Public-Private Pharmacy Services | Asian Development Bank

Public-Private Pharmacy Services

Article | 19 November 2013

Harnessing the expertise and resources of the private sector through partnerships can help broaden access to high-quality health care in Asia and the Pacific.

One of the challenges facing the public health sector in the Asia and Pacific region is how to improve access to lifesaving medicines, particularly in poor rural areas.

The problem is threefold. First, medicines can be expensive, especially for chronic and debilitating conditions that require long-term treatment like heart diseases, cancer, and diabetes. Second, there is a lack or absence of drugstores in areas where the pharmacy business is not considered profitable. Finally, publicly managed health facilities regularly have to deal with systemic problems - such as those related to procurement - that hinder the steady supply of medicines.

A promising solution is public-private partnerships (PPPs) in pharmacy services, which can provide safe and affordable medicines to many who would otherwise not have access to them.

Harnessing the entrepreneurial spirit

PPPs are innovative, long-term contractual arrangements for developing infrastructure and providing public services by introducing private sector funds and expertise in areas that are normally the responsibility of the government. In the health sector, PPPs have the potential to help the government increase access, lower costs, and improve the quality of facilities and services.

PPPs in pharmacy services tap the private sector's expertise in efficiently dispensing safe and affordable medicines even in remote, underserved areas.

The Asian experience

Health services from across Asia and the Pacific have already had positive experiences using PPPs to deliver pharmacy services.

In the Kyrgyz Republic, an ADB-supported early childhood development project which started in 2006 established rural pharmacy networks in remote areas through PPPs. The government was already subsidizing essential drugs based on doctors' prescriptions through the Mandatory Health Insurance Fund. However, patients in rural areas were benefitting less from the subsidy than urban patients because of the lack or absence of pharmacies in these areas.

The PPP program offered incentives to private drug retailers to open stores in rural villages. The government provided free rent for the pharmacies, while the project financed an initial supply of essential drugs, equipment, and staff training. The government regulated the prices of drugs covered by the public health insurance, yet it allowed the pharmacies to sell other medicines or toiletries to make a profit.

According to the project's completion report, majority of the population in the 12 of the poorest "raions" or districts covered by the project now have access to pharmacies, which have more than doubled in number. In 2005, there were less than 100 pharmacies in all 12 raions. By the time the project closed in 2008, there was an additional 123 pharmacies in nine raions, providing 90% of the population with access to a pharmacy, up from just 30% 5 years earlier. Moreover, prices of medicines have gone down, and the population also reported that they now trust the quality of the medicines.

"Rural pharmacy networks run by private pharmaceutical retailers in collaboration with the government have been profitable and drug prices have also dropped, and some companies are planning to expand to other villages on their own," said Rie Hiraoka, Country Director of ADB's Kyrgyz Republic Resident Mission.

Guiding PPPs, step by step

In the Philippines, technical assistance from ADB has helped the provincial government of Northern Samar to develop its PPP in pharmacy model. The local government wanted to improve the operation of the pharmacy in its provincial hospital, which would run out of medicines and supplies because of the long and tedious procurement process in the public sector. After assessing the situation with the support of a technical assistance team, the local government decided to develop a PPP in pharmacy model and eventually bid out the management of the provincial hospital's pharmacy to the private sector.

ADB has also produced a step-by-step guidebook on how to develop PPPs in pharmacy in the Philippines based on the technical assistance team's experience in Northern Samar.

"The six steps in the guidebook capture what the local government of Northern Samar and the ADB technical team went through as they developed the PPP in pharmacy model - from the project design to the procurement phases. This highlights the importance of working together on the ground level, ensuring that every stakeholder's voice is heard," shared by Gerard Servais, health specialist at ADB's Southeast Asia Department.

The guidebook helps to determine the issues and concerns related to pharmacy services, identify stakeholders and their roles, and develop an implementation plan and a social marketing plan. It also outlines procurement requirements and procedures, and provides project implementation guideposts, including putting in place an effective monitoring and evaluation system.

The lessons learned in the Kyrgyz Republic and the Philippines are no doubt invaluable to developing countries cross the Asia and Pacific region and beyond.