The literature search in PubMed and Cochrane resulted in a total of 9546 publications. After the selection of relevant abstracts according to predefined criteria, 14 papers were selected. After hand searching the reference lists of the eligible articles, another 14 publications were added, thus a total of 28 publications were included in the present review.
Tendering for pharmaceutical products is a common practice in many developed countries and, increasingly, also in developing countries. Tender practices have been analyzed and reported in European and other developed countries by academic or institutional researchers, whereby most of these reports comes from European research institutions [7, 12,13,14]. Such work was much less undertaken for the experiences with tender practices in developing countries and, therefore, the description of the tender practices in developing countries was drawn from our survey. The findings for tender practices in both developed and developing countries are summarized subsequently. The first part of this Sect. (4.1) focuses on describing the characteristics of tender systems, while the second part (4.2.) focuses on the impact of tendering in developed or developing countries as reported in the published literature.
Characteristics of Pharmaceutical Tendering
Developed Healthcare Systems
The approaches for pharmaceutical tendering in developed countries, and especially for Europe, have been reported by several authors and these reports are summarized here. In most of the developed countries, tendering is used primarily in hospital settings and public services (e.g., pandemic plans or military service), but in some countries, tenders are also applied for the purchasing of pharmaceuticals in the ambulatory care sector [7, 12]. Many countries apply the tendering process for a selection of vaccines, pharmaceuticals included in pandemic plans, or pharmaceuticals against communicable diseases.
In general, the tendering methodology depends on the volume of the tender. Tenders are invited from the specific country or from across the European Union. Switzerland is the only country where tenders are limited to pandemic supplies and vaccines for military hospitals. A recent report on tendering concluded that tendering in Europe can contribute to cost containment if embedded in a robust legal and organizational framework with appropriate stakeholder management protecting the users against potential risks . There are European directives, which regulate the use of tenders for public sector procurements in general and specifically, for HC purchasing in Europe .
Lowest price is the prevailing award criterion, but some countries have advanced to select the Most Economically Attractive (Advantageous) Tender (MEAT) [14,15,16]. This is also the approach recommended across all sectors including HC in recent European Union regulations . Criteria such as quality standards or ability to deliver may serve as conditions (i.e., prerequisites) for access to tenders or alternatively, tender selection criteria may include quality, availability, or supply reliability. Tender invitations can be released by single hospitals, regional consortia, or by central governmental organizations. Germany and the Netherlands apply tender-like processes for the selection of preferred providers. In Germany, these are conducted by the health insurance funds on a regional basis. The pharmacists should dispense only drugs from those manufacturers who have been selected as preferred providers by the patient’s health insurer [12, 17].
Frequency of Calls for Tenders
Mostly, tenders are conducted in a 1-year cycle, but they may occur less frequent (e.g., 2–3 years in Germany) or on an irregular basis as in the case of Lithuania [7, 13].
Pharmaceutical Tenders in Countries with Expanding Healthcare Coverage
In many countries, tendering systems have only recently been introduced and the introduction is usually not well documented and reported. Therefore, the information for this section was drawn from the survey answered by individuals from Algeria, China, Egypt, Lebanon, Malaysia, Pakistan, Philippines, Republic of Korea, Russian Federation, South Africa, Thailand, Turkey, Ukraine, United Arab Emirates, and Vietnam. The results of these responses are summarized in Tables 1 and 2.
While Pakistan, Lebanon, and the Republic of Korea did not report any use of tender systems for the purchasing of pharmaceuticals, all other responders indicated the use of tendering for pharmaceuticals in some form. In most of the countries, all medicines are purchased through a tendering procedure. In addition, five countries also purchase vaccines through a tendering procedure, and only Vietnam also purchases medical devices through tenders (see Table 1). In most countries, the Ministry of Health and hospitals are the key institutions procuring pharmaceuticals through tenders. Some countries mention military entities or the army (Pakistan, Lebanon, and Algeria). In Egypt and the Russian Federation, tendering can happen throughout all governmental sectors (e.g., Ministry of Health, university hospitals, educational institutions). In Turkey, the Social Security Institution is the single payer; the drugs are sold to the wholesaler first and then, the pharmacies procure drugs from the wholesaler.
Where tenders are conducted, the lowest price is the key criterion for selecting the winning supplier. Some countries, however, apply additional criteria such as ‘performance’ (not further defined) in Thailand; the ability to supply quantities in South Africa; product categories differentiated by product quality standards as defined in Vietnam ; supplier quality and investment by suppliers in Algeria; local manufacturing in Malaysia; or innovation and brand value in some cases in the United Arab Emirates (see Table 2).
Frequency of Calls for Tenders
In several countries, calls for tenders are issued annually (Table 2: Vietnam, Thailand, Philippines, Egypt, United Arab Emirates, and Algeria). In other countries, tenders occur every 2–3 years. In Ukraine, many mid-sized and small tenders occur throughout the year, usually in spring and autumn. In Malaysia, tenders are called for products exceeding a budget of US$250 million per hospital. In Egypt and Algeria, the duration of the tender contracts may extend for longer than 1 or 2 years.
Analysis of Impact of Tender Systems
Tendering Policies in Developed Healthcare Systems
Twenty-one publications relating to the use of tendering in European or other countries with developed HC systems and the key benefits and risks that were reported are extracted into Table 3. Broad experience exists with procurement through tendering in hospitals or for vaccines or pharmaceuticals for the military, but increasingly, tendering is also applied in the ambulant sector . However, there is little ‘European’ agreement on best practices for tendering, each tender system is a ‘homebrew’ by the individual member state institutions . Generally, the focus of the studies is on price management rather than health or other outcomes [20, 21] and too little attention is paid to monitoring the success of the policies .
Many authors agree that tendering effectively reduces prices and contributes to cost containment in the short term [6,7,8, 13, 17, 20, 21, 23,24,25,26,27,28,29]. This seems to be more evident when there is more competition in the tender . Cost savings were also observed with a tender process used for the selection of preferred providers, such as in Germany [12, 31]. Here, however, it is primarily the insurance companies that benefit . Increased transparency was mentioned as another benefit . In contrast, the long-term impact of procurement through tenders is not yet very well known [12, 29]. There is some evidence that the growth in pharmaceutical expenditure may not be reduced sustainably . Dylst and Simoens reported a phenomenon called “reallocation of demand”, which means that savings are offset by prescribing medicines with a similar therapeutic indication that does not fall under the tendering procedure . In some cases, even increased government budgets were described .
Several additional risks and potential negative consequences have been identified. Tendering is challenging for manufacturers and when bidding prices eventually are reduced to marginal costs [17, 23], they will be less motivated to compete and may move away from the business, which may be detrimental for product availability [17, 23, 27]. This will be even more critical for manufacturers of branded products . In particular, tenders selecting only one supplier will lead to monopolist supply situations . Overall, the capacity to produce and supply the products at affordable prices may be reduced . This will lead to decreased competition and consequently, to less pressure to offer the lowest price. Additionally, a reduction in the number of players will make the market more vulnerable for special events and may increase the risk for drug shortages, meaning restricted access to effective medicines for patients [13, 24, 25, 27, 32, 33]. A possible negative impact on HC quality has been red-flagged [8, 24]. Alternatively, manufacturers may choose to cut costs in their production processes, which ultimately may provoke quality compromises .
From the administration perspective, procurement through tendering requires a high level of expertise and resources for managing effective tendering processes [7, 26]. The smaller the volumes, the more burdensome and complex are the tenders. Planning and forecasting are demanding, and can be error prone and challenging . It has also been observed that procurement through tendering can lead to an imbalance between foreign and domestic suppliers . Additionally, with decreasing margins, manufacturers will invest less into the growth of the company in this market, which negatively impacts employment and the domestic economy [27, 32]. The reduced investment will be true for both branded and generic manufacturers, and the profitability in pharmacies may also be impacted negatively .
A few recommendations resulted from the research and observations in developed HC systems. Among the key success factors of tender programs are a strong legal basis, criteria to grant the tender, the number of winners, and the duration of the tender [6, 13, 28], but also the collaboration of buyers and pooling to achieve larger volumes , and the importance of fostering broad competition . Finally, impact assessment is recommended for all pricing and reimbursement policies including tenders .
Tender Policies in Countries with Expanding Healthcare Coverage
Research on the impact of procurement by tendering in CEHCs is extremely scarce and only six publications relating to this were retrieved and summarized in Table 4. Often, when such policies are introduced, there is only a limited capacity to establish the processes themselves and only a small amount of interest, time, or ability exists for measuring the consequences.
Cost reduction  and improved transparency [34, 35] were observed as key benefits. Kaplan et al. recognized the power of competition and the lack of motivation to reduce prices, when competition was low . On the risk side, compromises in quality were emphasized, especially if the legal and structural framework was unable to protect the system . However, setting the appropriate quality standards increased the resulting prices substantially .
Finally, there was some evidence that pooling or joint tenders were more effective in attracting bidders and in reducing the prices [34, 37]. Recommendations for the CEHCs included that strict quality standards should be imposed for tender inclusion , procurement should be pooled to address larger volumes , and a prudent practice for tendering should be followed by CEHCs to achieve their objectives in building their HC systems [38, 40, 41].