Will the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach

Innovation is the key to the development of the pharmaceutical industry. The pilot program of China’s “4 + 7” volume-based procurement policy (“4 + 7” procurement policy) brings the drug price back to a reasonable level through trading procurement quantities for lower drug prices. The policy manages to reduce the burden of the health care system, improve efficiency, and push the pharmaceutical industry to transform and update from the era of high gross profit of generic drugs to innovative drugs. So far, few studies have investigated the influence of the volume-based procurement policy on the innovation of pharmaceutical firms. By combining the event study and Difference-in-Difference (DiD) methodology, this study finds that the abnormal return (AR) of firms with high R&D intensity is lower than that of firms with low R&D intensity during the event window period. Moreover, further analysis identifies the moderating effect of firm size and firm type. Specifically, the results show that the negative influence of high R&D intensity on abnormal return (AR) during the announcement of the “4 + 7” procurement policy is stronger in large firms and innovative pharmaceutical firms. Finally, we discuss the policy implications of our study.

The impact of “procurement with impact”: measuring the short-term effects of sustainable public procurement policy on the environmental friendliness of tenders

Purpose This paper aims to study the short-term effects of a new procurement policy document on the inclusion of environmental requirements and green award criteria in tenders. The policy document is named “Procurement with Impact” and was released by the Dutch central government to further stimulate Sustainable Public Procurement (SPP). Design/methodology/approach Central government tenders were quantitatively analyzed in the six months prior and after the release of the new policy on their inclusion of environmental concerns. This judgment was made based on the role of environmental concerns in the requirements and the award criteria. As a control group, the same was done on a municipal level, for which the new policy document does not apply. Each of the four samples contained 60 tenders. Data was acquired via the European public procurement database TED. In the analysis, a chi-square test was used to measure whether a significant difference exists between the two periods for each group. Findings Results show that central government has procured in a more environmentally concerned way after the release of “Procurement with Impact.” Within a year, the number of green tenders conducted by central government significantly increased from 30% to 55%. No significant difference was found on a municipal level. Social implications SPP has received increasing attention over the past few decades but has not led to implementation of its principles in most public tenders. As SPP can have a major impact on a more sustainable and social society, it is important to understand how policy can influence the sustainability of tenders. The findings of our study show that “Procurement with impact” had a significant positive short-term effect on the inclusion of green award criteria and requirements in public tenders. Implementing similar SPP policies in other government sectors and other countries could have a substantial effect on the worldwide uptake of SPP. Originality/value “Procurement with Impact” contains a clear sustainable vision embracing the principles of SPP. This government policy takes into account several SPP barriers and drivers and satisfies several policy theory conditions. The authors show in the paper that this policy is an effective instrument for increasing the inclusion of environmental concerns in tenders. As the difference is already significant within a year, this could also reflect the readiness of tenderers to turn to SPP once there is a clear organization wide policy.

POLICY OF THE CIREBON REGENCY REGIONAL GOVERNMENT IN LAND PROCUREMENT FOR LANDFILL

The policy of the Cirebon Regency Government in land procurement with the designation of landfill is a very dilemmatic problem, this is caused by many factors that influence it, for that the formulation of public policies that are built must have an integral-comprehensive-holistic approach because waste management problems can have an impact on the existence of the environment. The solutions offered through local government policies must be balanced with community participation through efforts to build awareness and legal compliance. The importance of environmentally friendly waste management must be able to be pursued by all stakeholders in the region, considering that the waste problem must be resolved not only by normalizing the legal order but also formulating public policies that favor the interests and concerns of the community. The land procurement policy for the landfill is an example of a tug of war.

ESTABLISHING GOOD GOVERNANCE THROUGH VALUE IMPLEMENTATION OF MONEY PRINCIPLES IN PUBLIC PROCUREMENT POLICY CONTEXT

This study aimed to review the application of Value for Money principles in public procurement policy to establish good governance in Indonesia. This research used a normative legal method using library research with legal and historical approaches. The results of this study showed that the implementation of Value for Money in public procurement policy is urgent to be applied, which is to encourage the good public procurement practice and produce the right goods/services based on quality, quantity, time, cost, location, and provider aspects; increase the efficiency of the use of public money, which can suppress budget leaks; improve the effectiveness of state financial management; improve the effectiveness and quality of public services; realize a clean government. Arrangements regarding Value for Money in public procurement policy are very clear by the application of e-procurement and utilization of e-marketplace; sustainable procurement; and the use of domestic products. This research also indicated the real relevance of the implementation of Value for Money principles in public procurement policy to establish good governance in Indonesia.

Food Procurement in Post-neoliberal Countries: Examples from South America

This article analyzes public food procurement policy as one of the characteristics of post-neoliberalism in South America, whereby food produced by family farmers and peasants is purchased by the state and then donated to low-income people and public-school students. Focusing on Brazil, Ecuador, and Paraguay, the study demonstrates how such experiences partly break the control that large agri-food corporations exert in the food systems of these countries. This occurs because public food procurement has created a new market opportunity for family farmers and peasants and has also functioned as a mechanism to combat hunger and promote democratized access to good food. Moreover, such initiatives can be understood as providing a possibility to re-spatialize food by promoting closer contact between food producers and consumers.

Broader outcomes in procurement policy – a case of New Zealand pragmatism

Purpose The purpose of this paper is to investigate how the underpinning ideas of public procurement allowed for broader outcomes – a more strategic form of public procurement – to emerge. The paper contributes to the literature on public procurement by empirically addressing the evolution of procurement as a government policy lever in New Zealand so as to demonstrate how policy pragmatism can ensure a shift without a complete overhaul of a complex system. Design/methodology/approach The paper has used a single country case study to examine a recent development in procurement policy. The objectives of the paper are achieved by adopting a unique conceptual framework connecting ideas, sensemaking and bricolage. Findings The paper provides empirical and conceptual insights about how bricolage, or policy pragmatism, aids in dealing with the constraints of ideational legacies. It demonstrates a particular form of targeting in procurement, common in public administration but not well understood in the procurement field. Research limitations/implications Single country case studies lack scientific generalizability. However, they add to the canon of knowledge that is lacking in the field of public procurement in this case. They also provide a stronger starting point for further research especially with respect to comparative studies. Practical implications The paper provides an excellent example of the development of procurement policy that is useful for procurement officials from other countries undergoing change or looking to update or create procurement policies. It shows a high-level process of implementation for government priority outcomes from a country well-known for its quality of public management and governance. Social implications New Zealand has significant equity issues especially as related to its indigenous population. Procurement is being used increasingly as a lever to improve equity. This article includes information about New Zealand's uptake of social procurement. Originality/value This paper fulfils a need for greater understanding of how policy is “put together” and the dynamics at major points of change or the implications of policy changes. To the best of the author’s knowledge, this case study of procurement policy in New Zealand is original, and the author is aware of no other similar work emanating from New Zealand in the academic journals.

The impacts of Chinese drug volume-based procurement policy on the use of policy-related antibiotic drugs in Shenzhen, 2018–2019: an interrupted time-series analysis

Background In 2019, Chinese government implemented volume-based procurement of 25 drugs in 4 municipalities and 7 sub-provincial cities, i.e. “4 + 7” policy. Competitive bidding was conducted by the government based on the annual agreed procurement volume submitted by each public medical institution in pilot cities. Pilot cities were required to implement bid winning results in March 2019 and the use volume of bid winning products was examined to ensure the completion of agreed procurement volume. In the policy, an oral antibiotic (cefuroxime) was included. Given the current condition of the irrational use of antibiotics in China, this study aims to evaluate the impact of “4 + 7” policy on the use of policy-related antibiotics. Methods This study used drug purchase data from the Centralized Drug Procurement Survey in Shenzhen 2019, covering 24 months from January 2018 to December 2019. Oral antibiotic drugs related to “4 + 7” policy were selected as study samples, including cefuroxime and 12 antibiotic drugs that have an alternative relationship with cefuroxime in clinical use. Purchase volume and expenditures were selected as outcome variables, and were measured using Defined Daily Doses (DDDs) and Chinese yuan, respectively. Segmented linear regression analysis with interrupted time series was adopted to examine the effect of “4 + 7” policy. Results After the implementation of “4 + 7” policy, the overall volume of cefuroxime and its alternative drugs increased from 9.47 million DDDs to 13.42 million DDDs, with an increase of 41.8 %. The results of segmented linear regression showed that the volume of cefuroxime significantly increased 161.16 thousand DDDs after “4 + 7” policy (95 % CI: 59.43 to 262.90, p-value = 0.004). The volume of alternative drugs significantly increased 273.65 thousand DDDs (95 % CI: 90.17 to 457.12, p-value = 0.006). The overall “4 + 7” policy-related antibiotics significantly increased 436.31 thousand DDDs (95 % CI: 190.81 to 681.81, p-value = 0.001) after “4 + 7” policy. Conclusions This study provides evidence that the implementation of “4 + 7” volume-based procurement policy was associated with significant increases in the volume of policy-related antibiotic drugs. The increase in antibiotic use after the policy needs special attention and vigilance.

Retailer’s Emergency Ordering Policy when Facing an Impending Supply Disruption

Supply disruption is a common phenomenon in business activities. For the case where the supply disruption is predictable, the retailer should make an emergency procurement beforehand to decrease the inventory cost. For the scenario such that the happening time of the supply disruption obeys a certain common probability distribution but the ending time of the supply disruption is deterministic, based on minimizing the inventory cost and under two possible procurement strategies, we establish an emergency procurement optimization model. By considering the model solution in all cases, we establish a closed-form solution to the optimization model and provide an optimal emergency procurement policy to the retailer. Some numerical experiments are made to test the validity of the model and the effect of the involved parameters on the emergency procurement policy.