Electronic Procurement of Pharmaceuticals and Medical Devices in Chile: An Initial Empirical Investigation

The return on investments in electronic procurement platforms has been elusive. We show that the use of an electronic platform for the procurement of pharmaceuticals and medical devices has saved the Government of Chile money. Using a unique data set that covers purchases of the same items before and after the new Chilecompra platform was introduced in 2004 and includes controls for other variables that may have affected prices, we find that Chilecompra saved the government over 8% and that greater aggregation of purchases saved a further 3%. Consistent results are found when government prices are compared with those of Chile’s three drugstore chains. Chilecompra has resulted in quantifiable economic benefits which are related to volume and platfom effects rather than a greater number of competitors. These results help fill a gap in the literature on the returns to Information Technology investment, and are consistent with work in Health Economics.