Working Paper 4: Procurement of Medicines in Sri Lanka: A Case Study

For many decades, the nation of Sri Lanka has been providing for the health of its citizens at a level that exceeds what most other countries with similar economic situations have attained. Among other indicators, Sri Lanka has assured relatively good access to medicines while controlling prices. Sri Lanka spends about 1.6% of GDP on health, with about one-quarter of the total health budget spent on medicines. Its achievements in access to medicines stem from the government’s well-established system for procurement and distribution of medicines. For health systems in low- and middle-income countries, Sri Lanka’s example demonstrates the benefits of investing strategically and extensively over long periods of time in building a strong system for the procurement of necessary medicines, in useful formulations and appropriate quantities. The case study provides details on Sri Lanka’s model, which offers lessons for other governments working to improve medicines procurement policies and practices.

In order to procure medicines effectively, a list of required medications must be drawn up, manufacturers or suppliers of each medicine must be identified and vetted, funds must be provided to pay for them, and the physical commodities must be purchased, received and their quality verified. Then they must be transported to the facilities in time to be available to patients who need them. Each step in this process is complicated on its own—and coordinating the various steps to work in concert with each other adds complexity to the system.

While Sri Lanka’s system is far from perfect, it is overall relatively strong and has proven to be flexible enough to adapt and improve over time while maintaining its commitment to improving health equity in the country. The system has developed and changed over time, with key principles and goals related to providing for access to medicines for all Sri Lankans made clear from the outset. Structures established early on to support the vision remain in place, most notably the State Pharmaceuticals Corporation (SPC), through which all purchasing of pharmaceuticals for use in Sri Lanka is conducted. Having a single, government-controlled, purchaser does create bottlenecks that can slow down timely procurement. However, by issuing worldwide tenders and enabling bulk purchasing, SPC manages to control its own costs and the prices paid by consumers. Sri Lanka’s long-standing insistence on using the generic names of medications when prescribing has also contributed to bolstering the use of cheaper generics. By controlling costs, Sri Lanka has managed to expand its Essential Medicines List and formulary in order to supply a wide array of products to citizens.

Thanks to its long tradition of principled health care delivery, Sri Lanka is well-positioned to build on its previous successes as it continues to develop its approaches to health care delivery overall and access to quality medicines in particular. It also provides an informative example for other health systems seeking to rationalize their pharmaceutical policy and delivery systems to better serve populations in need.

 

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