How Pooled Procurement Can Lower Costs and Improve Access to Life-Saving Medications

Pooling procurement orders for essential medicines offers a promising strategy to lower drug costs and ensure reliable supply, especially in low- and middle-income countries. A recent study led by a health economist from the University of Massachusetts Amherst, published in the Journal of Health Economics, analyzed over 39,000 transactions across 106 countries from 2007 to 2017. The findings reveal that international pooled procurement notably reduces drug prices—by 13% to 20% compared to direct purchases from manufacturers—and decreases delivery delays. However, it also tends to increase procurement lead times, requiring earlier planning.

The study highlights that while international pooling is effective in lowering costs and delays, it involves trade-offs, notably reduced flexibility in procurement timing. This is particularly beneficial for smaller buyers and drugs from concentrated supplier markets, where pooling can lead to significant savings and faster access. Conversely, larger buyers may benefit more from domestic pooling mechanisms such as central medical stores.

Specific programs like the Global Fund’s Pooled Procurement Mechanism (PPM) have shown to cut prices for off-patent drugs and reduce delivery delays by nearly 28%, though they also extend procurement lead times by an average of 114 days. The research emphasizes that different procurement institutions serve different market functions. For example, PPMs excel at lowering prices for older, off-patent medications, while patent-pooling initiatives are more effective for newer medicines.

Integrating these procurement strategies with global health initiatives like PEPFAR and CHAI enhances the overall supply chain, helping health authorities address market failures more efficiently. As more countries adopt digital ordering systems linked to pooled procurement, the efficiency of medication distribution is expected to improve further.

Ultimately, understanding the strengths and limitations of various procurement strategies will aid governments and health organizations in designing effective procurement systems, ensuring vital medicines are accessible and affordable for populations in need.

Source: https://medicalxpress.com/news/2025-05-pooled-buying-life-drugs-key.html