How regional collaborations lower the cost of lifesaving medicines in developing nations

In many low- and middle-income countries, accessing essential medicines remains a significant challenge due to high costs and complex legal barriers. Despite these medications being available on the global market for years, affordability and availability issues persist, often resulting in delayed or insufficient treatment. One effective approach to overcoming these hurdles is pooled procurement, where multiple countries coordinate their purchase efforts to leverage collective bargaining power. This strategy not only helps meet supplier minimum order quantities but also enables countries to secure medicines at lower prices.

There are several models of pooled procurement. Decentralized procurement involves countries directly buying from pharmaceutical manufacturers, while international pooled procurement channels through organizations like the Global Fund or the United Nations streamline bulk purchasing. Some nations utilize centralized domestic procurement systems managed by government agencies, and others partner with NGOs, foundations, or private suppliers. Research analyzing over 39,000 drug transactions across 106 countries reveals that pooled procurement via international institutions can reduce drug prices by approximately 13% to 20%, especially benefiting smaller buyers and those purchasing drugs from limited manufacturers.

However, cost savings come with trade-offs. Pooled procurement often requires longer lead times—averaging an additional 114 days—due to earlier ordering requirements and logistical complexities. While larger pooled systems improve prices and supply chain reliability, they tend to favor high-volume, standard medications, potentially limiting access to other essential drugs. This approach's rigidity can also pose challenges during health emergencies when rapid response is critical.

The global context, including recent disruptions due to COVID-19, armed conflicts, and trade tensions, has highlighted the fragility of international supply chains. Some countries, like Kenya, have moved toward developing domestic procurement capabilities to curb dependence on international systems, though this transition faces hurdles related to quality assurance and manufacturing capacity.

Interventions by major donors and organizations, such as the US Agency for International Development’s (USAID) efforts through PEPFAR, have played crucial roles in supplying HIV treatments worldwide. Nevertheless, recent US funding cuts have resulted in setbacks, including medication shortages and disrupted services in several countries. These developments underscore that supporting access to medicines requires comprehensive strategies involving upstream procurement systems and downstream distribution mechanisms.

Recognizing both the benefits and limitations of pooled procurement is essential for optimizing drug access in resource-limited settings. Balancing cost reduction with flexibility and rapid response capacity remains a key challenge for policymakers aiming to improve health outcomes in developing nations.