Can Better Procurement be the Key to Financing UHC? Potential Savings from Health Sector Procurement Reforms in Low- and Middle-Income Countries

Around the world, procurement processes—which are vital to ensuring an affordable, reliable, and high-quality supply of health products—remain fraught with obstacles. Further, the ongoing pandemic is magnifying challenges, for both COVID-19-related supplies and other essential health products. This paper summarizes current challenges in health product markets in low- and middle-income countries; presents estimates for the range of potential savings that could be realized from improved procurement; and highlights possible policy options for the way forward. From simulations of three procurement reform approaches, we find that 50 of the poorest low- and middle-income countries could achieve savings between $10 to $26 billion per year, equivalent to 16 to 41 percent of the estimated $63 billion in annual spending on health products. Precise estimates of the potential savings from improved procurement of health products are difficult to compute due to scarce data. We also recognize that procurement-related reforms are contingent on overcoming complex political-economy dynamics in the real world. Nevertheless, our findings provide an illustrative range for the magnitude of possible savings and highlight the value proposition of addressing the inefficiencies that characterize procurement systems in low- and middle-income countries. In a post-pandemic world, improving procurement of health products must remain central to countries’ efforts to maximize health outcomes—it will also ensure health systems are more resilient when the next outbreak hits.