The Tribune

The Public Hospitals Authority (PHA) yesterday said the 20 per cent increase in spending with Bahamian pharmaceutical wholesalers over a two-year period proves that fears it is intent on “wiping out” the industry are groundless.

The Authority, which is responsible for managing the Princess Margaret and Rand Memorial hospitals, plus the Sandilands Rehabilitation Centre, described suggestions that its new drug purchasing strategy would eliminate Bahamian wholesalers as “complete falsehoods”.

In a lengthy statement sent to Tribune Business in response to this newspaper’s inquiries, the PHA said it could “not turn a blind eye” to sourcing pharmaceutical drugs overseas if local suppliers were unable to provide them.

It explained that it had been forced to do this with its latest drug tender exercise, known as MPC 16, after only receiving satisfactory bids for 50 per cent of the items required.

The PHA was responding to Bahamian distributor concerns that were sparked when Dr Mavin Smith, head of its pharmaceutical purchasing arm, the Bahamas National Drug Agency (BNDA), sought bids on the outstanding MPC 16 drugs directly from their overseas manufacturers.

His October 31 e-mail to all PHA-registered and approved manufacturers sought to ‘cut out’ Bahamian wholesalers from the process, stating that the BNDA “did not receive the requisite response” from local vendors.

“The PHA is desirous of procuring these items via other methods, including but not limited to direct procurement from manufacturers,” Dr Smith added.

Just in case the industry did not get it, he reiterated in a November 3, 2016, e-mail: “I am not authorised to have any discussions as it relates to inclusion of local vendors in this process.”

Bahamian pharmaceutical wholesalers thus feared that the PHA’s decision to exclude them from the remainder of MPC 16 may mark the start of a longer-term strategy of the Authority ‘going direct’ to manufacturers, especially given the opening of its east Shirley Street drug warehouse in recent weeks.

However, the PHA yesterday told Tribune Business that such fears were “careless mistruths”, explaining that Bahamian pharmaceutical wholesalers had been given every opportunity to bid on MPC 16.

The Authority said the initial tender was widely advertised in the newspaper on February 22, 2016, and the closing date of April 18, 2016, was extended by two weeks to May 2, 2016, at the request of Bahamian vendors.

This, the PHA said, was done “even though some in the industry felt that all vendors had more than equal opportunity to prepare their tender bids, as opposed to the traditional six to eight weeks”.

Tribune Business sources familiar with the wholesale industry’s position, though, last week said the tender launched in February 2016 marked the third time that the PHA had attempted to launch MPC.

MPC tenders typically used to be issued every 12-18 months, but the same sources said the 15th incarnation, labelled MPC 15, had been running for two-and-a-half years.

As a result, Bahamian wholesale distributors were concerned that delays in issuing the tenders, and awarding drug supply contracts, had resulted in the PHA using products and suppliers that were not on its approved list.

And they were suggesting that the MPC 15 exercise had saddled the Bahamian taxpayer with $1.5 million in extra costs as a result of purchasing from higher-priced suppliers.

None of these concerns were directly addressed by the PHA statement, which said Bahamian wholesalers and distributors were its “source of first choice” for pharmaceutical supplies.

It said this assertion was supported by the fact overseas drug manufacturers were not allowed to participate in the initial bid process, thereby giving Bahamians first preference.

“When our local vendors cannot supply items needed, the Public Hospitals Authority - because of its mandate to the Bahamian people - has to look outside of the country to source the required items,” the PHA said.

“After the extended closing date of May 2, the tender proposals from local vendors were analysed, and on completion of that review our analysis team reported that approximately 50 per cent of items required were received from the proposals submitted.

“For the benefit of the Bahamian people, we would wish to report that already eight local vendors were offered contracts totalling in excess of $5 million based on their proposals.”

With 50 per cent of the MPC 16 tender items not awarded in the original bid, the PHA said it had little choice but to ‘open the field’ and look abroad - including going direct to foreign manufacturers - if it was to service all patient needs.

“It would be foolhardy to suggest that when drugs and medical supplies cannot be sourced in country that the PHA turns a blind eye to sourcing them elsewhere, leaving those entrusted to our care without the medications they may require for treatment,” the PHA added.

“With regards to assertions that the PHA’s direct procurement approach has resulted in job losses, the record will reflect that the PHA’s expenditure on pharmaceuticals with local vendors has been on the rise for some time now.

“For example, in the period July 2014-June 2015, local pharmaceutical vendors received more than $15 million. For the period July 2015-June 2016, local vendors received more than $16 million, and it is projected that by the end of the fiscal year 2016-2017, the PHA would have spent in excess of $18 million with local vendors for the procurement of pharmaceuticals alone.

“This clearly shows an increase in business with local vendors, and dismisses any possible suggestion that the PHA could be responsible for the loss of jobs in the industry.”

The PHA added that the introduction of its online bid management system, Online Tender Management System (OTMS), had enabled more qualified Bahamian vendors to participate.

“This hardly sounds like a move to ‘wipe out’ the industry, but rather a move to enhance relationships by inviting other suppliers to the table,” the PHA said.

However, several wholesale sources have queried the narrow two-day window that the PHA/BNDA gave overseas manufacturers to bid on the remaining MPC 16 drugs.

Dr Smith’s e-mail, which was dispatched on October 31, gave them just 48 hours to put together complex bids involving prices, shipping and insurance costs, minimum order amounts and shipping/delivery times.

This, Tribune Business was told, has left some in the industry questioning whether the PHA had already selected its providers, give the difficulty of meeting its bid deadline.

Meanwhile, referring to its new Shirley Street facility, the PHA said: “The transformation of the PHA’s Supply Chain Management System is designed to bring about a greater level of efficiency, maximisation of scarce resources, transparency, accountability and a culture of continuous improvement throughout all levels of the supply chain system.

“It is the PHA’s clear intention to ensure that supplies needed for our patients can be accessed 24-hours a day, seven days a week.”

The PHA, though, did not address supplier concerns about its “unrealistic” order quantities, which have been blamed for frequent drug shortages.