On 5 October 2022, the WHO issued an alert about four children’s cough and cold syrups found in The Gambia. Laboratory analysis had found unacceptable amounts of diethylene glycol and ethylene glycol, industrial chemicals that cause acute kidney injury and can kill. The products had been linked to a cluster of deaths among young children.
Every one of those bottles passed through a supply chain. Somebody imported it. Somebody sold it. Many links in the chain made a decision about it, and most of those decisions were, in effect, procurement decisions: which supplier, at what price, with what checks.
We usually talk about medicine quality as a job for regulators, and about procurement as a job for accountants and anti-corruption officials. My argument is that this division is backwards. In most low- and middle-income health systems, the procurement office has more practical control over the quality of what reaches patients than the regulator does. And the rules it works under often push it toward buying worse products.
The scale of the quality problem
The WHO estimates that at least one in ten medical products in low- and middle-income countries is substandard or falsified, and that countries spend an estimated US$30.5 billion a year on them. Substandard means a legitimate manufacturer failed to meet specifications. Falsified means someone set out to deceive.
The public sector is not immune. Government tenders buy vast quantities of generic medicines, often from a large pool of suppliers, under deadlines, with limited laboratory capacity to check what arrives. When the regulator is under-resourced, the tender specification and the supplier qualification process become the real quality gate.
Why lowest price is a quality risk
Most public procurement rules were written to prevent corruption. The cleanest defence against an accusation of favouritism is to buy from the lowest compliant bidder. So that is what procurement officers do.
The problem is that in pharmaceuticals, “compliant” is often a paper test. A supplier submits the right certificates and the lowest price, and wins. Nobody in the tender committee has the means to know whether the price is low because the manufacturer is efficient or because it is cutting corners on raw materials and quality control.
The incentive underneath this is the uncomfortable part. An auditor will query a procurement officer who paid 20% more than the lowest bid. Almost nobody audits an officer for buying a cheaper product that turned out to be substandard, because that failure shows up much later, in a clinic, as a treatment that did not work. The system punishes visible overspending and ignores invisible harm.
Why the buyer can move faster than the regulator
Building a strong national regulator takes years. It needs inspectors who can assess factories abroad, laboratories accredited to international standards, legal powers that survive challenge in court and independence from the industry it oversees. Many countries are on that path, and it is the right long-term goal.
A procurement agency can change faster. It does not need to regulate the whole market. It only needs to decide what it will buy with public money. It can require a stringent regulatory approval or WHO prequalification tomorrow, contract an accredited laboratory for batch testing next month, and exclude a failing supplier the week after. In a country where the regulator is still building capacity, the public buyer’s choices may be the most effective quality filter available, at least for the medicines that flow through public facilities.
What good procurement looks like
The Tamil Nadu Medical Services Corporation in India is one of the most cited examples of a public procurement agency that built quality into the process. It was incorporated as a state government company on 1 July 1994 and began operating in January 1995, with responsibility not only for buying drugs for government hospitals but also for testing, storing and distributing them.
That combination is the point. An agency that buys, tests and distributes can link supplier performance to future contracts. A supplier whose batches fail testing can be excluded. The procurement office stops being a clerk that picks the lowest number and becomes a buyer with a memory.
Pooled procurement at international level works on a similar logic. Organisations such as Gavi and the Global Fund buy for many countries at once, which gives them the scale to insist on prequalified products and to shape which manufacturers stay in the market. The WHO prequalification programme exists partly so that buyers without their own strong regulator can rely on a shared quality standard.
The trade-offs reformers have to own
None of this is free. Stricter supplier qualification means fewer bidders, which can mean higher prices and, occasionally, less competition. Testing costs money and time, and a batch held in quarantine is a batch not on a clinic shelf. Centralised agencies can become bottlenecks, or new sites of capture, if their governance is weak.
There is also a political risk. A procurement officer who chooses a more expensive but better-assured product needs legal cover to do so. Without explicit rules that allow quality to outweigh price, reform-minded officials are simply exposing themselves.
The mechanism: a market where quality is invisible
Medicines are a textbook case of what economists call asymmetric information. The manufacturer knows how carefully a product was made. The buyer, looking at a box of tablets, cannot tell. Two batches of the same generic antibiotic, one made to specification and one made with a cheaper, impure ingredient, look identical on a warehouse shelf.
In 1970 the economist George Akerlof described what happens in markets like this, using used cars as his example. When buyers cannot tell good products from bad, they will not pay extra for quality, because they cannot verify it. Sellers of good products then find it hard to compete with sellers of bad ones on price. Over time, low quality can drive high quality out of the market.
Public tenders built around lowest price reproduce this dynamic almost perfectly. If the buyer cannot verify quality and awards contracts on price alone, it signals to every supplier that quality investment will not be rewarded. Manufacturers who spend money on good raw materials, proper validation and quality control are at a disadvantage against those who do not. The tender rules, written to prevent corruption, can end up selecting for the suppliers most willing to cut corners.
The way out is to make quality visible to the buyer: through prequalification, stringent regulatory approval, independent testing and supplier track records. Every one of those tools is a way of solving the information problem. And every one of them is something a procurement agency can require, often faster than a national regulator can build full capacity.
A scenario: two tenders for the same antibiotic
Imagine two government agencies buying the same children’s antibiotic suspension.
The first runs a standard tender. The specification lists the product, strength and pack size. Bidders submit a certificate of registration and a certificate of good manufacturing practice issued by their home regulator. The lowest price wins. The winning supplier, new to this market, offers a price well below the others. Delivery arrives on time. Nobody tests it. A year later, clinicians in a few districts report that children are not responding to treatment as expected, but the reports are scattered and put down to resistance.
The second agency runs a tender where bidders must hold approval from a stringent regulator or WHO prequalification, or submit to a factory inspection by the agency’s own team. Price still matters, but quality criteria come first. After delivery, the agency tests random samples from each batch in an independent laboratory. A supplier whose batch fails is suspended from future tenders. The price the second agency pays is higher. The number of bidders is smaller.
The first agency looks more efficient in an audit. The second agency is buying medicines that work. The difference in price is the cost of making quality visible, and it is usually small compared with the cost of treatment failure.
The strongest counterargument
The case against strict quality rules is serious and should not be dismissed.
Higher prices mean fewer medicines. A health system with a fixed budget that pays more per unit buys fewer units. If stricter rules raise prices significantly, some patients may go without treatment altogether, which is also a harm.
Strict rules can exclude local manufacturers. Many low- and middle-income countries are trying to build domestic pharmaceutical industries for reasons of supply security and economic development. If public tenders require approvals that local firms do not yet have, the government’s largest buyer is effectively closed to them. That can entrench dependence on imports.
Fewer suppliers mean more fragile supply. If only a handful of manufacturers qualify, a production problem at one of them can cause a shortage.
These points partly hold. The answer is not to abandon quality requirements, but to design them with those trade-offs in mind: a clear, time-bound path for local manufacturers to meet higher standards, with technical support; post-delivery testing that applies to every supplier; and deliberate multi-sourcing so that no product depends on one supplier. The goal is a market where quality is rewarded, not one where only a few firms can compete.
Second-order effects
Procurement choices shape markets over years.
A large public buyer that rewards quality changes manufacturers’ investment decisions. Firms that know they will be tested and excluded if they fail have a reason to invest in quality systems. Over time, the quality of the whole market, including private pharmacies supplied by the same manufacturers, can rise.
Conversely, a buyer that rewards only price can drive quality manufacturers away. Once they have left, bringing them back is slow and expensive.
Procurement data are also an underused asset. An agency that tracks which suppliers deliver on time, which batches fail testing and which products generate complaints builds an intelligence system that regulators can use. Linking procurement data to pharmacovigilance and regulatory inspections turns buying into a quality surveillance tool.
What this means for each actor
- For health ministries: give the procurement agency an explicit quality mandate, legal authority to use quality criteria, and budget for testing.
- For regulators: share information with procurement agencies. A supplier under investigation should not be winning public tenders.
- For funders: support independent testing laboratories and pooled procurement, and help local manufacturers meet international standards rather than lowering standards to include them.
- For clinicians: report suspected treatment failures and product problems. Scattered reports only become visible when someone collects them.
What to watch next
Watch whether governments that faced contaminated-medicine scandals in recent years have changed their tender rules, not just their export controls. Watch whether regional pooled procurement initiatives grow. And watch whether audit bodies begin asking procurement agencies how they assured quality, not only how much they saved.
Practical levers
- Write quality into the award criteria. Prequalification, stringent regulatory approval or a track record of passed batches should count, not only price.
- Test after delivery, not just before tender. Random batch testing of what actually arrives is where substandard products get caught.
- Keep supplier memory. Link past performance to future eligibility, and publish exclusions.
- Protect officials who pay more for quality. Audit rules should recognise documented quality justifications as legitimate.
- Pool where scale helps. Small buyers get better quality and prices by buying together.
Procurement reform is usually sold as a way to save money or fight corruption. Both matter. But its biggest untapped value is as a quality lever. A ministry that wants better medicines in its clinics may get more from a well-run buying agency than from any new regulation.
What’s the most effective procurement change you’ve seen for improving medicine quality, not just price?
