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The impact of centralization on pharmaceutical procurement prices: the role of institutional quality and corruption

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  • Simona Baldi
  • Davide Vannoni

Abstract

The impact of centralization on pharmaceutical procurement prices: the role of institutional quality and corruption. Regional Studies. This paper deals with the open issue regarding centralized versus decentralized public procurement strategy. Using a unique dataset on tender prices of selected drugs for hospital usage provided by a sample of 52 Italian local health service providers (aziende sanitarie locali – ASLs) between 2009 and 2012, the paper tests which procurement system (centralized, decentralized or hybrid) performs better. Controlling for several covariates, including measures of institutional quality and corruption, it finds that centralized and hybrid procurers pay lower prices than decentralized units. Moreover, the results show that in areas in which institutional quality is lower or corruption is higher, the effect of centralization in terms of negotiating lower prices is much stronger, with savings of up to 60% of the price paid by ASLs that procure independently.

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  • Simona Baldi & Davide Vannoni, 2017. "The impact of centralization on pharmaceutical procurement prices: the role of institutional quality and corruption," Regional Studies, Taylor & Francis Journals, vol. 51(3), pages 426-438, March.
    • Handle: RePEc:taf:regstd:v:51:y:2017:i:3:p:426-438
    DOI: 10.1080/00343404.2015.1101517
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    2. Jozsef Sakovics & Lluis Bru & Daniel Cardona, 2018. "Block sourcing," Edinburgh School of Economics Discussion Paper Series 287, Edinburgh School of Economics, University of Edinburgh.
    3. Massimiliano Ferraresi & Gianluca Gucciardi & Leonzio Rizzo, 2017. "Does purchase centralization reduce public expenditure? Evidence from the Italian healthcare system," Working papers 66, Società Italiana di Economia Pubblica.
    4. Joosse, Iris R. & Tordrup, David & Bero, Lisa & Mantel-Teeuwisse, Aukje K. & van den Ham, Hendrika A., 2023. "A critical review of methodologies used in pharmaceutical pricing policy analyses," Health Policy, Elsevier, vol. 134(C).
    5. Giuseppe F Gori & Patrizia Lattarulo & Marco Mariani, 2017. "Understanding the procurement performance of local governments: A duration analysis of public works," Environment and Planning C, , vol. 35(5), pages 809-827, August.
    6. Giuseppe Francesco Gori & Patrizia Lattarulo & Marco Mariani, 2021. "The Expediting Effect of Monitoring on Infrastructural Works. A Regression-Discontinuity Approach with Multiple Assignment Variables," Papers 2102.09625, arXiv.org.
    7. Cinzia Di Novi & Dino Rizzi & Michele Zanette, 2018. "Scale Effects and Expected Savings from Consolidation Policies of Italian Local Healthcare Authorities," Applied Health Economics and Health Policy, Springer, vol. 16(1), pages 107-122, February.
    8. Giampaolo Arachi & Debora Assisi & Berardino Cesi & Michele G. Giuranno & Felice Russo, 2022. "Inter-municipal Cooperation in Public Procurement," CEIS Research Paper 548, Tor Vergata University, CEIS, revised 19 Dec 2022.
    9. Clark, Robert & Coviello, Decio & de Leverano, Adriano, 2021. "Centralized procurement and delivery times: Evidence from a natural experiment in Italy," ZEW Discussion Papers 21-063, ZEW - Leibniz Centre for European Economic Research.
    10. Olga Balaeva & Yuliya Rodionova & Andrei A. Yakovlev & Andrey Tkachenko, 2021. "Public Procurement Efficiency As Perceived By Market Participants: The Case Of Russia," HSE Working papers WP BRP 29/PSP/2021, National Research University Higher School of Economics.
    11. De Leverano, Adriano & Coviello, Decio & Clark, Robert, 2023. "Centralized Procurement and Delivery Times: Evidence from a Natural Experiment in Italy," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277589, Verein für Socialpolitik / German Economic Association.
    12. Marina Cavalieri & Calogero Guccio & Domenico Lisi & Ilde Rizzo, 2020. "Does Institutional Quality Matter for Infrastructure Provision? A Non-parametric Analysis for Italian Municipalities," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(3), pages 521-562, November.
    13. Dubas-Jakóbczyk, K. & Albreht, T. & Behmane, D. & Bryndova, L. & Dimova, A. & Džakula, A. & Habicht, T. & Murauskiene, L. & Scîntee, S.G. & Smatana, M. & Velkey, Z. & Quentin, W., 2020. "Hospital reforms in 11 Central and Eastern European countries between 2008 and 2019: a comparative analysis," Health Policy, Elsevier, vol. 124(4), pages 368-379.
    14. Gerald Oeser & Pietro Romano, 2021. "Exploring risk pooling in hospitals to reduce demand and lead time uncertainty," Operations Management Research, Springer, vol. 14(1), pages 78-94, June.
    15. Emanuela Marrocu & Silvia Balia & Rinaldo Brau, 2016. "A spatial analysis of inter-regional patient mobility in Italy," ERSA conference papers ersa16p127, European Regional Science Association.
    16. Denita Cepiku & Fabio Marinangeli & Benedetta Marchese, 2019. "La centralizzazione degli acquisti in sanit?: esperienze di approvvigionamento del servizio di ossigenoterapia domiciliare nel Lazio," MECOSAN, FrancoAngeli Editore, vol. 2019(111), pages 7-33.

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