Why did the Government ask international organizations for support to procure vital medicines to Ukraine?
Corrupt practices and limited competition have led to the delayed public procurement of overpriced medicines across Ukraine, ultimately taking a high toll on human lives as a result of shortages and unaffordable medical products.
In a bid to reverse this unacceptable situation that put public health at high risk, the Ministry of Health of Ukraine - in line with the Government’s anti-corruption strategy and legislative package adopted in 2014, which aims at bringing the country into compliance with international anti-corruption standards – decided to temporarily transfer the procurement of some specific medicines to international organizations up until March 2019.
What is the legal framework of this public medicine procurement by UNDP?
As a part of procurement reform, the Ministry of Health of Ukraine officially requested UNDP’s support in dealing with this public health emergency.
This decision is based on the provisions of the Law of Ukraine «On Amending Some Laws of Ukraine on Ensuring Timely Access to Medicines through Public Procurement with Participation of Specialized Procurement Organizations” of March 19, 2015 #269-VIII and in “Amending the Tax Code of Ukraine regarding Tax Exemption of Some Medicines and Medical Products” of April 9, 2015, #332-VIII.
In order to entrust procurement services to international organizations, some Laws and Provisions of Ukraine were changed or amended. In particular:
This emergency measure allows to win the time necessary for the proper implementation of effective reform in public procurement and ensure the uninterrupted supply of medicines that Ukrainian citizens need and deserve.
The expertise and global experience of these international organizations is directed towards the timely provision of medical products required by State programmes at affordable prices through efficient and transparent procedures.
Why did the Government of Ukraine choose UNDP specifically to provide support services in medicine procurement?
UNDP has a well-functioning, state-of-the-art managerial and operational system, which delivers cost-effective procurement and supply chain management in a number of countries – including in Central and Eastern Europe such as Montenegro, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan - and with a wide variety of partners.
UNDP manages the United Nation’s largest procurement capacity, procuring over USD 3 billion worth of goods and services each year, guaranteeing countries access to life-saving medicines, emergency relief supplies and a breadth of other needed items.
UNDP’s medicine procurement programme for Ukraine therefore builds on the organization’s long-term experience in procurement and supply chain management for health and non-health related projects and programmes.
Is the current procurement system through international organizations the best way for Ukraine to purchase medicines in the long run?
Ukraine's current procurement system, even if (partially) done through international organizations, is still very ad-hoc and suboptimal. Ukraine still does not centrally administer its medicine needs and procures from dozens of locations separately. If centralized procurement were to be adopted, Ukraine would make a fist in the world market which would drive down prices. Also, Ukraine works on an irregular year-by-year budget basis which does not allow long-term contracting and predictable contracts with manufacturers. Because of this ad-hoc procurement, often manufacturers are not interested in selling in the country, and intermediaries insert themselves driving up prices. All these issues need to be addressed in the medium- to long-term.
What are the objectives of the UNDP medicine procurement programme in Ukraine?
In the short term, UNDP provides emergency support to the Ministry of Health for the cost-effective and timely procurement of life saving medicines in Ukraine.
In the long term, UNDP, in cooperation with UNICEF and WHO, helps the Ministry of Health develop its own operational and professional capacity to efficiently perform medicine procurement at international standards. As soon as MoH reaches the required capacity to manage a fully functioning national procurement system - including appropriately trained personnel and efficient management processes that meet international standards and guarantee that healthcare needs of all Ukrainians are met with integrity, transparency and accountability - UNDP will progressively hand over the procurement of medicals to the Ministry of Health.
Selecting UNDP to lead its procurement and capacity building programme reflects the current government’s commitment to fighting corruption while improving competitiveness and fostering excellence among the Ukrainian pharmaceutical industry.
What is UNDP performance record in international procurement?
UNDP procures goods and services for each of its 166 Country Offices, as well as UNDP Headquarters in New York. However, the responsibility for procurement is decentralized, which means that the entire procurement cycle – from sourcing to contract management – is done locally, clearance and approval of high value procurements are always subject to approval by UNDP’s HQ in Istanbul or New York, adding a further level of check and balance to guarantee procedural integrity and fairness.
Today, an increasing number of partners, including governments and international donors worldwide, approach UNDP with requests to provide procurement and supply chain support.
Indeed, the best value-for-money of products and services delivered by UNDP and its direct procurement handling costs being lower than those of most other international procurement arrangements, make it a partner of choice for all stakeholders willing to benefit from world-class procurement and supply chain service.
In April 2016, the Aid Transparency Index has recognized UNDP as the leading aid organization among 46 international agencies, representing 98% of Official Development Flows. This index is produced by ‘Publish What You Fund’, a non-profit organization that advocates for and measures transparency. http://ati.publishwhatyoufund.org/index-2016/results/
What results did UNDP demonstrate in the first year of medicines procurement for the Government of Ukraine?
Two Agreements for the provision of procurement support services under 8 state health programs (child and adult hepatitis, TB medicines and diagnostics, HIV diagnostics, orphan diseases, vaccines and hemophilia) were signed between UNDP and the MoH in 2015 for a combined total of USD 39 million. Funds for this procurement of medicines and medical supplies were transferred to UNDP in late November and December 2015.
UNDP managed to successfully procure the requested medicines and demonstrate savings which resulted from the open competition and higher engagement of manufacturers from Ukraine and abroad. The average procured amount of medicines and medical products across all programs administered by UNDP constituted 104,5% against the quantity budgeted by the Government.
Besides procurement, UNDP provided extensive support to the Ministry of Health in strengthening its capacity through support of training activities in sustainable procurement and anti-corruption for officials of the Ministry and regional healthcare institutions. UNDP invested its efforts in increasing the transparency of the system of medicines distribution through support of the Open platform E-Liky and professional digital stock management system for the Ministry of Health. E-Liky was rolled-out in 2016 and already covers two full oblasts (Odessa and Rivne) and while also a number of cities in Sumy, Kyiv, Luhansk and Khmelnytskiy oblasts. Professional digital stock management system was successfully tested and is expecting full roll-out.
Which standards and principles does UNDP procurement apply?
UNDP procurement procedures comply with both UN and international standards and abide by the following principles:
Best Value for Money, which consists of the selection of the offer that best meets the end-users’ needs and that presents the best return on investment. Best Value for Money is the result of several factors, including quality, experience, the vendor’s reputation, life-cycle costs and benefits, and parameters that measure how well the good or service allows the organization to meet its social, environmental or other strategic objectives.
Fairness, Integrity and Transparency, which ensures that competitive processes are fair, open, and rules-based. All potential vendors should be treated equally, and the process should feature clear evaluation criteria, unambiguous solicitation instructions, realistic requirements, and rules and procedures that are easy to understand.
Effective International Competition, understood as giving all potential vendors timely and adequate information on UNDP requirements, as well as equal opportunity to participate in procurement actions, and restricting them only when it is absolutely necessary to achieve UNDP development goals.
In the best interest of UNDP, which means that any business transactions must conform to the mandates and principles of UNDP and the United Nations.
Does UNDP purchase from manufacturers or from intermediary companies?
Current procurement procedures according to the law do not distinguish between manufacturers and intermediaries, however UNDP procured more than 70% of items under 2015 procurement directly from manufacturers.
Which medicines does UNDP procure with the 2016 funds?
UNDP procures and supplies quality medicines based on a list of products given by the Ministry of Health, which stipulates the required quantities and the available budget.
The International Nonproprietary Names (INN), required amount of medicines, their dosage and presentation form are defined by Cabinet of Ministers of Ukraine resolutions #577, 715, 864 of 2016. Technical characteristics are defined by the Terms of Reference (Specifications) provided by the Ministry of Health. UNDP does not have a right to change parameters of the procured medicines and medical products without consultations and decisions of the Ministry of Health.
Under the procurement budget allocated by the Ministry of Health in 2016, UNDP handles the centralized procurement of the medicines and medical products listed below, as required by 23 State health care programmes for a total amount of $78 mln.
UNDP received funding for 2016 procurement in November and December of 2016. As of the end of January, UNDP has signed contract for over $12 mln under 7 programs and opened procurement for 22 programs out of 23. All tender announcements are available at the UNDP web-site tender page.
List of programs for procurement with 2016 funds:
Medicines and medical products for patients in pre- and post-transplant period
Chemotherapeutic agents, radiopharmaceuticals and support drugs for treatment of cancer patients
Medicines and medical products for treatment of children with oncology and oncohematology diseases
Reagents for neonatal screening for phenylketonuria and congenital hypothyroidism
Medicines for treatment of children with cystic fibrosis
Medicines for children with primary (congenital) immunodeficiency
Medicines for children with cerebral palsy
Medicines for children with dwarfism of various origins
Medicines for children with mental and behavioral disorders of autism spectrum
Medicines for treatment of children with resistant juvenile rheumatoid arthritis
Medicines for treatment of patients with mucopolysaccharidosis
Medicines and medical products for patients with epidermolysis bullosa
Medicines for patients with pulmonary arterial hypertension
Anti-D immunoglobulin for the prevention of hemolytic disease of the newborn
Medicines and small laboratory equipment for female infertility treatment by means of assisted reproductive technologies
Medicines for adults with hemophilia
Medicines for treatment of patients with multiple sclerosis
Medicines for patients with orphan metabolic diseases
Medicines for children with chronical viral hepatitis
Tests, supplies for the diagnosis of tuberculosis
Medicines for children with hemophilia type A or B or Willebrand disease
Medicines for treatment of tuberculosis (TB)
Medicines for adults with hemophilia
What are the requirements for the registration of medicines to be procured by UNDP?
UNDP encourages bidders to submit their bids for both registered and non-registered medicines and medical products that they may supply.
However, selected bidders who offer non-registered products will have to ensure that such products are actually registered at the time of supply by the State Expert Center of the Ministry of health of Ukraine. Failure to do so may lead to contract termination or bid liquidation.
In the framework of procurements of health products by international organizations, the Ministry of Health of Ukraine has established a fast-track procedure for quicker registration to enable bid winners to timely register their products and help speed up their delivery to patients in need.
Who can participate in the bidding process?
All medicines and medical products are being procured through open international, transparent and competitive tender processes.
All Ukrainian pharmaceuticals companies, as well as international manufacturers, meeting he eligibility requirements and quality standards detailed in the tenders announced by UNDP are encouraged to participate and submit bids.
All products that UNDP procures must be registered in Ukraine. Bidders whose products comply with the quality standards, but are not registered yet with MOH at time of contract award, will sign a conditional contract with UNDP and will be required to register their products before supply.
The Ministry of Health has established a fast track procedure for registration that will enable winning bidders to register their products and help speed up delivery to patients in need.
What are the eligibility criteria for bidders?
While further specific qualification criteria may be required for a particular purchase, in general terms all vendors must meet the following commercial criteria to qualify for UNDP procurement:
Present adequate financial resources to perform the contract or the ability to obtain them;
Provide audited financial statements for completed fiscal years upon request;
Comply fully and effectively with UNDP General Terms and Conditions of Contract;
Demonstrate the adequate organizational structure, facilities, experience, accounting and operational controls to perform the contract; Present adequate insurance levels and technical skills (such as quality controls, property and production control systems, standards and safety programmes applicable to goods produced or services performed);
Have a record of satisfactory performance with UNDP, when applicable; and
Have sufficient material and financial resources to meet all commercial commitments specified in the contract.
Eligible vendors are qualified vendors that have not been temporarily suspended or debarred by UNDP or any other UN agency, fund or programme.
What are the specific requirements and process peculiarities?
Medical products must be registered in Ukraine by the time of supply and meet the quality criteria as listed in the tender requirements solicitation.
Detailed administrative and technical requirements are elaborated for each product/programme separately and listed in tender requirements.
Bidders can submit their proposal in English, Ukrainian or Russian. The financial proposal(s) can be made either in US dollars or in Ukrainian hryvnya.
Bidders can submit proposals for one or several lots within the same tender.
Bids are submitted electronically. Late submissions are not accepted.
The Contract is issued in the same currency than the one stated in the financial proposal. If the bid was submitted in US dollar, international companies will be paid in US dollars, whereas companies based in Ukraine will be paid in Ukrainian hryvnya at the official United Nations Operational Rate of Exchange (treasury.un.org) effective on the day of payment.
As part of risk mitigation measures, UNDP may require “performance security” instruments, such as bank guarantees, to bind a bidder to fulfill the commitment made in the framework of its offer to UNDP. Performance security is an amount sufficient to protect UNDP in case of a breach of contract by the supplier.
In case a Performance Security is required, its submission and the confirmation of its acceptance by UNDP is a condition for the contract between the successful bidder and UNDP to effectively enter force.
When deemed necessary by UNDP, Quality Control or testing may also be arranged for some medical products.
How does UNDP select the company, which will supply the medicines?
The selection process follows 4 steps: announcement of the tender, pre-bidding conferences, public bid opening, and tender evaluation.
Announcement of the tender:
Tenders are announced on UNDP’s corporate website (http://procurement-notices.undp.org/), and on the United Nation’s Global Market place (https://www.ungm.org/), for a minimum of two weeks.
In order to maximize circulation and ensure a satisfactory number of bidders for fair competition, UNDP supplements the tender publication on corporate websites with direct notifications to the potential bidders as identified by UNDP’s sound market research. The UNDP may also post advertisement in other print (newspaper, publications, etc.) and electronic means, such as the MOH website, UNDP’s social platforms and online news portals.
When appropriate, a pre-bidding conference is conducted at the date, time and location, specified in the solicitation document. All interested bidders are encouraged to attend to ask questions, and conference.
However, non-attendance does not disqualify potential bidders. Minutes are published on the UNDP website in a day or two after and sent to the individual firms who have registered or expressed interest with the solicitation, regardless of their attendance to the pre-bidding conference. Minutes are also added as amendment in the form of a Supplemental Information to the Invitation to Bid.
Public bid opening:
Upon the tender deadline and in case of a high value contract of USD 150 000+, UNDP publicly opens received bids. Only bidders, who submitted their proposals, can participate,
The tender evaluation consists of three stages: preliminary examinations of the bids received, technical evaluation, and financial evaluation.
a. Preliminary examinations of the bids received.
UNDP shall examine the bid to determine whether they are complete with respect to minimum documentary requirements, whether the documents have been properly signed, whether or not the bidder is in the UN Security Council 1267/1989 Committee's list of terrorists and terrorist financiers, and in UNDP’s list of suspended and removed vendors, and whether the Bid are generally in order, among other indicators that may be used at this stage. UNDP may reject any bid at this stage.
b. Technical evaluation
UNDP then reviews the bids that have made it through the preliminary examinations stage to confirm that all terms and conditions under the UNDP General Terms and Conditions and Special Conditions of the tender have been fully accepted by the bidder.
Bids are evaluated on the basis of their responsiveness to the Schedule of Requirements and Technical Specifications, as well as other documentation provided. Selection criteria cannot be changed once bids have been received.
However, UNDP may undertake a post-qualification exercise prior to awarding a contract, aimed at determining the validity of the information provided by the bidder. Such post-qualification is always fully documented and may include the following, among others:
Verification of the legal, technical and financial accuracy and authenticity of the information provided;
Confirmation of bids compliance with the requirements and evaluation criteria listed in the Invitation to Bid;
cross-referencing with Government entities whose jurisdiction the bidder is subject to, or with any other entity that may have engaged in business activities with the bidder;
Inquire for reference and credentials by checking with previous clients the quality of performance and delivery for on-going or past contracts;
Physical inspection of the bidder’s production plant, factory, branches or any other business touch points, with or without notice to the bidder;
Testing and sampling of completed goods presenting similar requirements than those of UNDP, where available; and
Other means that UNDP may deem appropriate, at any stage within the selection process, prior to awarding the contract.
c. Financial evaluation
Bidders presenting the lowest rates are selected, provided they have successfully passed the two previous selection stages.
What are the main contractual terms and conditions?
As result of the evaluation process, UNDP issues a Purchase Order to the winning bidder(s), listing the following:
Requisites of both sides: supplier (bid winner) and purchaser (UNDP).
Specification and quantity of goods to be supplied, including shelf life and delivery terms.
Shipping terms and addresses, including the list of shipping documents required from the supplier, transport and storage (i.e., temperature, etc.).
Terms and conditions for the reimbursement of defective or damaged goods and their disposal.
Terms and conditions for payment (30 calendar days after the effective delivery, upon a written acceptance of goods duly signed and stamped by UNDP/MoH and the provision of the original invoice).
Terms of performance security issuance, if applicable.
UNDP’s General Terms and Conditions for Goods.
Progress payments can be made if deliveries are divided into several shipments.
All suppliers are expected to deliver the goods at the quality and quantity levels specified in their bid and in compliance with the contract terms and tender requirements.
What are the quality requirements for the medical products to be procured?
The medical products to be procured must meet the following set of criteria, to ensure the highest quality of health products delivered under each programme:
Prequalified by World Health Organization (WHO), or
Approved by a Stringent National Medicines Regulatory Authority (SRA) of countries with a Pharmaceutical Inspection Convention Scheme (PIC/S)
Recommended by the Expert Review Panel for The Global Fund, оr
Registered in Ukraine, with at least one contract successfully completed in Ukraine by its supplier within the past three years (since December 2012),
All products must be manufactured at sites with a Good Manufacturing Practice (GMP) certificate provided by the WHO or PIC/S authorities.
The remaining shelf life of products procured must be at least 75% of the total product shelf life at the time of delivery.
Additionally, other requirements cover packaging, labelling and delivery.
How does UNDP evaluate/check the quality of health products procured?
Upon analysis of potential risks, UNDP reserves the right to perform, at any time, inspections and tests for quality assurance and to reject the items if found as not complying with the required specifications, and this up until three months after the goods delivery to the final destination indicated in the Purchase Order. Prior to shipment or upon arrival at the final destination, some batches of the product may be tested randomly to ensure that the products meet the Quality Assurance requirements and contractual standard. Such tests can involve an independent laboratory and in-house quality checks, or both. Any consignment or batch(es) of goods not meeting the agreed standards and requirement is rejected. Upon receipt of a written notice from UNDP, the supplier must, as swiftly as possible, replace the defective Goods at its own expense and at the final delivery location. The supplier is also required to remove, at his own risk and expense, the defective goods upon replacement with valid ones. If the defective goods are not removed within 30 days, UNDP will dispose of them at the supplier’s expense. Labelling and delivered quantities under each Purchase Order are the supplier’s responsibility until goods are inspected by UNDP or its representative. A Clean Report of Findings may also be issued by UNDP or its representative upon delivery, if needed. In case discrepancies are found in labelling and/or quantities between the Purchase Order requirements and the actual delivery, these must be rectified promptly by the supplier at its own expense.
In what language should the text on the packaging/stickers of procured health products be written?
In accordance with par. 2, p. 3, art.26 of the Law of Ukraine "On the basics of state language policy”, labelling of medicines and medical products procured through an agreement between the Ministry of Health and a specialized procuring organization, as well as instructions of use of such medicines and medical products may be performed in original language. However, Ukrainian language is preferred.
Does UNDP procurement result in significant savings for Ukraine?
So far, the large majority of items were procured by UNDP at prices lower than the prices paid by the Ministry of Health prior to out-sourced procurement. UNDP saved more than UAH 50 mln of Ukrainian taxpayers’ money and procured additional medicines for the saved funds.
How much time does it take to deliver the procured medicines to Ukraine?
The delivery process takes on average 1 to 3 months. In some cases, later deliveries are purposely scheduled with the aim to ensure availability of medicines throughout the year and guarantee sufficient shelf-life at the moment of medicine use.
UNDP-procured medicines with less than 75% shelf-life are delivered only upon receipt of written confirmation from MoH or relevant MoH structural divisions that the quantities delivered will be used within the scope of the remaining shelf-life. When medicines with a shorter shelf-life are accepted, this is only done to ensure presence of life-saving medicines in health facilities stock while waiting for newer batches to be made available.
Does UNDP carry out pre-shipment inspection?
When all the goods from a specific purchase order are ready for shipment with their final packing and marking, pre-shipment inspection may be carried out by UNDP or its representative on the basis of the risk analysis, to verify the quality, quantity, packing, labelling, marking and sampling.
Who is responsible for customs clearance?
Distributors or suppliers based outside Ukraine must deliver their goods under DAP-Kyiv terms (Delivered at Place) to the central warehouse of the state company nominated by UNDP, which will arrange customs clearance on its behalf. Local distributors must arrange customs clearance themselves and at their own expense.
How is the medicine stored?
In accordance with the Agreement between UNDP and MOH, UNDP has contracted two state companies which were created by the Ministry of Health of Ukraine, Ukrmedpostach and Ukrvaktsyna, to provide custom clearance, storage and distribution services.
These logistical providers have been selected through competitive process and among companies, which are allowed to provide such services under the legislation of Ukraine. The fee for the services of the enterprises amounted in 2015 to between 1,35% and 1,5% of the cost of goods procured, while it amounts to 1% for the procurement under the budget of 2016.
Does UNDP charge a fee for the provision of its services to the Ministry of Health?
UNDP applies a 5% General Management Service fee on the budget allocated to the procurement. This fee is used to cover the administrative and operational expenses incurred by running the procurement programme.
It is worth noting that Ukraine’s savings on medicine procurement have exceeded by far the service fee charged by UNDP.
Last update: March 2017