variation can
be explained by standard features of procurement policy
implementation, such as the length of advertising tenders.
Third, the explanatory models point to the potential for
lowering prices across the region by about 14 percent by
implementing low-level, yet impactful changes to how
purchasing is done. |
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