Kenyans may be paying up to 30 times more for everyday medicines. This is according to a 2019 study from the Center for Global Development, which reported that low to middle-income countries sometimes pay up more for medication compared to high-income countries.
This can partly be attributed to sub-optimal public procurement systems that drive up costs, as well as the fact that over 70 percent of pharmaceutical products in Kenya are imported.
The recently published draft 2023 Budget Policy Statement recognises that access to quality and affordable healthcare is critical to achieving Kenya’s development goals.
It has prioritised reforms and interventions in the healthcare sector, including with respect to the procurement of medical supplies and ramping up of local manufacturing of pharmaceutical products.
With respect to public procurement, contracts for medical supplies can be quite lucrative and therefore prone to collusion and fraud.
The recent Kemsa scandals attest to this. The government could consider effecting existing provisions under the public procurement law that provide for the use of an electronic reverse auction system.
In such a system, the relevant public entity would publish a tender, clearly stating the specifications of the required medical supplies.
All registered qualified suppliers would be invited to bid in real-time through an online platform. The lowest bid would be posted for all to see without naming the bidder.
In subsequent rounds of the auction, bidders who are interested in submitting a lower-priced bid would do so and this will go on until no more bids are submitted.
The lowest-priced bid would, therefore, win the contract. In such a system, bidders are only allowed to lower their prices but not to increase them - hence the term ‘reverse auction’.
The relevant software would obviously be required, including a secure system with electronic procurement capabilities.
An open auction such as this would elicit greater participation owing to the increased transparency and would likely result in lower prices as compared to a negotiated procedure where only select firms are invited to bid and negotiate their offer.
On the issue of ramping up local pharmaceutical manufacturing as proposed in the draft 2023 Budget Policy Statement, it goes without saying that this shall be critical in ensuring the sustainability of Kenya’s healthcare system.
A robust pharmaceutical manufacturing sector shall ensure that the healthcare system can respond to the general healthcare needs of Kenyans as well as emergencies.
A good case in point is the Covid-19 pandemic, which disrupted global supply chains and exposed our vulnerabilities arising from reliance on imported medicines and medical products, including vaccines.
According to the East African Pharmaceutical Manufacturing Plan of Action 2017-2027, Kenya has the fastest-growing pharmaceutical market in the region, with an estimated annual growth rate of 15 percent.
Kenya is also arguably the region’s business, financial and transportation hub.
There are however a number of factors that could hinder the growth of the pharmaceutical manufacturing sector in Kenya and interventions will need to be put in place to address these.
For instance, it will be critical to ensure that the regulatory and enforcement environment guarantees that pharmaceutical products in the market are genuine, safe and meet the required quality standards.
Cynthia Olotch is a Partner in the Projects, Energy & Restructuring practice at DLA Piper Africa, Kenya (IKM Advocates).
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
