Wholesalers in ‘drug shortage’ warning to PHA


Tribune Business Editors


Top Bahamian pharmaceutical distributors have warned the Public Hospitals Authority (PHA) that the “extraordinarily unrealistic” order volumes in its latest procurement tender will likely create “drug shortages”.

The trio of Lowe’s Wholesale, Nassau Agencies and Commonwealth Drugs (CDM Group) said the minimum guarantees provided by the Government “seem impractical”, and might result in their manufacturer partners having difficulty in meeting the PHA’s needs on short notice.

The October 25, 2016, letter addressed to PHA managing director, Herbert Brown, suggested that the Bahamian wholesale industry instead by provided with data on each drug’s usage so they could better forecast annual volumes.

The letter, detailing five concerns over the latest MPC 16 tender exercise, was sent before the PHA raised fresh concerns by deciding to ‘go direct’ to manufacturers for the supply of the 40-50 per cent of drug contracts not yet awarded (see other article on Page 1B).

Focusing on the initial tender results, the three companies said: “The [government] guarantees given on the majority of items are not only extraordinarily unrealistic, but in many cases work out to numbers that seem impractical.

“For example, many of the guarantees are for 2.5 boxes or vials of product. Manufacturers need to forecast their production, and cannot effectively do so without being given realistic usage requirements.”

The implication here is that the local wholesalers’ overseas drug manufacturing partners may be unable to meet sudden orders at short notice, as a result of the PHA under-estimating its likely supply/usage needs.

“If the PHA cannot give realistic guarantees, we humbly request the actual usage of product by government over the past year so we can more accurately forecast needs for the next 12 months,” the three companies wrote in a letter that was also copied to PHA chairman, Frank Smith.

“This would avoid shortages and out-of-stock situations that wholesalers are often blamed for.”

The three wholesalers were tight-lipped over the letter’s contents yesterday, with some expressing surprise that Tribune Business had seen it.

However, sources familiar with the industry’s position, and speaking on condition of anonymity, said the “minimum” guarantees that the wholesalers were given in the latest MPC 16 tender were “way, way off”.

They suggested that the PHA, which receives around $200 million in annual funding from the taxpayer, was trying “to fit” its pharmaceutical drug purchases to its available budget.

And, when the inevitable supply shortages occurred, the wholesalers would inevitably be blamed.

“There’s been a lot of shortages,” the source confirmed, questioning why the PHA did not follow the practice of health authorities in other Caribbean islands, such as Cayman, where wholesalers were given access to prior year usage data to ensure orders could be forecast accurately.

“Wholesalers have never at any point been given the amount of product used over the past three-four years,” the source said. “The PHA’s ordering system is so erratic.”

The three companies said they “share common concerns and challenges”, including the absence of the normal performance bond form that accompanied drug procurement contract awards.

“One bank has already rejected a bond request without the customary bond form,” they warned.

The trio also expressed concern that they were asked to bid on a 24-month contract, but the PHA only awarded one-year terms.

“The reason for reducing the timeframe does not seem valid,” they wrote, “since we have to believe that the tendering process had already taken care of wholesalers and manufacturers who cannot supply.

“Moreover, pricing is, among other things, related to projected consumption for a given tender period.”

The wholesale trio also asked for the complete list of awards and bid prices, as had been customary, and queried whether there would be an additional tender given that numerous drugs were not awarded.

The PHA’s response appears to have been to exclude the Bahamian wholesale industry, and instead go to their manufacturer partners to solicit bids directly.


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