Improving health resilience through better procurement of medical supplies : lessons from the COVID-19 Pandemic

Abstract

• Bias for procuring domestically (“home bias”) stands in the way of an integrated Single Market in procurement and is associated with malpractice that negatively affected the procurement of medical supplies in 2020.

• The first infection wave in early 2020 coincided with an unprecedented surge in cross-border procurement. Most of these were direct awards to firms, not competitive tenders, indicating that home bias is not driven by ignorance of buyers about foreign firms.

• Buyer discretion enables misallocation towards domestic buyers. Policy makers should limit buyer discretion to promote cross-border procurement for medical supplies. This allows the best firms to win contracts internationally, improving health resilience through a stronger industrial base.

• Nonetheless, deregulation and increasing buyer discretion may have been optimal in the emergency as the net effect of the pandemic and deregulation was towards more cross-border procurement, at least temporarily.