It becomes unprofitable for drug distributors to participate in Ministry of Health auctions

The share of failed auctions for the purchase of medicines by the Ministry of Health of the Russian Federation in the first quarter of 2024 increased significantly – from 15% to 32.9%. The ministry acknowledges the problem, pointing out that a number of suppliers did not participate in the tenders due to economic infeasibility or suspension of the production of certain drugs. Experts point out that due to rising costs in the last two years, it is often simply unprofitable to supply medicines to government customers at the same prices to distributors.

In January-March 2024, the share of failed auctions under state programs increased year-on-year from 15% to 32.9%, according to data provided to Kommersant by Headway Company. At the same time, in monetary terms, the share of such auctions increased over the same period from 6.9% to 14%. The Company classifies as failed auctions both those that were canceled and those where no bids were submitted.

As follows from Headway Company data, the highest share of failed tenders is for purchases by the Ministry of Health under the state program “14 high-cost nosologies”, for the national vaccination calendar, drugs against HIV and hepatitis, as well as registered drugs for the “Circle of Good” foundation. At the same time, the share of canceled auctions on average in the market, including regional purchases, remained approximately at last year’s level – 28.6%. The upward trend in canceled trades has been observed since the end of 2023, say two Kommersant sources in the pharmaceutical market and confirmed by Nikolay Bespalov, director of development at RNC Pharma.

The Ministry of Health confirmed to Kommersant that a number of traditional suppliers did not take part in this year’s auction, citing “economic inexpediency, as well as the lack of introduction into civilian circulation (drugs – “Kommersant”) and suspension of production.” Meanwhile, the ministry points out, when forming the cost of contracts that were placed in the first quarter of 2024, the price of government orders from previous periods was taken into account. They claim that they have already held meetings with potential participants in state tenders and, as a result, procurement procedures have already taken place for all positions.

Last year, small suppliers working with stocks and delivering small volumes dumped at auctions throughout the country, explains a Kommersant source in the pharmaceutical market. And this is exactly the price that was taken into account when determining the cost of government contracts in January-March of this year, adds Kommersant’s interlocutor. Due to rising costs for logistics and other parameters that influence the increase in production costs, distributors this year often cannot afford to participate in auctions at the same prices, explains Nikolai Bespalov. The reduction in the initial contract price is also affected by the registration of new generics, although not all of them have been put into circulation yet, another Kommersant source on the pharmaceutical market points out.

Biocad says that it participates in all auctions where it can supply products “in accordance with the needs and terms of contracts.” R-Pharma notes that auctions were left without applications where the subject of purchase were generics and biosimilars; for original drugs, such a trend was practically not observed.

If the auction is declared invalid, the auction is announced again with an increase in the initial maximum price. According to Headway Company, the average price of completed auctions in 2024 increased by 10%.

The share of failed tenders for drugs against HIV and hepatitis increased the most in the total volume – from 17.2% to 47.3%, according to data from Headway Company. According to analysts, among antiretroviral drugs the leaders in the share of failed auctions in 2024 are abacavir (81.7% of announced auctions remained without applications) and lamivudine (91.9%).

In addition, twice there were no suppliers of vaccines against pneumococcal infection for a total amount of 3 billion rubles. This vaccine was supplied by Petrovax Pharm and Nanolek. Kommersant’s source indicates that the production of the vaccine has become unprofitable and manufacturers do not want to produce the drug at a loss. And Nanolek, he reminds, cannot yet produce the Pnemotex vaccine due to patent restrictions. The Ministry of Health announced an auction for the purchase of this drug for the third time, increasing the price per dose by 8.8% compared to the first auction of the year. Petrovax Pharm and Nanoleka did not answer Kommersant’s questions.

Polina Gritsenko