Providing patients with high-quality essential medicines requires a well-functioning procurement, distribution, and regulatory system. However, in many low- and lower-middle-income countries (LMICs), public sector supply chain performance is far from optimal, resulting in frequent stockouts at health clinics. Decentralized purchasing of essential medicines by health facilities themselves provides greater autonomy to health facilities in managing their medicine stock, and has the potential to reduce essential medicine stockouts.

This paper attempts to synthesize available evidence on the impact of greater facility autonomy in purchasing medicines on medicine availability, price, and quality. We find that literature is sparse on the impact of different roles played by lower-level health facilities in product selection, price negotiations, purchasing, and contract performance management. Our review suggests that decentralized purchasing with regional or central price contracting and supplier selection has the potential to improve the availability of medicines at health facilities, but depends on many prerequisite conditions to be met. These include, at a minimum, requisite capacity at government and health facility levels to support demand forecasting financing and data sharing, and a healthy distributor network that operates under government stewardship. Currently available evidence suggests that institutionalizing an enabling environment under which health facilities can place orders of essential medicines to preselected suppliers who have been vetted for quality and price terms have been negotiated, can provide them a much-needed recourse to secure essential medicines when the public sector supply system is not working.

Report by the Center for Global Development