A local news report has confirmed that the Public Hospital Authority has by-passed the local distributors of pharmaceuticals in The Bahamas, and gone directly to manufacturers for bids for medication.

The rational given at the time, was that these 760 items, had not been bid for by the local wholesalers on a recent tender. Sources not only insist that this was not true for all products, but that traditionally, the request for subsequent or "supplementary" bids on any tender has always been requested through the local wholesalers. On this occasion, they were not even given the courtesy of a notification. One source said it was a "slap in the face" after doing business with PHA for more than 20 yrs.

After the first request for bids, the manufacturers received a subsequent notification from a PHA source that they were not to discuss this request with bids with the local wholesalers as the intent was "DIRECT PROCUREMENT".

If this is the future plan for procurement of all medication by government, especially with National Health Insurance coming, this could potentially destroy the pharmaceutical industry in The Bahamas.

DRUG COSTS

The cost of medication in the "private" sector has often been scrutinized and much concern has been expressed for patients who have not been able to afford certain drugs. Many of these drugs however are 2-3 times more expensive in the U.S. and other countries, and 2-3 times less expensive in others. In the public sector's bidding process however, we understand that PHA has been getting excellent prices through the local wholesalers, who contribute significantly to the economy of the Bahamas. Possibly more than 90% of the drugs used in hospital are generics. Just one example of pricing to hospital is a well known drug used to treat hypertension costing the government $1.05 for a month supply.

MANUFACTURERS RESPONSE

Manufacturers, with whom local wholesalers have legal binding contracts, were apparently at a loss on how to proceed with this very recent unusual request for bids from the Public Hospital Authority. They were given two days to submit the bids which is also highly unusual. Many of them insisted that they have no contractual agreements or accounts established with the PHA. Other concerns were also expressed regarding shipping, payment, clearance and storage of their drugs which they do not take lightly because of the sensitive handling and storage requirements of the products for which they are liable.

WILL GOING DIRECT TO THE MANUFACTURER SAVE THE GOVERNMENT MONEY?

While we do not understand the intricacies of the pharmaceutical business we are entirely not convinced that the Public Hospital Authority will save any money by by-passing local wholesalers and going direct to the manufacturers.

If the government were to access lower prices by going direct to the manufacturer, the savings will probably not be astronomical. Most wholesalers operate on very low margins. In a bidding process, this margin is even lower. PHA would have to take that small savings to do the following:

    1. Purchase in bulk. (Inventory alone would be extremely costly!)

    2. Operate their own warehouse and storage facilities with constant cool temperatures in order to maintain the stability of the drugs. (High electricity cost!)

    3. Pay for insurance on the building

    4. Pay for and operate motor vehicles including gas and maintenance

    5. Deliver to hospitals and clinics

    6. Organize proper inventory control or risk losing millions in expired stock

    7. Accounts and payments, computerized

    8. Hire qualified staff and pay salaries

    9. National Insurance Contributions

    10. Invest in security to prevent theft and pilferage

WHOLESALERS CURRENTLY DO ALL THE ABOVE PLUS MAKE THESE CONTRIBUTIONS TO OUR ECONOMY:

    1. Huge Business license fees

    2. Pay Real Property Tax & Stamp Tax

    3. VAT collections and stamp tax payments to government

    4. Significant donations to local charities and organizations

    5. Donations In education & Equipment

Has the Public Hospital Authority calculated the cost that it would take to provide the same services that the wholesalers are providing now? Is the warehouse which has been identified to store drugs for the government owned by government or is it being rented? Has all costs been taken into consideration?

There will be a definite loss in revenue to government considering that most pharma companies literally pump hundreds of thousands of USD annually into the Bahamian economy for support of medical representatives' salaries and benefits as well as for continuing education of medical/pharmacy professionals. Besides, college-trained professionals will be losing significant employment.

Since the partial release of the current tender awards, some medical reps have already lost their jobs!

If going direct to the manufacturer is such a great solution to saving the government money, why doesn't the government buy everything direct? Surely they could save a ton of money that way? We know that negatively affecting the private sector business is not the way to go. Regularizing and monitoring them, and seeing that they are all operating on an even playing field would be a much better option in fairness to all.

ADDRESSING DRUG SHORTAGES

A recent ZNS TV news report (below) showed pictures of the warehouse on Shirley St. that the PHA has acquired to store the drugs that they will purchase. It was suggested by the PHA Director, that this new move would reduce the incidence of shortages and increase access to medication. Shortages have indeed been of concern and there are pockets of outcries from the general public because of it.

In investigating the reason for shortages however, we received some interesting feedback from wholesalers. They are many and varied. Wholesalers insist that one of the major reasons for shortages of supply is the inability of the Public Hospital Authority to properly forecast their need for drugs. Manufacturers manufacturer drugs based on forecast, and in many cases the guarantees for purchases of contracted drugs have apparently been based on budget and not on actual need.

"Ordering by PHA is often erratic at best! It's almost impossible to tell what to keep in stock!" said one source. With that said, we are were also advised that there are always manufacturers as well as wholesalers that are at fault because of their own inability to keep inventory on hand, so all of these things would need to be considered by the PHA when choosing a source for drugs.

BAHAMAS PHARMACEUTICAL MARKET STILL NOT PROPERLY REGULATED

The pharmaceutical industry in the Bahamas also face another challenge. There is still no "functioning" authority that properly regulate the import and export of drugs. i.e. no FDA type authority. This potentially leaves the market wide open to substandard, and the possibility of, counterfeit drugs. We have been advised that plans are in place to have the market regularized and we agree that it's about time. The health and welfare of our citizens are at stake.

We appeal to the government to review this situation and see how best they can work with the local wholesalers to ensure that patients receive the best medication, at the best prices through the best means and that the pharmaceutical industry, which has contributed signficantly to The Bahamas economy, remains a viable one.

By Concerned Citizens of The Bahamas