Health Sector Reform in Paraguay
Paraguay operates a fragmented health care system with three major health provider networks namely the Ministry of Health, the Institute for Social Security and thirdly, a range of private sector providers. This fragmentation has led to inefficient resource allocation, duplication in service delivery and inequality in health service utilization and outcomes. Given this scenario, the long-term policy goal of the Government of Paraguay is to make progress towards a national health system reform to integrate the main public providers, the Ministry of Health and the Institute for Social Security.
To assist with the challenges related to the reform, the World Bank South- South Facility (SSF) supported a series of knowledge exchange activities to facilitate the sharing of experiences, progress and tools for the implementation of health sector reforms drawn from the Chilean and Uruguay experiences. The overarching theme of the knowledge exchange was “Centralized procurement of medicines, medical supplies and equipment”. This theme was well aligned with the objectives of the World Bank-funded investment project financing (IPF) to Paraguay. The IPF entitled “Paraguay Public Health Sector Strengthening” was prepared by the World Bank at the request of the Government of Paraguay to expand population access to health services and to contribute to the realignment of the service delivery system in priority disease areas. One of the project components aims to establish efficient procurement and logistics mechanisms for medicines, medical supplies and equipment. From this standpoint, the knowledge exchange activities would directly support the implementation of this project component.
In Paraguay, the Ministry of Health - Ministerio de Salud y Bienestar Social - MSBS, operates its own network of clinics and hospitals. MSBS has the mandate to deliver health services free of charge to all populations. The Institute for Social Security - Instituto de Prevision Social - IPS covers those employed in the formal sector through a contributory insurance scheme financed by employee and employer contributions, while operating its own network of service providers. In addition, several smaller public providers belonging to parastatal agencies operate their own insurance schemes and network of providers. Finally, there are private sector providers of health care services through insurance and fee-for-service models. The situation has resulted in a fragmented and inefficient system of health care.
Experiences from other Latin American countries such as Brazil, Chile and Uruguay show that integration of fragmented healthcare networks is possible. In the past, the two knowledge-providing partners – Chile and Uruguay, operated fragmented health care systems until their own reforms in 2003 and 2007 respectively. The Government of Paraguay expressed interest in learning from the successful reform in Chile which provides a common package of services under two separate insurance schemes, the private Instituciones de Salud Previsional - ISAPRE and the public Fondo National de Salud – The National Health Fund. The Government of Paraguay was also eager to learn from the Uruguayan experience which integrated a previously fragmented system into a single national system. Both countries operate a centralized drug procurement for all state agencies, pooling the pharmaceutical products needed. After human resources, pharmaceuticals are the second largest line item in each Paraguayan agency budget, representing about 30-40 percent of their annual expenditures.
A series of knowledge sharing activities were organized as well as study tours to both Chile and Uruguay. The Paraguayan delegation comprised of high-level representatives from the MSBS, IPS and National Directorate of Public Procurement (Dirección Nacional de Contrataciones Públicas - DNCP). The key themes addressed during the knowledge exchange activities included:
• Defining the strategy and design of the pharmaceutical procurement reform process
• How to design the institutional and legal framework
• Identifying good practices, potential pitfalls and managing resistance from special interest groups in order to successfully implement the health care reform
• Composition of the technical committee for the management and updating of essential medicines lists
• Phased approach to establishing the implementation agency
The knowledge exchange consisted of virtual learning sessions, a two-day workshop and study tours to Chile and Uruguay.
Chile: The focus areas of the study tour were:
• Legal framework for the procurement process
• Coverage of pharmaceuticals and medicines
• Consolidation of medicines and medical supplies of hospitals and clinics
• Purchase mechanisms and models
• Negotiation and payment mechanism
• Logistics of collection, distribution and administration of stock
Late December 2018, two weeks prior to the (video) virtual learning session, reading materials on the Chilean health care system were sent to the Paraguayan delegation, thus ensuring they have all the background information on the regulations, policies and procurement process of medicines, medical supplies and equipment in Chile before the virtual learning session.
The first virtual learning session took place on January 10, 2019. During the session, teams from both countries were introduced, technical presentations were delivered by the Chilean delegation and followed by Q&A and interactive discussions. The teams agreed on the next steps and the agenda for the face-to-face workshop scheduled to take place during the study tour to Chile.
During the study tour to Chile (January 14-15, 20190) a two-day workshop was held during which technical presentations were delivered by experts from the National Supply Centre of the Health Services System – Central de Abastecimiento del Sistema Nacional de Servicios de Salud – CENABAST. A field visit to Hospital de la Florida and a roundtable discussion with technical representatives of Chile Ministry of Health (Ministerio de Salud, MINSAL) were also organized.
On February 15, 2019, a follow-up virtual session was held between the Chilean and Paraguayan representatives who had participated in the knowledge and learning activities. They reflected on the lessons learned, addressed follow-up questions and identified interest areas for future discussion.
Uruguay: The focus areas of the study tour included:
• Legal framework for procurement
• Process for defining technical specifications for procurement
• Demand needs planning and process of consolidating the needs of hospitals and clinics
• Design of procurement mechanisms and the procurement process
• Monitoring the execution of purchase contracts, logistics for collection and distribution of medicines and supplies purchased
• Negotiation process with suppliers and the private sector
• Estimation of reference process, and analysis of factors that impact prices, and the best practices for analysis of prices
• Design of procurement specifications and contracts
• Payment mechanisms, terms and payment process
• Indicators to evaluate processes and success
A virtual learning session took place prior to the study tour to Uruguay on April 1-2, 2019. In Uruguay, a two-day workshop was led by experts from the Uruguayan Central Procurement Agency (Unidad Centralizada de Adquicisiones - UCA), the National Procurement and Contracting Agency (Agencia Nacional de Compras y Contractaciones – ACCE) and the National Resource Fund (Fondo Nacional de Recursos – FNR) coordinated and supported by the Ministry of Economy and Finance of Uruguay.
The development of an online price comparison tool would be very useful for Paraguay. The development of such a tool is simple from a technological standpoint, relying on data from individual medicine chains and suppliers to public pharmacies. Chile offered to provide technical expertise in the purchasing and IT applications.
The Paraguayan delegation agreed that an international price observatory was a highly effective procurement tool, more so for the purchase of high cost medicines. They discovered that the International Price Observatory has its origin in the Mercosur Drug Price Observatory, to which Paraguay has access as a member state. CENABAST offered to provide technical expertise on the design, management and technology requirements to set up a price observatory.
With the epidemiological and demographic transitions, countries around the world are finding themselves in situations where a small fraction of drugs account for a significant amount of the public budget for pharmaceuticals and Paraguay is no exception. Learning about the use of FNR for purchasing and provision of high-cost medicines was especially invaluable to the members of the Paraguayan delegation. They learned about the implementation and operation of FNR, focusing on the design and structure of the organization, processes for technical and financial management, quality management of suppliers and measures that FNR has taken to ensure financial sustainability of the fund.
The implementation of the knowledge exchange activities was also extremely valuable in increasing the knowledge of the World Bank team members who participated, on topics related to centralized procurement of pharmaceuticals and medical supplies. WB team members learned about many initiatives that countries are using to ensure access to medicines and medical supplies, including experiences to remove market imperfections and increase the efficiency of expenditures.
Beneficiaries / Participants
1. Director for Administration and Finances, Ministerio de Salud y Bienestar Social (MSBS)
2. Director of Management of Strategic Resources, MSBS
3. Director of Logistics and Supplies, Instituto de Prevision Social (IPS)
4. Coordinator of the Procurement Department, IPS
5. Advisor to the Cabinet, MSBS
6. Director of Administration and Finances, MSBS
7. Director, Dirección Nacional de Contrataciones Públicas (DNCP)
8. Coordinator of Market Intelligence, DNCP
World Bank Contribution
The knowledge exchange activities were funded by the World Bank South-South Facility. A WB team accompanied and supported the Paraguayan delegation during the entire design and implementation process. Planning and implementation was a collaborative effort between teams from the WB Health, Nutrition and Population Global Practice, the Governance Global Practice and the Development Economics (DEC) Vice Presidency unit.
With support from the World Bank, the Paraguayan delegation finetuned the training operational plan and the communication strategy that will be supported through the IPF to incorporate the issues of centralized procurement as a tool to improve sector efficiency. In addition to the financing from the IPF, the Government of Paraguay will also explore other sources of financial and technical assistance for the purpose of improving procurement mechanisms of medicines, medical supplies and equipment.
Future areas of support and cooperation were identified, which included different bidding modalities; dialogue and bargaining process with the private sector; mechanisms for aggregating demand and consolidating purchases; the role of technical agencies in defining specifications of goods and services to be contracted; the scope for tenders and purchase programs; models of design and operation of virtual catalogs for direct purchases based on framework agreements and additional models for the incorporation of high-cost treatments and medications.
The Chilean delegation agreed avail their technical experts for visits to Paraguay to provide continued support and collaboration. The nature and scope of the follow-up activities will depend on a more detailed analysis of the requirements of Paraguay, the relevance of the proposed activities, the complementarities of the activities with the IPF project scope and the availability of financing.
New knowledge: The Paraguayan delegation learned about how population access to pharmaceuticals in Chile is governed by two laws – the Explicit Health Guarantee Law (Garantis Explicititas en Salud – GES) and the Financial Protections from Diagnoses and Treatment Law (Ricarte Soto Law – LRS). GES began in 2005 with 25 services and has expanded to cover 80 preventive, curative and rehabilitative services. GES essentially guarantees citizens the right to access covered health services. Both public and private insurers and providers are required by law to provide the services in a timely manner. In so doing, this eliminates co-pays for the covered services for the poor and vulnerable populations, capping the co-pays to 10 and 20 percent for the richer populations. GES is based on three principles, the first being “Prioritization of health problems” which promotes the inclusion of health problems that occur frequently, are more serious in nature, pose a serious financial risk to the population and affect most the quality of life. The second principle is “Guaranteed Interventions” requires that services included are effective, promote prevention, curation or rehabilitation of conditions. The third principle relates to “Service provision capacity” that is that health systems need to have the capacity to provide services for the included conditions and must have the necessary resources to do so.
Enhanced skills: Members of the Paraguayan delegations enhanced their skills and knowledge of the process for defining technical specifications for procurement as well as how to design procurement mechanisms. This included how a legal framework can enable efficient public procurement, how to create a procurement database and terms of reference, how to revise and create product specifications based on current health needs, validation and evaluation of bids, technical certification of goods and services and other regulatory aspects. Additional skills included how to monitor the execution of the purchase contact, logistics for the collection and distribution of medicines and supplies purchased. CENABAST highlighted the need to look for international providers as well as using joint procurement mechanisms (with other countries) through the World Health Organization (WHO) and the Pan-American Health Organization (PAHO). Joint procurement allows Chile to exploit economies of scale associated with volume purchasing and use of international prices, suggested by PAHO to better negotiate with local providers.
In Uruguay, members of the Paraguayan delegation were introduced to the proclamation procedure for public procurement, which is like an auction, but with the bidder quoting decreasing prices in a previously defined and published period so that all interested parties have knowledge of the latest bids.
Improved actions: Chile shared how they use framework contracts, public tenders, private tenders, direct procurement and imports. Paraguayan participants learned about CENABAST’s prioritization on the use of biomedically equivalent generic medicines and the accelerated process of approving generic drugs for public use. They were introduced to the International Price Observatory, a tool developed by Chilean authorities to facilitate comparative visualization of international prices of high-cost medicines. This tool allows for greater bargaining power for public health systems, mitigating the information asymmetries that exist in the pharmaceutical market
Enhanced coordination: From the Uruguay experience, the Paraguayan delegation learned from the coordination role played by the Central Procurement Unit (Unidad Central de Adquisiciones - UCA) which implements a system of purchase of medicines, medical and related supplies, food and food services. UCA is also responsible for harnessing the negotiating power of the State to promote competition and to ensure free access to the market for all purchasing agencies. UCA also provides continuous support on processes, systems, transparency of all procedures and responsibility in the management and use of available financial resources.
• National Health Services System (CENABAST)
• Ministry of Health (MINSAL)
• Central Procurement Agency (UCA)
• National Procurement and Contracting Agency (ACCE)
• National Resource Fund (FNR)
• Ministry of Economy and Finance (MEF)
Story author: Twity Mueni Musuva Uzele
Photo credits: Aisha Faquir / World Bank