Analysts estimate government spending on drug purchases in 2023

In 2023, the state, according to industry analysts, reduced costs for the purchase of medicines. The funds could be redistributed, among other things, to the needs of the army - these tenders are not published. The Ministry of HEALTH talks about rising costs

The volume of drug purchases by the state in 2023 amounted to 864.3 billion rubles, according to data from the analytical company Headway Company prepared for RBC. This is 7% lower than in 2022 – then they amounted to 929.4 billion rubles. We are talking about drugs purchased by government customers at all levels - both federal and regional - for example, to provide therapy to beneficiaries, people with various serious diseases, as well as patients in hospitals.

The reduction in purchases is also confirmed by the analytical company DSM Group. According to her calculations, over the 11 months of 2023, government customers purchased medicines worth 649.8 billion rubles. - almost 23% less than in January-November last year, when this figure was 797.8 billion rubles.

How did they think?

Headway Company analysts add up the amounts of all contracts for the supply of medicines concluded by government customers with distributors during each year, including in cases where the tender was announced in December and the contract was signed in January. The relevant information is published on the portal zakupki.gov.ru. DSM Group considers purchases based on the execution of each contract - they estimate the amount of drugs actually supplied. This information is also contained in the auction documentation.

The press service of the Ministry of Health denies the reduction in the amount of government procurement. “The volume of government contracts concluded in 2023 for the supply of medicines not only did not decrease compared to 2022, but, on the contrary, increased by more than 36 billion rubles,” they said. The ministry clarified that the assessment is based on the volume of limits on budget obligations (that is, funds provided by the budget), and the indicated 36 billion rubles. may include contracts entered into in 2022 but for which deliveries continued into 2023.

How medicines have been purchased in recent years

According to Headway Company reports for the previous five years, from 2018 to 2022, the monetary volume of government purchases of drugs has continuously increased. During this time, a number of federal programs were launched in the country, in particular, for the centralized provision of therapy for patients with HIV (medicines for the needs of all regions are purchased by the Ministry of Health or its structures), the national project “Healthcare”, within the framework of which the purchase of drugs for the treatment of oncology has significantly increased, The Circle of Good Foundation was created to provide treatment for children with serious illnesses.

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In 2022, according to Headway Company, government purchases decreased by 4.8% - from 974.6 billion rubles. in 2021 to 929.4 billion rubles. Analysts attribute this to the cancellation of purchases of drugs for the treatment of CORONAVIRUS infection in 2022. For example, purchases of five main international generic drugs used to treat covid-19 (including favipiravir and umifenovir, produced under the Arbidol brand) decreased by 10 billion rubles, and the entire segment - by approximately 40 billion rubles, they explain at Headway Company.

The biggest reduction in 2023 was the volume of federal purchases that provide medicines, in particular, to patients with serious illnesses, says Lyudmila Balandina, head of the strategic development department at Headway Company. According to DSM Group, over the 11 months of last year there was a strong reduction in regional tenders - by almost 20% compared to the same period in 2022 (from 154.3 billion to 128.6 billion rubles). The drop in physical volumes, according to analysts, amounted to 34.5% - from 648.8 million to 482.3 million packages. The decline in regional purchases has been going on for at least the second year—earlier data from DSM Group is unavailable.

In general, the market for government procurement of medicines began to decline in the first half of 2023, DSM Group continues: during the corresponding period, government customers purchased medicines worth 424 billion rubles. against 490 billion rubles. a year earlier (for comparison: at the end of six months of 2021, this figure was 399 billion rubles).

Why are purchases declining?

The reduction in funding for federal purchases in 2023 may be due to the fact that in previous years the necessary drugs were purchased in advance, for several years in advance, says Balandina from Headway Company. The Ministry of Health also draws attention to the fact that a number of deliveries are made under contracts concluded a year earlier.

Another reason for the reduction in the monetary volume of purchases could be the withdrawal of a number of original foreign drugs from the market, continues Balandina. For example, in 2023, Finnish Orion Pharma, which also owns the drug Metipred with the international nonproprietary name methylprednisolone, stopped working in RUSSIA. Back in 2021, its share accounted for 92.4% of the natural volume of the Russian methylprednisolone market, including government purchases. Metipred has analogs, but they were produced in small volumes, so due to the withdrawal of the original drug, 60% of all announced tenders for the purchase of methylprednisolone did not take place in 2023, says Balandina.

There is practically no import substitution that could affect the monetary volume of tenders within the framework of government procurement - for the treatment of serious diseases, government customers continue to actively purchase expensive innovative foreign drugs, notes DSM Group CEO Sergei Shulyak. He believes that the reduction in 2023 was due to the redistribution of the drug budget to the needs of the Russian army. But such tenders are often not visible in the public procurement system, so it is impossible to find out their volumes, the expert clarifies.

Balandina also names the same reason as one of the possible ones. “We must not forget that purchases may take place for military purposes; how they are marked is not at all clear,” she notes. In addition, the expert continues, there are purchases of up to 100 thousand rubles, and for large customers - up to 500 thousand rubles, which are carried out without tenders at all.