A preliminary study on the electronic transaction model of essential drugs: the existing model has prominent defects

Since the implementation of the essential drug system, there has been constant debate, one of the focuses of which is the centralized bidding and procurement model for essential drugs. At present, a concept of advocating the establishment of a new procurement model for essential drugs, the electronic trading center (hereinafter referred to as the "trading center"), has been investigated. The reporter learned that the preliminary investigation has been completed and the relevant report has been submitted to the top leaders of the country.

Li Xianfa, the proposer of the concept and deputy director of the Medical Logistics Research Center of Renmin University of China, said that the current centralized procurement model of basic drugs based on provinces has very prominent defects. 70% of the winning bid prices of basic drugs in various provinces are roughly the same, which means 70% of duplication of work and a large amount of waste of resources. If a trading center is established, the cost of centralized procurement of basic drugs can be reduced and the opportunity for centralized corruption to breed can be eliminated at the source.

Existing model has prominent defects

"The most prominent problem is that there is no law to rely on. Local governments cannot conduct centralized drug procurement in accordance with the Bidding Law and the Government Procurement Law. Second, the only way to win is to reduce prices, and bad money drives out good money. The four-factor tiered bid evaluation method currently used by various places is a research result from 10 years ago. It cannot effectively classify equivalent drugs and cannot form a situation of price competition among equivalent drugs. Third, the transaction cost is high. Each province has to gather thousands of drug manufacturers to participate, which is similar to the scale of a large-scale drug trade fair, and the transaction cost is hundreds of millions."

This is Li Xianfa’s evaluation of the current centralized procurement model for basic drugs.

Therefore, Li Xianfa pointed out that due to the prominent defects of the current centralized procurement model of basic drugs, the centralized procurement resources allocated by local governments can no longer ensure the acquisition of basic drugs. If the centralized procurement model of basic drugs is not fully optimized and upgraded, even if the correct methods such as "double envelopes", "quantity-price linkage" and "single source commitment" are introduced, it is impossible to eliminate the phenomenon of only price reduction and bad money driving out good money.

It is subversion rather than reform

According to Li Xianfa, the trading center will establish a basic drug trading preparation system, unify the data standards for basic drug trading in the entire industry, establish credit registration classification, collection and release standards for basic drug production and distribution entities, and establish and improve payment credit, quality credit and supply credit systems.

The trading venues are set up on a provincial basis, and the contract terms are formulated by each province in accordance with the prescribed standard format. Manufacturers can formulate trading offers based on the different trading conditions proposed by each province and implement different prices. For procurement projects based on provinces, competitive price comparison procurement services such as bidding and bidding are provided, and for national centralized procurement projects, transaction matching services are provided.

During logistics distribution, the trading center will classify logistics distribution enterprises according to the industry grade standards of basic drug distribution enterprises, and publish the grade standards and supply credit information of logistics distribution enterprises. The trading center will provide third-party payment services to basic drug production and operation enterprises, and provide supply chain financing services to the first payers of the basic drug purchase price of medical institutions and medical institutions. At the same time, the trading center will also play a role in price discovery, that is, forming the average transaction price of all basic drugs, publishing price indices, and providing data support for the government guidance price of basic drugs to price authorities.

Li Xianfa believes that the core value of establishing a trading center is to reduce transaction costs, standardize transaction behaviors, and improve efficiency. It is a subversion of the model rather than an improvement. By promoting direct transactions between enterprises and medical institutions and the logistics transformation of pharmaceutical companies, the intermediate links and circulation costs can be reduced. Through the adoption and credit evaluation mechanism established by the trading center, it can guide local governments to select winning products and distribution companies in accordance with the principle of limited quality and supply guarantee, establish and improve the credit system, and control commercial bribery in the purchase and sale of medicines from the source.

Is it better?

Li Xianfa believes that the trading center is a further improvement to the centralized drug purchasing system based on provinces.

The bidding, tendering and bid evaluation processes will be completed uniformly by the trading center, but the determination and awarding of bids will still need to be carried out on a provincial basis. As a result, the focus of basic drug procurement and supply management in provinces (autonomous regions and municipalities) will shift from the current entry price limit to centralized procurement, and the centralized procurement platform and procurement organization established with government investment will continue to play an indispensable and important role.

Taking into account the uneven economic development among different regions, trading venues can be set up on a provincial basis. Manufacturers can bid and quote to all trading venues in one bidding or auction project, complete the bidding and quotation process for all trading venues at one time and implement differentiated prices based on the trading conditions of each region, so as to meet the basic drug procurement and supply needs at different levels in different regions.

The reporter communicated with many industry insiders about the trading center. Industry insiders recognized the trading center to a certain extent, but also expressed concerns about whether the trading center model can eliminate the drawbacks of the current model. Yang Changshun, general manager of Jiangxi Sanjin Yian Pharmaceutical Co., Ltd., believes that the core value of the trading center is to reduce human interference and thus improve supply chain efficiency, but the inherent drawbacks of drug bidding, such as quality selection, emphasis on price, and profit-seeking caused by using drugs to support doctors, may be difficult to solve with just a drug trading center.