OBJECTIVES: This study aims to compare the impact of tenders and consignment on the purchase price of pharmaceuticals and the effect of consignment on liquidity. The study explores the feasibility of combining tenders and consignment to accrue the benefits of each.
METHODS: A pre-post observational study design was used to retrospectively collect pharmaceutical purchase prices from the 2019 tenders, the 2020 consignment supplier invoices, and the 2022 tenders-for-consignment. Descriptive and inferential statistics were used to determine statistical significance. Cash flow statements from 2019 and 2020 were used to determine the change in liquidity. The mean purchase price was compared to the Management Sciences for Health International Medical Products Price Guide to determine the price ratio.
RESULTS: The dataset included 65 products listed by proprietary name. Quantitative analysis of the purchase price obtained through tenders in 2019 and consignment in 2020 shows that the price increased by a median of 4.78% [IQR = -5.66% - 12.71%] (p=0.48). However, when tenders-for-consignment was introduced, the price was reduced by a median of -7.71% [IQR = -11.72% - 1.935%] (p=0.65). Consignment resulted in a direct cash savings of KES 4,427,266.10 in one year. The median price ratio was 4.4319 [IQR = 0.8496-12.6193].
CONCLUSION: Inventory consignment offers substantial savings through reduced capital expenditure. However, eliminating competition results in higher purchase prices that can harm the affordability of medicines. Comparatively, tenders provide the best prices because of competition between suppliers. Combining both results in substantial savings for the institution without negatively impacting the cost of medicines.