AN-011: Annual fiscal procurement-cost implication¶
Economic intuition
Take the price gap from the Lee bounds, apply it to how much the state spends on litigated urgent purchases each year, and discount it by how much of that spending plausibly could have been sourced through the closest feasible urgent comparison. The arithmetic points to roughly $28M a year in extra procurement outlays. This is an outlay calculation for the state budget, not a full welfare accounting: it deliberately leaves out the health benefits of faster access and the search and compliance costs on the other side of the ledger.
Question¶
What is the annual fiscal procurement-cost implication of the litigated-urgent price gap? The calculation combines the Lee-bound midpoint gap, the volume of annual litigated spending, and an admissibility calibration for the share of that spending that could plausibly have been sourced through the closest feasible urgent comparison.
Design¶
- Sample: litigated urgent procurement within the BEC group 65 São Paulo pharmaceutical sample, 2009–2019.
- Specification: a fiscal procurement-cost calculation. The Lee-bound midpoint price gap of 18.5% is applied to $300M of annual litigated spending, scaled by a 50% admissibility calibration; the reported range traces the Lee lower and upper bounds.
- Scope: this is a fiscal procurement-cost calculation, not a full welfare estimate. It excludes health benefits and search and compliance costs.
Results¶
| Quantity | Value |
|---|---|
| Lee midpoint gap | 18.5% |
| Admissibility calibration | 50% |
| Annual litigated spending | $300M |
| Fiscal procurement-cost implication (per year) | $27.8M |
| Lee-bound range | \(23.9M–\)31.7M |
Output: v10-causal-mechanism/output/tables/tab_procurement_cost_bound.tex.
Interpretation¶
Confidence: yellow. Applying the 18.5% Lee midpoint gap to $300M of annual litigated spending, scaled by a 50% admissibility calibration, yields a fiscal procurement-cost implication of $27.8M per year, with a Lee-bound range of \(23.9M–\)31.7M. This is a fiscal procurement-cost calculation, not a full welfare estimate: it captures the extra outlay the state budget bears and deliberately excludes the health benefits of faster access and the search and compliance costs. The reading is yellow because the figure depends on a calibrated admissibility share, rests on a single-jurisdiction sample (São Paulo BEC), and comes from own project runs.
Follow-ups¶
- Trace how the implication moves under alternative admissibility
calibrations and annual-spending assumptions (see the companion
sensitivity tables
tab_procurement_cost_sensitivity.texandtab_procurement_cost_spending_sensitivity.tex). - A full welfare accounting would require monetizing the health benefits of faster access and the search and compliance costs; that is outside the scope of this fiscal calculation.