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Marina V. Shmeleva // Public procurement in the healthcare sectors of Russia and EEUU, 150-166

DOI: http://dx.doi.org/10.46925//rdluz.34.10

Public procurement in the healthcare sectors of Russia and EEUU

Marina V. Shmeleva *

ABSTRACT

The aim of the study is to analyze public procurement issues in the field of healthcare.

Dialectical, logical, and comparative methods have been used. The author has studied the

best practices of such procurement and conducted a comparative legal analysis of Russian

and the US public procurement systems. The following results have been achieved: it has

been found that public procurement in the healthcare sector is considered more complex

than that in other sectors of the economy since there are more barriers and travails. This is

because through healthcare public procurement the state purchases medical equipment and

medications for state and municipal healthcare facilities. The author concludes that one of

the main problems in the regulation of healthcare public procurement is that budget holders’

supply agreements for medical equipment, medications, and medical products are often

competition-free. Covering the efficiency of public procurement in Russia, the author

highlights the main violations typical of the system at all levels (from regional authorities to

municipal institutions). There are also some practical recommendations to improve Russian

public procurement legislation.

KEYWORDS: Russian Federation; USA; health services; innovation behaviors; budgets.

*PhD in Law, assistant professor Civil Law Department Saratov State Law Academy, Russia,

ORCID: https://orcid.org/0000-0002-1628-8366 . Researcher ID: Р-6997-2017. E-mail:

civil2012@mail.ru

Recibido: 07/06/2021

Aceptado: 20/07/2021

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Contratación pública en los sectores sanitarios de Rusia y EEUU

RESUMEN

El objetivo del estudio es analizar cuestiones de contratación pública en el ámbito de la

asistencia sanitaria. Se han utilizado métodos dialécticos, lógicos y comparativos. El autor ha

estudiado las mejores prácticas de dicha contratación y ha realizado un análisis jurídico

comparativo de los sistemas de contratación pública ruso y estadounidense. Se han logrado

los siguientes resultados: se ha comprobado que la contratación pública en el sector sanitario

se considera más compleja que la de otros sectores de la economía ya que existen más barreras

y tribulaciones. Esto se debe a que a través de la contratación pública de atención médica, el

Estado compra equipos médicos y medicamentos para los centros de salud estatales y

municipales. El autor concluye que uno de los principales problemas en la regulación de la

contratación pública de atención médica es que los acuerdos de suministro de equipos

médicos, medicamentos y productos médicos de los titulares del presupuesto a menudo están

libres de competencia. Al cubrir la eficiencia de la contratación pública en Rusia, el autor

destaca las principales violaciones típicas del sistema a todos los niveles (desde las

autoridades regionales hasta las instituciones municipales). También hay algunas

recomendaciones prácticas para mejorar la legislación rusa en materia de contratación

pública.

PALABRAS CLAVE: Federación de Rusia; Estados Unidos; servicios de salud;

comportamientos de innovación; presupuestos.

Introduction

Medical services are a social good. That is why effective healthcare public

procurement tools are extremely important. In the OECD countries, the public sector

provides about three-quarters of the total health system funds. In a number of countries, for

example, in Denmark, the UK, and Sweden, up to 80% of budgets at all levels are spent on

health (OECD, 2013).

The main source of healthcare financing in any country is budget funds. Since each

country bears the high cost of healthcare, the state is interested in making it more efficient

through the procurement of high-quality goods, works and services.

Such violations as miscalculation of the agreement price, its incorrect justification, or

the lack of its justification are numerous and costly for the state. As a rule, the vast majority

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of the violations are associated with the purchase of high-tech medical equipment, modern

medications for severe and rare diseases as well as foreign-sourced medical products.

The purpose of this study is to assess the efficiency of Russian healthcare public

procurement and produce proposals for improving corresponding legislation. The results of

the study provide valuable information for the state policy developers and implementers of

national strategic plans in the healthcare system.

1

. Research Methods

The study is based on general scientific methods. The comparative legal method has

been used to analyze and compare the characteristics of procurement legislation in Russia

and the US. Specific scientific methods have also been applied, e.g. the method of analysis has

been used for collecting and summarizing the data from Russian and foreign studies together

with the methods of deduction and classification.

2

. Results and Discussion

Currently, the health systems of most countries of the world are facing daunting

challenges even if their priority objective remains the same. The objective is to ensure an

effective and sustainable healthcare system in the context of current and projected

demographic changes and the needs of the population. The quality and efficiency of medical

care and high standards of medical services have always been crucial. Of course, the quality

and efficiency of medical care depends on medical equipment. Consequently, the equipment

should be procured in a timely manner. This is a long-standing economic and procedural

problem in many healthcare systems, which is evidenced by many reports on public

procurement as well as scientific works of Russian and foreign researchers.

In recent decades, the health systems of many countries have solved many complicated

problems. However, the process of demographic aging of the population requires the proper

development of legal rules to maintain the healthcare system. It is also necessary to develop

effective tools for public procurement. Today, population aging is leading to a decreased

portion of working-age people per pensioner. Trends in health indicators among older people

are mixed. Severe disabilities have been cut down in some countries but expanded in others.

Mild disabilities and chronic morbidities are gradually increasing.

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A decline in the number of able-bodied population will result in a shortage of financial

inflows to healthcare systems. An aging population is more susceptible to numerous chronic

diseases. Consequently, people will need more medical care. The need to procure high-

quality medical equipment triggers strong pressures on the state budget.

In the future, the share of public health spending in GDP is expected to grow. This is

also confirmed by the population aging forecasts by 2060. The main factors inducing this

avalanche are the following: the demand for high-quality medical services, rising

expectations, and steady technological progress.

In Russia, while procurement is being conducted, there are often violations on the part

of the health management authorities. At the municipal level, healthcare procurement

legislation is regularly violated by public authorities (health departments, ministries, or

administrations). At the regional level, potential violators are the local authorities that

manage and conduct procurement procedures.

Public inspections often reveal omissions on the part of healthcare duty holders. The

omissions are expressed in the lack of control over the execution of agreements, improper

registering of agreements, and escaping penalties for non-execution or improper execution

of agreements.

At the level of the ultimate beneficiaries, i.e. public (state-owned) and municipal

(

state-owned) healthcare facilities, the range of procurement legislation violations is much

wider. The scope of purchases made by those customers is very extensive: from the repair of

medical facilities to the purchase of food for them.

The level of competition lags far behind most countries of the world, even though

recently there have been many positive changes in the Russian healthcare public

procurement legislation. In Russia, the low efficiency of public procurement stems from

many factors, including the abuse of the lowest price criterion while conducting

procurement, arrangements for public procurement without any preliminary study of how

effective this procurement would be, etc. Nonetheless, public procurement procedures in the

Russian healthcare system can get better and more efficient through the use of advanced

diagnostic tests and treatment methods.

Up to the present, medical facility managers are likely to make agreements on terms,

which are different from the ones specified in the procurement documents and approved by

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the customer. There are also violations of the legislation related to the protocols on the results

of the procurement procedures.

This is only a small sample of violations detected in the field of public procurement of

medical services, medications, and equipment. Unfortunately, the current Russian legislation

does not make it possible (as it has been planned by the legislators) to fully eliminate public

and municipal agreements with suppliers, contractors, or implementers affiliated to

customers. Thus, the Russian legislators failed to bring new, competitive and transparent

relationships into public procurement.

At the same time, violations in the way medical equipment, medical products and

medications are supplied have had true negative impact. For example, by extending the

delivery time, suppliers unintentionally accelerate a patient’s disease progression and

provoke geographical, class and racial discrimination in the field of healthcare. Ensuring the

supply of high-quality medical products is crucial to address the disparities in the spread of

diseases and the related outcomes.

The main goal of each state, conducting procurement for healthcare facilities, is to

purchase medical equipment and medications. But at the same time, the state solves other

problems, e.g. supporting the development of competition and innovation, helping domestic

manufacturers, etc. The regulatory function of the state in the field of public procurement is

increasing not only in Russia, but also in the countries where private medical services are

very well developed (Improving Public Procurement, 2012). Thus, when the directors of

medical facilities conduct procurement, they face a bunch of tasks, including ensuring the

quality of purchased medications, treatment tools, and equipment. They also get involved in

developing competition, stimulating small and medium-sized businesses, and implementing

the imports phase-out policy (Sirotkina and Skrebtsova, 2013).

Many Russian and foreign authors are engaged in research on the efficiency of public

procurement. Their main goal is to study the determinants of public procurement and to find

ways to make procurement procedures more efficient. As a rule, the contents of the studies

is often contradictory. However, these works are rather valuable because they analyze and

compare all the ways to solve emerging problems. Most studies analyze such factors as

corruption, competitiveness, and transaction costs that affect the efficiency of public

procurement (Huculová, 2018; Baldi and Vannoni, 2017; Ochrana and Maaytová, 2012).

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“

In the US, patients depend on medical supplies and prescription drugs, which are

mainly produced by international companies located in Southeast Asia and Europe. With

each US hospital sourcing these products alone, hospital procurement officers are running

into a bewildering array of middlemen, international procurement rules, import quotas,

and exorbitant freight charges. The quality of public procurement supplies is also a concern,

as hospitals face unverified brokers and counterfeit goods.Moreover, as the crisis transitions

into a chronic concern, the finances of hospitals, particularly those that serve the safety net,

are now at risk. For some hospitals and communities, the purchasing of potentially needed

supplies at exorbitant “crisis” prices can become an existential threat. Hospitals require

many medical products including PPE and prescription drugs on a regular basis. Most

hospitals maintain a procurement officer or department to manage their inventory and order

when needed. They do this themselves or through their parent institution. While hospitals

can source products themselves through wholesalers, most contract with group purchasing

organizations (GPOs), such as Premier Inc. GPOs aggregate demand across many hospitals,

buy supplies in bulk, and in many cases obtain better prices for products than individual

hospitals can by themselves. In exchange, hospitals pay membership fees to GPOs. GPO

memberships are rarely exclusive arrangements, and it is common for a hospital to be a

member of multiple GPOs. GPO contracts feature characteristics that make them

challenging partners for hospitals when there is a surge in demand or shortage in supply.

First, larger purchasers of medical products, including regional/national hospitals, tend to

receive preference over smaller hospitals in traditional GPO arrangements. This can lead to

disparities in access across hospitals, even in the same city or country. Second, most GPO

contracts do not contain “failure to supply” arrangements that would hold them accountable

for failing to supply products that they are unable to procure and that hospitals require. This

leaves hospitals to source needed products on their own.

Third, there are no product price guarantees in a typical GPO contract. This means

that manufacturers of these products can and do charge prices above the contracted amount

and what may seem reasonable when there is a surge in demand or in the prices of base

products and ingredients. While US states have price gouging laws, cross-border federal

laws fall under the umbrella of trade and tariffs and don’t prohibit price gouging. Fourth,

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GPO contracts do not guarantee the quality of products that they procure for hospitals. For

some products, minimum quality standards set by regulators serve as a backstop. For

example, the Food and Drug Administration (FDA) regulates the quality of most prescription

drugs and maintains a database of approved PPE manufacturers as a resource to hospitals.

However, many products procured by GPOs are not regulated by federal agencies, which

incentivizes suppliers to maintain very low-quality standards or even cheat. There is also no

public information about the quality of products sold by manufacturers. GPOs and

wholesalers have no legal or contractual obligation to provide this information to their

members” (Devaiah et al., 2020).

In our opinion, an important element of healthcare public procurement is innovation-

oriented public procurement (IOPP). Among other tools, it is considered extremely effective,

since it allows the state to act as a leading buyer, stimulating the innovative development of

domestic companies and achieving social goals.

Innovative public procurement can be defined as the purchase by a medical facility of

equipment and medications, which do not yet exist but can be produced by the supplier

within a reasonable period. The equipment and medications are to be manufactured on the

basis of additional or new research as well as science and technology.

In addition, innovative public procurement contributes to the development of

innovations in many ways, e.g. through the use of new methods of treatment that are more

effective and painless.

Innovative public procurement is being actively debated all over the world. Though

this issue has been studied a lot in Europe, there are very few research papers on this issue in

the US. Moreover, American public procurement primarily embraces innovations in the

sphere of national defense and security. Most of the strategic procurement in the US is aimed

at achieving social goals, e.g. environmental protection, energy conservation, and assistance

to socially vulnerable groups.

Thus, the US government encourages the procurement and the development of

innovative solutions to meet various social needs. However, a direct reference to the purchase

of advanced technologies through federal procurement was found only in one US Executive

Order No. 13834 of 17 May 2018. In this Executive Order, “the Congress has enacted a wide

range of statutory requirements related to energy and environmental performance of

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executive departments and agencies (agencies), including with respect to facilities, vehicles,

and overall operations. It is the policy of the United States that agencies shall meet such

statutory requirements in a manner that increases efficiency, optimizes performance,

eliminates unnecessary use of resources, and protects the environment. In implementing this

policy, each agency shall prioritize actions that reduce waste, cut costs, enhance the

resilience of Federal infrastructure and operations, and enable more effective

accomplishment of its mission” (Presidential Document by the Executive Office of the

President, 2018).

Public procurement can be classified in different ways according to what is procured,

for whom, and why.

On the first classification level, there is general and strategic procurement. Any public

procurement implemented to meet the buying agency’s need for finished products refers to

general public procurement. Procurement is considered strategic when the demand for

certain technologies, products, or services is spurred in order to boost a certain market.

The next basis for classification is the forms of innovative public procurement. They

depend on the level of promoted innovations. Development procurement refers to the

acquisition of technologies that must be developed almost from scratch. Adaptive

procurement refers to the acquisition of innovations, which are necessary to refine some

specific technology when the basic technology already exists (Edquist, Hommen and

Tsipouri, 2000).

Another classification of public procurement is based on the end-user of acquired

goods, services, and works. Direct public procurement takes place when the final consumer

of the things purchased is the Government itself. Cooperative public procurement is defined

as joint purchasing, i.e. state-owned companies buy something jointly with private buyers.

Afterward, both public and private parties use the purchased innovations. Catalytic public

procurement happens when a public agency initiates a purchase, but afterward, the

innovation is used exclusively by a private person.

On top of it, three main roles of innovative public procurement have been identified.

The creation of a market occurs if there is no market for a procured technology. Market

escalation is triggered when there is a stable market for the technology, but it requires further

development to attain commercial success. Market consolidation helps to standardize the

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criteria or technical specifications for the technology to be used in the public sector. This

entails similar changes in the private sector.

Moreover, serious risks are provoked by restrictions related to public procurement of

high-tech medical devices, for example, ultrasound machines. It should be noted that Russia

has legislative restrictions for foreign suppliers on the delivery of medical devices and

equipment. That is why not all the devices are equally good since in most cases only foreign

equipment provides for quick and efficient diagnostics.

We believe it is really good that there are no such restrictions on foreign medications.

The reform of the Russian public procurement system has become an urgent issue in

recent decades. It is also essential to realize that investing in innovations is an expensive and

risky gamble. An emphasis on minimizing costs and risks in the procurement legislation may

impede innovations. Similarly, the tightening of financial management can increase an

administrative burden, which would keep the most innovative organizations away from

participating in procurement.

The Russian procurement legislation is characterized by a pronounced antimonopoly

orientation. Russian procurement procedures seem to be tailored only to one criterion, i.e.

the low price. The rules that ban any limitations on the number of participants in

procurement apply to almost all purchases in medical facilities, but special attention is paid

to the procurement of medications under the Federal Law on the Contract System. Thus, in

accordance with Article 33 (1) (6) of the Law, the procurement documents must reveal

international unlicensed names of medical drugs. If the procured medications do not have

such names, the documents must specify the chemical names and the grouping names of the

medications. There are exceptions to this rule, i.e. there are cases where the legislation allows

the procurement of medications under their trade names.

First, the procured medicinal product must be on the list of medications approved by

the Government of the Russian Federation. The procedure for forming the list is defined by

the Government Decree No. 1086 “On approval of the rules for forming the list of medications

procured under their trade names and on amendments to the Regulation on the Government

Commission on Public Health Protection” of 28 November 2013.

Second, the procurement of medications must be conducted through a request for

proposals under Article 83 (2) (7) of the Law on the Contract System. The Article covers the

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procurement of medications that are necessary for prescribing to a patient if there is a

corresponding medical need determined by a decision of the medical commission.

Third, the Law restricts the amount of procured medications. It must not exceed the

amount of medications needed by the patient during the treatment period.

Fourth, under Article 93 of the Law on the Contract System, the medication must be

procured from a single source (supplier, implementer, or contractor).

The current Russian legislation requires customers to undertake marketing research

to determine the availability of goods, services, or works, which could meet the customer's

requirements, and procure them if necessary. For procurement of goods, services, and works,

acquisition procedures and contract terms are simplified. This entails the simplification of

procurement documentation and shortening the time for contract performance.

The Russian market for the supply of medications and medical equipment features

strong consolidation in the healthcare sector. The public procurement market has become a

specialized niche with a limited number of companies and a special range of goods, e.g.

cancer drugs, insulin, antibiotics, etc. (Sokolov et al., 2013).

In the field of healthcare, Russian legislators provide for special rules aimed at

boosting competition in the market of public procurement of pharmaceuticals. For example,

Article 33 (1) (6) of the Law on the Contract System says that medications with the various

international unlicensed names or in the absence of such names with chemical and grouping

names cannot be a subject of one contract (one lot) provided that the initial (maximum) price

of the contract (lot price) exceeds the limit value established by the Government of the

Russian Federation.

Russia is taking measures to regulate the market of vital and essential medications due

to the social significance of such medical products. Under Article 60 of the Federal Law “On

the Circulation of Medicines” of 12 April 2010, the list of vital and essential medications is

approved annually by an Order of the Government of the Russian Federation. The Law

requires the state registration of the manufacturers’ maximum ex-works prices for the

medicinal products included in the list of vital and essential medications. By the same Law,

executive authorities of the Russian Federation constituent entities are entitled to determine

maximum wholesale and maximum retail mark-ups for vital and essential medications.

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The Russian legislation on procurement for state needs prescribes rules for the

purchase of medical products from the list of vital and essential medications. Under Article

31 (10) of the Federal Law on the Contract System, at the procurement of medications, which

are included in the list of vital and essential ones, dismissal of the procurement participant

from participation in determination of suppliers or refusal to conclude the contract with the

winner of determination of suppliers is allowed at any time prior to conclusion of the

contract if the customer finds out that the maximum sale price of medications offered by such

procurement participant is not registered, or the price offered by such procurement

participant exceeds maximum sale price (the procurement participant refuses to make it

lower).

The medication must be described through converted measurements and registered in

the Russian Federation. To convert the measurements, the customer has a right to use any

applications and information, including those on the Internet.

According to the definition in Article 4 of the Federal Law “On the Circulation of

Medicines”, a reference medical product is a medical product which is registered in the

Russian Federation for the first time, whose quality, efficacy and safety are proved based on

the results of preclinical trials. A generic medical product is a medical product, which has the

same qualitative composition and quantitative composition of active substances in the same

pharmaceutical form as a reference medical product, but appeared on the market later.

The problem of equivalence of generic medical products is relevant all over the world

because the world market is full of medications from different manufacturers. In Russia, this

issue is particularly urgent, since the pharmaceutical market is saturated with a large number

of medications, and even taking into account the fact that the global consumption of generics

is constantly growing (Yagudina, Arinina, and Kondratieva, 2013). Russia occupies one of

the leading places with a 77% share of generics on the market. For example, in the United

States, the share of generics is 12%, in Japan – 30%, in Germany – 35%, in France – about 50%

(

Presidium Meeting of the Government of the Russian Federation on the development of

competition in the markets of air transportation and medicines, 2013). Moreover, several

hundred medications from various manufacturers have been registered as having the same

active substances.

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The manufacturer of the reference medical product invests funds at all the stages of

drug development, i.e. from the search for the active substance to the study of the most

effective combinations with auxiliary substances, which eventually becomes a medication.

Studies confirm the effectiveness and safety of the developed drug in specific pathologies.

Pharmaceutical companies receive patent protection for it for a long period (up to 20 years

or more), which allows them to compensate for the enormous costs of developing an

innovative medication and promoting it on the market, paying for many years of work of

highly paid specialists, clinical research and, of course, to earn income. Manufacturers change

the composition, use less refined raw materials and auxiliary substances. The medication gets

brought to the market often without having a single clinical study confirming its

effectiveness and safety (Sirotkina and Skrebtsova, 2021).

The Russian Federal Antimonopoly Service considers that the drug form, the

international unlicensed name, and its dosage are decisive for the buyer.

Thus, according to the Letter of the Federal Antimonopoly Service dated August 30,

2011, in accordance with Article 61 of the Law on the Circulation of Medicines, similar

medicines are medicines with the same names, the same drug forms and the same dosages.

The Federal Antimonopoly Service of Russia believes that similar medicines should be

referred to as interchangeable medicines in the context of the Law on Protection of

Competition. However, this approach contradicts the understanding of the therapeutic

equivalence of medications.

However, there are exceptions. When there are differences in the amount and

bioavailability of the active substance contained in the instructions for use, the drug form,

the route, and other inconsistencies that the customer considers important for one reason or

another. Such medications will not be considered interchangeable even within the

framework of one international unlicensed name. This is evidenced by a number of Federal

Antimonopoly Service regulations and court decisions.

After analyzing the explanations of the International Pharmaceutical Federation (FIP)

and the International Federation of Pharmaceutical Manufacturers and Associations

(

IFPMA), it can be concluded that they focus on controlling therapy in the interests of

patients, which means promoting adherence to a particular treatment. The aforementioned

organizations draw attention to the fact that therapeutic equivalence must be proved for

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each medication of each specific manufacturer, taking into account the fact that the generics

containing the same active pharmaceutical substance are not therapeutically equivalent.

Therefore, they are not interchangeable. This evidence should be based on scientifically

sound data. A specific decision on the replacement of the medication should be based on

medical specifics but can be based on the information provided in the relevant manual.

According to the Decree of the Russian Government No. 1380 in the description of the

object of purchase, you must not specify:

1

) The drug form (packaging), for example, a vial or a blister;

2

) The requirements for the pharmacodynamics and/or the pharmacokinetics of the

medication, for example, the start time, the manifestation of the maximum effect,

and the duration of the medical product effect;

3) Other characteristics of medications contained in the instructions for the use of

medicinal products that reveal their manufacturer.

Thus, the driving force should be the cooperation between suppliers and customers.

Customers and suppliers will benefit from cooperation by identifying the best commercial

practices and determining the need for their implementation.

Now, contracts, which are based on the results of procurement procedures, assume

that customers fix their requirements for the purchased product, service, or work in the

terms of reference. They determine in advance what they want. Consequently, there is a very

limited opportunity for contractors to provide their own ideas. Therefore, it is necessary to

introduce an innovative type of contract, which could be concluded at the early stages of

product development.

Price is always an important factor in public procurement, but it cannot be decisive in

innovative procurement. The search for the best value should become an essential factor

when purchasing high-tech products. “Cost realism” should also be used to determine

whether the overall concept makes sense to the customer.

The main results of the study include the following:

1

) Proposals have been developed to improve the tools for healthcare public

procurement;

2) The analysis of regulations on public procurement in Russia and the US has been

carried out.

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Conclusions

The public procurement system reform has become an urgent issue in recent decades.

The study reflected the best practices in the sphere of public procurement, comparing them

to the habitual practices of the Russian government.

The analysis of typical violations of procurement legislation in the field of healthcare

shows that the requirements for mandatory and timely publication of information about the

planned procurement, information about concluded and executed agreement, and the

maintenance of procurement registers are not very well observed. Violations also happen

when determining the procurement method. Illegal actions are often made by the

procurement committees when determining the procurement winners. The committees are

able to illegally prohibit a potential candidate from participation in procurement and reject

his/her application. During inspections, cases of illegal requirements, being included by

customers in the procurement documents, including those that establish administrative

barriers and restrict competition, have been revealed.

As a result of the conducted research, we have found that in recent years, the concerns

of limited budgetary financing and the problems of the public procurement system efficiency

in the healthcare sector have become obvious. In this regard, it is important to build a more

effective system of healthcare public procurement. As stated in some WHO reports, almost

a fifth of health spending does not contribute to improving people’s health and/or the

contribution is not enough.

Reforming the public procurement system in the healthcare sector requires much

time. In particular, it is necessary to more precisely regulate the procedure for conducting

procurement in health care systems, aiming at spending less budget funds. At the same time

hospitals are equipped with high-quality and modern medical equipment and medications.

The solution to the problem is to conduct two-stage procurement procedures, where at the

first stage the customer only places the task that he needs to be done, and suppliers would

offer their own solutions. At the second stage, the procurement procedure should take place

directly with the consideration and evaluation of applications. This can be a two-stage

competition or a two-stage request for proposals.

There are also other serious problems in the healthcare system, such as the provision

of fictitious bank guarantees, illegal changes introduced by the parties into the terms of

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DOI: http://dx.doi.org/10.46925//rdluz.34.10

agreements as well as expanding the range of goods supplied, resulting in an increase in the

contract price. There are still cases of improper performance by contractors (suppliers) of

obligations stipulated in agreements in the absence of proper control by customers as well as

their failure to take measures to impose penalties and terminate improper agreements.

We propose the following legislative changes that would help make the public

procurement process in the healthcare sector more efficient:

1

) To abandon the low price main criterion. In such procurement priority should be

given to those goods, works, and services that meet the interests of therapeutic treatment of

patients;

2) To conduct and stimulate procurement of innovative and high-tech goods, works

and services;

3) To include the concept of “therapeutic equivalence of medications” in the

legislation;

4

) To create an information and analytical system for monitoring and controlling

public procurement of medications that would meet modern requirements;

5) To provide for a special procurement procedure in the legislation to fight emergency

threats like COVID 19.

Acknowledgments

The reported study was funded by the Russian Foundation for Basic Research,

scientific project No. 20-011-00140 A: “The Introduction of modern civil law mechanisms in

the field of public procurement as a system of measures to ensure efficient use of budget funds

as well as conditioning positive structural changes in the economy and social sphere”, 2020-

2022.

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