Ukraine has saved $37 million on buying drugs for the health service with an online program that compares the government’s purchases to the prices listed by other suppliers, which are often lower. The program, called ProZorro, emerged from a Soros Foundation hackathon trying to find ways of tackling corruption. It has been so successful at saving money that President Poroshenko last year ordered its roll-out to cover all government purchases. The same hackathon also saw a similar project launched in Kyrgyzstan.
Results & Impact
ProZorro has saved more than $37 million on medicine, and at the last count had reached a total of $55million across all government departments. As of July 2016, it has overseen more than 85,000 tenders. Ukraine loses some $2billion annually to shady deals and limited competition, and the government believes ProZorro could recover 10% of that, $200million
The government of Ukraine, the Soros Foundation, the International Renaissance Foundation
A 2015 Soros Foundation-International Renaissance Foundation hackathon in Kyrgyzstan led to the creation of a prototype program called ProZorro, a web tool which allowed the general public and journalists to monitor how much the Ukrainian government was spending on medicine for the health service. The program, which plugs into the government's e-tender website, examines purchases made by government departments and compares the prices to other suppliers, who are often cheaper. The program was launched as an official pilot in 2015, and was so successful in bringing accountability to procurement, it was adopted by the Ukrainian government
Cost & Value
Running since 2015
Two ministers leading the department responsible for procurement resigned during the implementation phase, and while some agencies have welcomed the reforms, others have resisted
The app, which initially covered only health purchases, has been extended to cover all government purchases. The initial hackathon has led to the launch of a similar project in Kyrgyzstan
Ukraine has saved more than $37 million on buying drugs for its health service with an online program that compares the government’s purchases to the prices listed by other suppliers, which are often lower.
The program, called ProZorro, emerged from a hackathon trying to find ways of tackling corruption, and led to the creation of a similar project in Kyrgyzstan. ProZorro, which means ‘transparently’ in Ukrainian, has been so successful at saving money that it has triggered a nationwide clampdown on graft, helping make the country the unlikely winner of an excitingly named World Procurement Award in 2016.
President Poroshenko first made it part of the official government system and last year ordered its roll-out to cover all government purchases. The tool has been expanded to other sectors to provide oversight into all areas of government purchasing. As of July 2016, agencies including defence, police, customs, health, infrastructure and energy, have awarded more than 85,000 tenders through ProZorro.
Countries like Ukraine and Kyrgyzstan have no mechanism for regulating the prices of drugs, opening up officials to bribery. For example, a hospital manager bribed by a pharmaceutical representative could agree to procure a drug at a price 10 times higher than at a neighbouring hospital. In addition, those medicines procured by the state and meant to be dispensed freely to patients often appear for sale at hospital-based pharmacies instead.
“Until recently, the regulatory and institutional framework that regulated the “paper” procedures of public procurement was used in Ukraine,” said a spokesperson for ProZorro. “This system made numerous abuses by government procuring entities possible. It was complicated and inconvenient for suppliers and did not provide the opportunity for public and professional control.”
The new law into force in two steps beginning from April 1 when ProZorro became mandatory for central executive authorities. It became mandatory for other public procurement authorities on August 1. The delay between the two stages of implementation was deliberate so as not to overload the government procurement platform, which included more than 25,000 tender commissions from more than 15000 procuring entities across the country.
The spokesperson continued, “Technical compliance between Ukrainian legislation and European practice did not guarantee a transparent, effective and fair procurement process, as well as did not facilitate the solution of the most important issue in public procurement, which is eradication of systemic corruption.”
The Ukrainian government estimates that it loses $2billion annually because of shady deals and limited competition. It hopes to make up some 10% of that with ProZorro, leading to an estimated annual saving of some $200million. At the last count, it had saved $55million across all government departments.
The app came out of a hackathon hosted by the Soros Foundation with the International Renaissance Foundation in Kyrgyzstan in 2015. The participants were coders, journalists and activists from Ukraine and Kyrgyzstan who were were tasked with finding a solution to address corruption in procurement and free up access to health services.
Over two and a half days, one of the Ukranian teams developed a prototype for a program called ProZorro, which improves the e-tendering process for all public procurement in Ukraine. Launched as a pilot in 2015, the program plugs into the government’s e-tender website, allowing journalists and members of the public to compare the prices government is paying with what’s available elsewhere, and so shine a light on graft. The app compares prices automatically instead of forcing people to spend days trawling through the relevant data.
Another team at the hackathon, came up with the idea of having patients monitor supplies of medicine at facilities like hospitals in real time. If a hospital representative says that a patient needs to buy drugs that should be readily available, for example, the patient can check online and hold the hospital accountable if the medicines are meant to be provided for free.The tool is called WikiLiky, and has been launched in one region of Ukraine.
At the same hackathon, one of the Kyrgyz teams looked at price monitoring their home country, as well as inefficiencies and errors in the purchasing of stocks. These could arise from when a drug was misspelled in several different ways, which made it harder to accurately track prices. The Kyrgyz team standardised the Kyrgyz government’s e-procurement portal to avoid such mistakes.
The update will allow the Kyrgyz Republic’s Ministry of Health and Mandatory Health Insurance Fund—as well as journalists and civil society activists—to monitor prices and reduce abuses in government procurements. An open procurement system is particularly important here, since the public health system has limits on the purchase of essential medicines for the most vulnerable populations.