The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian pharmaceutical wholesalers have warned that the National Health Insurance (NHI) scheme’s “loose approach” to procuring medicines could “severely compromise” patient safety, with “grave ramifications” for the Government.

The warning is contained in the Pharmaceutical Wholesalers Group’s (PWG) NHI position paper, which details the consequences of proposals by the Government’s NHI consultants to effectively cut them out of the medical drugs supply chain.

The October 9 document, which has been obtained by Tribune Business, laments the complete absence of any contact between the group and the consultants, Sanigest Internacional, prior to the latter releasing its draft NHI Pharmacy Policy in mid-September 2015.

The PWG warns that the ‘consultation gap’ has created a “myriad of misconceptions and challenges” that will result in a less than optimal outcome for the NHI scheme, if the pharmaceutical policy is implemented as is.

The paper, which was written on behalf of companies employing several hundred Bahamians, and which are responsible for multi-million dollar sales annually, added that PWG members had acted as the “sole custodians” of the pharmaceutical supply chain for decades.

However, the proposed NHI Pharmacy Policy, which has also been seen by Tribune Business, appears to recommend a radical overhaul of that supply chain - and a much-reduced role for the PWG and its members.

The Sanigest document recommends allowing a newly-formed entity, the Bahamas Health Authority (BHA), to purchase drugs for the Government-run health system via a combination of “direct procurement” from drug manufacturers plus the use of local wholesalers.

And private pharmacies will be allowed to organise their own procurement systems for the quantities, and prices, of drugs agreed with the NHI scheme.

This contrasts with the existing drug procurement scheme, where private wholesalers supply both pharmacies and the Government’s National Prescription Drug Plan (NPDP). The Public Hospitals Authority (PHA), under the Bahamas National Drug Agency (BNDA), handles the public sector.

Sanigest argued that its scheme would be the “most likely cost-effective option, where procurement, storage and supply of pharmaceuticals for the public system is centralised by the BHA, and private pharmacies would be ensuring procurement and distribution through private suppliers”.

The PWG, though, suggested that this approach, which appears to imply that significant ‘cost savings’ will be achieved by ‘cutting out the middle man’ (its members), was based on a flawed understanding of the existing supply chain.

The Group, which represents companies such as Commonwealth Drug & Medical Supplies (CDM); Lowe’s Wholesale Drug Agencies; and Bahamas Medical & Surgical Supplies, warned that “quality assurance is of paramount concern”.

By adopting World Health Organisation (WHO) and regional standards, the PWG said it was assured of ‘best practices’ right through the supply chain - from manufacturing of medicines right down to their distribution.

“The loose procurement approach suggested as the operative mode in the NHI draft hinders quality assurance compared to the relatively secure system currently in place,” the PWG paper warns.

“Patient safety and efficacy are in question, and may be impaired and severely compromised. This creates significant risk management challenges for the Government and the ramifications can be grave.”

One pharmaceutical wholesaler, speaking on condition of anonymity, said that to eliminate any one of the three supply chain tiers - manufacturer, wholesaler or retailer - “would not result in the best outcomes for the country, as far as national planning for the drugs needed, and a secure, safe chain.

“Sanigest suggested that tiers of the supply chain were not necessary, and bring additional costs. We wanted to state that there were some misconceptions.

“They’ve not met with any wholesaler. Not one consultation has been done with any wholesaler. It’s incredible.”

The wholesalers’ concerns add another voice to the numerous private sector organisations who have voiced fears that the Government’s proposed NHI scheme is simply not viable or sustainable in its present form.

Their position paper will further increase the pressures on the Christie administration for a radical re-think of its planned reforms, which have already come under fire from the Medical Association of the Bahamas (MAB); Bahamas Insurance Association (BIA); Bahamas Chamber of Commerce and Employers Confederation (BCCEC) and Grand Bahama Chamber of Commerce.

The PWG, meanwhile, added that while the proposed NHI pharmaceutical policy referred to Pharmacovigilance Reporting, there was no such agency in the Bahamas.

“The Bahamas remains the only country in the region without a Pharmacovigilance Centre which can be used by the Government to guard against Adverse Drug Reactions (ADRs) or even mortalities,” the PWG paper said. “This further compromises the process and increases government risks in a loose procurement system.”

The Group and its members expressed particular concern that there had been no effort to meet or consult with them, yet Sanigest had concluded that “there are significant opportunities to achieve greater value for money”.

In somewhat mangled language, the Government’s consultants said the PHA’s own supply systems assessment had found that long-term supply agreements based on the Pan-American Health Organisation’s 2013-2014 Strategic Fund prices were “all lower” than the BNDA’s.

“PAHO prices were 1 per cent to 478 per cent lower than the comparable BNDA item,” the Sanigest pharmacy policy document said. “Many of the highest differences in price are attributed to the quantity purchased, which does not enable BNDA to attain economies of scale...

“At the same time, the prices obtained under NPDP are also considerably higher than international reference prices. This is partially due to the decision to use branded drugs where generics are available, and partially due to the low volumes under NPDP.

“Expanding the volume of drugs reimbursed by NHI should significantly improve the ability to provide affordable access to the essential medications on the Vital Benefits Package.”

Sanigest also criticised what it termed the “parallel process” for supplying medicines to the Government’s healthcare facilities. While the BNDA managed procurement process for drugs financed by the PHA. the NPDP acquired supplies from the private wholesalers who traded with both public and private pharmacies.

“This dual process has resulted in a parallel supply chain that is inefficient and often ineffective,” Sanigest argued. “Under NHI, it is envisioned that streamlined supply chains will be used, and greater competition, will be encouraged to meet the reference prices set by the National Health Insurance Commission (NHIC).”

The PWG paper, though, suggested that the Government and Sanigest may have misunderstood both the pharmaceutical supply chain structure and its pricing.

“Suggestions have been made using the PAHO strategic fund and other information gathered by consultants that do not reflect the competitive pricing structure that currently exists under the current tendering systems,” the Bahamian wholesalers warned.

“The PWG membership is confident that, with its combined experience, its core efficiencies, its IT capacity, and its physical infrastructural capacity, there will be a suitable complement for reduction of costs.

“Our empirical data show that pricing being offered in the current tendering systems reflect equal or lower pharmaceutical product costs than other regional tenders, PAHO medications pricing and most of the European Union (EU) tender models, inclusive of Canada, Germany, he Netherlands and Austria, as referred to in the NHI draft.”

The PWG called for the current pricing protocol, where 32 per cent is the maximum margin/mark-up on Cost/Insurance/Freight costs, to be maintained.

And, several members, speaking on condition of anonymity, said “it just doesn’t make any sense” for Sanigest to be using Austria as a comparative to the Bahamas when it came to designing an NHI pharmaceutical policy.

The PWH paper described Austria as “an inappropriate premise”, given that it was a landlocked European country with a population of eight million, compared to the Bahamas’ 350,000 and tropical island chain layout. The GDP and income per capita differences between the two are also stark, with Austria also able to manufacture 18 per cent of the medicines it consumes.

The PWG, meanwhile, urged that the functions of pharmacy retailer and wholesaler be kept separate, adding: “The challenges remain with the ability to adequately procure, track shipments, and manage stock logistics while engaged in quality service to the patient.

“It is our position that a retail pharmacy cannot execute the functions of a wholesaler/distributor with efficiencies for a national initiative.” It also warned that separating the Family Islands from the major population would “reduce economies of scale”.

Finally, the PWG denied that it and its members had been consulted, even though Sanigest’s proposed policy suggested that the Bahamas Pharmaceutical Association (BPA) - of which it is a part - has been.

“The PWG is concerned that no consultation was made with pharmaceutical wholesalers prior to the drafting of the NHI policy note,” the PWC paper said.

“This concerns us, as we have a history and currently manage the procurement for both the Bahamas National Drug Agency (BNDA) and National Prescription Drug Plan formularies, though page 5 of the draft states the claim that consultation regarding formulary with the BPA was made.

“The PWG never met with any grouping, and feels that concerns with regards to logistics, volumes, quality and regulatory matters would have been addressed had there been consultation with pharmaceutical wholesalers in the Bahamas.”

The PWG paper ended with a call for “meaningful consultation on all matters related to the procurement, distribution and provision of safe, efficacious and cost-effective pharmaceuticals for the Bahamas”.

This, again, relates to the seeming lack of transparency over NHI. PWG members were first informed of how pharmaceutical issues would be addressed by the scheme at a September 22, 2015, meeting at the Ministry of Health, before being provided with a copy of the Sanigest policy draft on September 25.

Apart from the three previously mentioned companies, the PWG also includes the likes of Ports International; Nassau Agencies; Progressive Pharmaceuticals; and Worldwide Wholesale.