GROUP PURCHASING PROGRAM

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• GROUP PURCHASING PROGRAM
• Dr. Khaled AL Hussein
• MBBch. MD .DCH (UK) CSBP.
• CHS (USA). CHQ (USA),FAIHCQ
• Adjunct. Professor Oklahoma University (USA)
• MEMBER,GCCEXCUTIVE BOARD
• Director General of Medical Supplies
• MOH - KSA

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GROUP PURCHASING PROGRAM

• I. The Establishment of Group Purchasing Program
  
• (GPP) (Origin of the Concept)
• The group purchasing of drugs and medical
  supplies is considered one of the most important
  achievements of the council. It has ensured the
  purchasing of high quality products from the best
  national and international manufactures. In
  addition, the program has saved millions of
  dollars for the council states. This concept
  originated since the first Ministers' Council for
  GCC States in 1976, with the objective of
  procuring some of the drug items which were hard
  to obtain either because of the small quantity
  needed or due to their high prices. Hence, came
  the idea of presenting such items in a common
  tender since 1978 undertaken by the Permanent
  Drug Committee. So the cooperative will was an
  essential element for the success of this
  program. The first announced tender covered 32
  items awarded to nine companies with total amount
  exceeding one million US Dollars.

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• The core function of GPP is pooled procurement of
  pharmaceuticals and medical supplies for the
  Ministries of Health of the seven GCC countries.
• The continuous annual cost-savings obtained after
  25 years of the joint purchasing arrangement have
  reinforced the Procurement Service as an
  excellent cost-benefit model of economic and
  functional cooperation among the member
  countries.
• The experience of the GPP after 25 years of
  successful centerlised tendering for
  pharmaceuticals and related medical supplies, has
  demonstrated that improved procurement can reduce
  costs and enhance the efficiency of health
  service.
• The collective decision-making reduces the
  possible influence and high prices in case each
  country announces tender individually.

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• Efficient procurement provides the greatest
  opportunity for cost-savings.
• Prior to establishment of GPP, the GCC States
  used to purchase drugs and other medical supplies
  from suppliers by local tenders and direct
  purchase systems. Thus, drug prices for similar
  products used to vary widely among GCC States.

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• Thus we can summarize some of the main
  functions, objectives and benefits of Group
  Purchasing Program in the following
• Ensure continuous supply of drugs, hospital
  medical supplies all the year around through
  successive deliveries by minimizing routine
  administrative and financial procedures.
• Ensure the use of the same drugs by all member
  states in terms of the manufacturing company and
  quality.
• Improve the application of Quality Assurance,
  control procedures and bio-equivalence.
• Support of Gulf Drug Industries to achieve Gulf
  Drug Security.
• Qualifying companies and verification of their
  follow of GMP as well as quality assurance of
  purchased goods.
• Registering companies and encouraging purchasing
  from registered generic companies to achieve more
  savings.
• Allowing other health sectors such as specialized
  hospitals to procure their needs through group
  purchasing.

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• Apart from pooled procurement, GPP provides the
  GCC States with a wide range of related services,
  which include training on the requirements of GMP
  and Quality Assurance Certificates, a common
  formulary manual for drug, hospital sundries,
  Lab. Blood Supplies, Rehabilitation supplies,
  orthopedic spinal are issued and they are
  updated every two years.
• Ensure rapid processing of presenting tenders at
  various stages.
• Reduce wastages due to over stocks and
  non-essential items.
• Information exchange among the member states
  through the executive Board about what had been
  experienced, in any of the member states, of
  adverse reactions or side effects to any of the
  items
• i. Increase purchasing volume through the group
  purchase.
• ii. Post marketing surveillance system for the
  drug action.

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II. Mechanism of Group Purchasing

• The Group Purchasing solicits bids in US Dollars
  to provide one standard monetary unit for easy
  price comparison. The use of the US Dollar price
  through the GPP procurement system allows GCC
  States to forecast drug costs without concern
  about fluctuation between other international
  currencies.
• Recognizing the success with pooled procurement
  of pharmaceuticals, GPP has rapidly expanded its
  product portfolio to include other medical
  supplies. By the year 2003 the Group purchasing
  Division of the Executive Board announces ten
  tenders annually.

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• The following table illustrates the first date
  each tender had been issued
• S. Tender Year of issue
• 1 Drugs 1978
• 2 Hospital Sundries 1982
• 3 Vaccine Sera 1985
• 4 Chemical 1992
• 5 Rehabilitation Supplies 1996
• 6 Insecticides 2000
• 7 Medical Laboratory Blood Transfusion
  Supplies 2001
• 8 Orthopedic Spinal 2002
• 9 Radio-pharmaceuticals 2003
• 10 Dental Mouth Care Supplies 2003

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III. The participating MOH Health Sectors

• Group Purchasing Program serves ministries
  of health in the Seven GCC members States
  United Arab Emirates, MOH-Kingdom of Bahrain
  Royal Medical Services, Saudi Arabia, Sultanate
  of Oman, State of Qatar, State of Kuwait and
  recently Yemen Republic which joined the member
  countries in addition to the following public
  sector hospitals
• a. King Fahd Medical City.
• b. King Faisal Specialist Hospital Research
  Center, Riyadh Jeddah.
• c. King Khaled Specialist Eye Hospital.
• d. Medical Service-Ministry of Interior.
• e. Security Force Hospital Program.
• f. National Guard Hospitals.
• g. King Saud University Hospitals, Riyadh.
• h. King Abdul Aziz University Hospital, Jeddah.
• i. Medical Services, Royal Commission-Yanbu.
• j. Qaseem University- College of Medicine.

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IV. Tender Announcement

• The Group Purchasing Program operates a
  centerlised restricted tendering system in which
  all approved suppliers are pre-qualified.
  Pre-qualification is necessary to assess the
  quality standards, technical competence and
  financial viability of competing suppliers. So
  the tenders are announced through direct
  invitation as follows
• a. Pharmaceuticals Tenders
• The companies to be invited for the
  pharmaceutical tenders (drugs and vaccine sera)
  must be either centrally registered at the EB, or
  being registered in the three GCC member
  countries with reference laboratories (Saudi
  Arabia, Kuwait United Arab Emirates).
• b. Medical Supplies Tenders
• Participation on the under mentioned tenders
  is restricted to the qualified companies.
• (Hospital Sundries, Dental Mouth Care
  Supplies, Laboratory Blood transfusion
  Supplies, Rehabilitation, Orthopedic Spinal)

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V. Tenders' Technical Committees

• The procedural steps for each tender are
  performed by four technical committees which meet
  annually according to the time-table of the
  tenders. Each committee is formed of three
  persons from each of the GCC States, except
  MOH-Saudi Arabia, which is represented by 5
  persons in addition to the delegates of the
  government specialized and university hospitals
  as well as medical departments of the public
  sector that participate under the umbrella of the
  Saudi Ministry of Health. They are all, except
  Complaints' Vetting Committee, six-day period
  committee. The four committees who perform the
  procedural steps for each tender are
• 1. Tender Preparation Committee.
• 2. Envelopes Opening Committee.
• 3. Bids' Vetting Committee.
• 4. Complaints' Vetting Committee.

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• The meeting agenda of every committee should
  include the following
• Review the resolutions and recommendations issued
  by the council that regulate the work mechanism
  of Group Purchasing Program.
• Discuss the remarks of the GCC member countries
  and other participating health sectors over the
  previous tender in terms of item specification,
  addition and/or deletion of items.
• Review the tender terms conditions in the light
  of the remarks made by the participants.
• Review the predetermined criteria for items'
  selection and award to successful bidders.

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• a. Tender Preparation Committee (TPC)
• In addition to the above sited fixed meeting
  agenda, the tender Preparation Committee (EOC)
  should perform the following
• - Screening the list of companies which shall be
  invited for the new tender.
• - Approve the annual schedule for executing the
  tender's phases, which include the following
• a. Submission of the initial
  quantities needed by all participants.
• b. Tender announcement date.
• c. The dead-line for submission of bid offers,
  which is the same date for holding the meeting of
  the Enveloped Opening Committee.
• d. Date of Bids' Vetting Committee.
• e. Announcement of the selected bid
  offers, and fixing dead-line for submission of
  the bidders' remarks and complaints.
• f. Date of Issuing the Letters of Award.

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• b. Envelopes Opening Committee (EOC)
• In addition to the above mentioned fixed
  meeting agenda, the Envelopes Opening Committee
  (EOC) is entitled to perform the following
• Review the original bid offers (the hard copy),
  submitted by the participating bidders.
• Review the bid Bonds (Initial Bank Guarantees).
• Review the covering letters attached to
  the original bid offers.
• Enter all data of the bid offer (the soft copy)
  which include company name code number, item
  code and description, unit price and company
  remarks etc.. in the computer system which
  contains the pre-designed program for this
  purpose.
• Rejection of the bid offers which are not in
  compliance with the tender's terms conditions.
• Prepare a comparison statement printed out of the
  system, showing the quoted price made by the
  bidders for each specific item.
• Provide the Group Purchasing Division with all
  original bids, bank guarantees, compact disks and
  the comparison statements to be presented, by the
  Group Purchasing Division, to the Bid Vetting
  Committee in the meeting which shall be held one
  week after.

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• c. Bid Vetting Committee (BVC)
• Apart of the fixed meeting agenda, the
  duties of the Bid Vetting Committee (BVC)
  comprise the following
• Examine the offer made by each bidder for every
  individual item in terms of price and
  specifications, compared to the price registered
  at the EB.
• Examine the items' samples provided by the
  bidders so as to make sure that, they comply with
  and fulfill the required specifications.
• To ensure that, all bidders as well as their
  products, are registered as per tenders'
  regulations. However, the BVC has the right to
  reject the bid offered by any company which does
  not fulfill such regulations.
• The committee's decision regarding selection of
  items is entered directly in the computer system
  using the pre-designed program. Nonetheless, all
  members should sign on the comparison statement,
  made by the Envelopes Opening Committee, derived
  from the computer system.
• Select the acceptable offer for each individual
  item following the predetermined criteria for
  items' selection and award.
• The Bid Vetting Committee reviews bid offers and
  awards tendered items to the successful bidders.

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• d. Complaints' Vetting Committee (CVC)
• It is a one-day period committee. The duty
  of this committee is to study the objections,
  complaints and remarks made by the bidders. CVC
  has the right, after a thorough study of the
  documents presented by the complainant against
  other available documents, to EMPHASIZE the
  decision made by the BVC OR to change the award
  for the benefit of the complainant.

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VI. Preparation of Final Quantity

• Based on the decision and the awards made by the
  BVC CVC, the Group Purchasing Division shall
  provide participants, ministries of health in all
  GCC States as well as other health sectors, with
  a compact disk which includes the accepted
  offers, so that they could make their final
  required quantity.

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VII. Issuance of Letters of Award

• According to the final decision made on the bid
  offers of the participating national and
  international vendors, the EB make the awards
  according to the final quantities provided by the
  participating GCC ministries of health and other
  health sectors. It also monitors delivery and
  suppliers performance. The final quantities
  forwarded to the EB by all MOH in the GCC member
  countries and other participating health sectors,
  are entered in the computer system so as to
  print-out the award sheets which include the
  total quantity of each item awarded to the
  bidder. Then Group Purchasing Division shall
  issue the letters of Award to successful bidders
  and provide them with the award sheets.

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VII. Delivery Payment

• Suppliers deliver the ordered items directly to
  MOH of the participating GCC countries and other
  governmental health sectors, which in turn
  reimburse the cost directly to suppliers.
  Suppliers should effect delivery as from date of
  award, following the delivery schedule for each
  participant.

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• Tenders' Statistics
• The following table illustrates statistical
  information about the tenders issued through
  Group Purchasing Program in 2004
• Tender Tender Title Items
  Total Cost
• No.
  (Million )
• 26 Drugs 1308 333.7
• 21 Hospital Sundries 1059 81.2
• 19 Vaccine Sera 50 32.4
• 12 Chemicals 32 0.8
• 09 Rehabilitation Supplies 1668 3.4
• 05 Insecticides 27 2.7
• 04 Laboratory Blood Transfusion Supplies
  2756 48.9
• 03 Orthopedic Spinal Surgery Supplies
  1976 18.3
• 02 Dental Mouth Care Supplies
  1190 10.5
• 02 Radiopharmaceuticals 41 1.5

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The Significance of Group purchasing

• Recent studies shows significant savings (35)
  Million US Dollar's in 1991 Tender distributed as
  follows

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The Significance of Group purchasing

• In 2001 Tender(23) The Savings where (11.5
  Million US Dollars) for Kuwait, Sultanate of Oman
  And Qatar .
• Also for the same year Tender (18) Provide
  savings amounted (1.2 Million US Dollars) for
  Kuwait, Sultanate of Oman ,Qatar and UAE.
• In 2002 the Group Purchasing has significant
  savings amounted (16.3 Million US Dollars) for
  Sultanate of Oman, UAE and Kuwait.

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The Significance of Group purchasing
For Sultanate of Oman
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The Significance of Group purchasing
For Kuwait
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The Significance of Group purchasing
For UAE
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The second Gulf Symposium for Group purchasing

• This workshop were held in Riyadh under the
  general theme (Group Purchasing Future Prospects)
  in the period from 20-21 Safar 1425H (10-11 April
  2004), in celebration of the 25th anniversary for
  this principal program in the Executive Board.
  In this workshop, working papers were presented
  by representatives from the member states and the
  head of the department of group purchasing in the
  Executive Board., as well as from the companies
  participating in the symposium. In addition, in
  the opening ceremony, a lecture was presented by
  HE The General Director of the EB/ HMC GCC
  states demonstrating the march of Group
  Purchasing Program in 25 years.

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The second Gulf Symposium for Group purchasing

• This workshop were held in Riyadh under the
  general theme (Group Purchasing Future Prospects)
  in the period from 20-21 Safar 1425H (10-11 April
  2004), in celebration of the 25th anniversary for
  this principal program in the Executive Board.
  In this workshop, working papers were presented
  by representatives from the member states and the
  head of the department of group purchasing in the
  Executive Board., as well as from the companies
  participating in the symposium. In addition, in
  the opening ceremony, a lecture was presented by
  HE The General Director of the EB/ HMC GCC
  states demonstrating the march of Group
  Purchasing Program in 25 years.

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• The Arab League representative Dr. Hussein
  Hammoudah gave an address which dealt with how
  the rest of the Arab countries can make use of
  such a successful program and take it as a model
  for fruitful cooperation.
• Dr. Mohammed Shuhna, EMRO representative made a
  presentation on (operational principles for good
  pharmaceutical procurement).
• Workshops were organized dealing with
  pharmaceutical supplies, medical sundries and
  supplies of medical laboratories and blood
  transfusion services. Recommendations were made
  in each of the workshops. The overall
  recommendations were summed up, the following is
  a brief account of the most prominent
  recommendations

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• I) Concerning Pharmaceuticals Tender
• 1- Due to the differences in the expiry date of
  the registered drug in the reference countries,
  the member states have to mention the expiry date
  for each item on submission of the data of the
  registered drug OR unifying the expiry period.
• 2- The member states have to send the new items
  to be added in the tender one month prior to the
  meeting date for preparation of the tender.
• 3- Formulation of work team to study the
  possibility of submission of the tender every 2
  years.
• 4- Performance of the companies should be
  evaluated (assessed) in terms of commitment to
  the conditions of tenders.

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• 5- In case of equal prices and technical
  characteristics between 2 companies, negotiation
  to select the cheapest one is done, and the terms
  of awardation are amended to omit the item of
  halfing the amount between the companies.
• 6- Finding a mechanism for collection of 0.5
  from the companies to support development of
  group purchasing program, and financing training
  and educational activities for the members of the
  group purchasing committees in the member states
  (just like the case in the Health Research
  Fund).
• 7- Appointing the Gulf Group
  Purchasing Committee members in the Sultanate
  of Oman and the Kingdom of Bahrain to study the
  high prices of drugs. The EB is to be provided
  with the results of this study.

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• II) Concerning the Medical Supplies Tender
• The necessity of contribution on the part of the
  companies in supporting the rehabilitation
  program through offering training workshops for
  such purpose.
• Discussion of any problems related to the tenders
  in a joint meeting between the countries and the
  local companies as well as foreign ones after the
  end of each tender.
• Emphasis on commitment on the schedules of visits
  to the factories, and all arrangements of the
  visits are coordinated before a long time of
  conduction the visit.

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• III) Medical Laboratories Tender and Blood
  Transfusion Services
• 1. Nomination of a specialized officer in the
  field of laboratories for the corresponding
  tender.
• 2. The member states have to provide the
  Executive Board with the evaluation forms adopted
  to be studied by the committee of rehabilitation
  and evaluation of samples to reach a unified
  form.
• 3. In case a product is awarded to one of the
  companies, it has to provide the external
  reference quality control program on delivery.

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• IV) General Recommendations
• 1. The companies that are notified of awardation
  have to support the member states and the
  participating agents in the field of training.
  This has to be one of the conditions cited in the
  technical specifications of the tender.
• 2. Speeding up the application of e-commerce in
  all phases of the tenders.
• 3. Investigating setting an appropriate mechanism
  for participation of all member states and other
  bodies in the evaluation process (companies will
  sponsor such activities, the costs are to be
  determined by the Executive Board).
• 4. Formulation of companies, a pointing system
  is set to urge them to raise the quality of this
  product.

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Thanks