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Pharmaceutical Procurement Demystified Managing supply chains through the Public Sector Sangeeta Raja ACTafrica Why care about supply chains? Over the last decade – health expenditures continue to escalate worldwide. High-income countries spend 10% of their GDP for health Middle-income countries average 6 percent of their GDP and Low income countries, about 5.3% of GDP (Source: WB 2007) Expenditures for medicines and medical consumables has also increased. (Source: WHO, 2004) Despite increased spending – little attention is given to supply chains. (Source: DELIVER, 2006) Source: World Bank 2007 The Burning Question for the Bank Is the Bank investment in HNP significant? Does it buy enough medicines and health supplies to make a difference? Does the Bank’s procurement practices impact the supply chains Does the Bank invest in supply chains? What are the entry points for the Bank? Supply Chain management in WB Portfolio The objective of the ACTafrica review was to: establish the level of Bank support in the procurement of health sector goods and its impact on supply chains determine the extent to which the Bank has had a role in addressing supply chain management through its various products and instruments Looking within…. WB financed procurement of medicines and medical equipment FY99-07 (US $billion) Medical equipment, $1.3, 45% Pharmaceuticals, $1.6, 55% Source: WB Business Warehouse Trend by Year 300,000,000 250,000,000 US millions 200,000,000 150,000,000 100,000,000 50,000,000 0 1999 2000 2001 2002 Medical Equipment 2003 2004 2005 2006 Pharmaceuticals 2007 Who is buying what? Medical Equipment (EMD) versus Pharmaceutical Procurement by Region FY 99 - 07 ECA MNA EAP LAC AFR SAR 0% 20% 40% 60% % of total EMD/PMP procurement EMD Source: WB Business Warehouse PMP 80% 100% Procurement trends that impact supply chains Number of pharmaceutical contracts Number of medicines contracts by Region FY99-07 500 400 300 200 100 0 ECA EAP MNA SAR LCR AFR Procurement Efficiency Uganda HIV/AIDS Control Project, number of repetitive procurements Table 2: Uganda HIV/AIDS Control Project - pharmaceutical contracts categorized by disease Types of pharmaceuticals procured Condoms - 10 + 80+ 80 = 170m condoms (plus 1 sampling & testing consulting svcs contract) TB drugs, lab TB reagents ARVs STI and Opportunistic Infections (OI) drugs VCT test kits, STD-HIV test kits Other - accessories & pharma proj consult svcs TOTAL Contract amount (millions) Number of contracts Average contract amount % of total PMP procurements 4,585,528 4 1,146,382 32.4 2,667,557 2,309,766 3,041,979 1,298,116 256,300 14,159,245 8 6 14 4 2 38 333,445 384,961 422,208 324,529 128,150 18.8 16.3 21.5 9.2 1.8 100.0 Procurement lead times Commodity Bid Posting to Contract Award Date Condoms 7-9 months Contraceptives, injectables 7 months STI drugs 8 months WB Procurement of key public health commodities HIV Test Kits ARVs Anti-TB drugs Malaria commodities Contraceptives Vaccines 0 100 200 300 400 500 $US millions 600 700 800 900 Trends in procurement of key public health commodities FY 99- 07 ARVs Vaccines 180 140 35 120 30 100 25 $US millions $US millions 160 80 60 40 20 15 10 20 5 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2003 40 45 35 40 2006 2007 35 $US millions 30 $US millions 2005 Malaria Contraceptives 25 20 15 30 25 20 15 10 10 5 5 0 1999 2004 0 2000 2001 2002 2003 2004 2005 2006 2007 1999 2000 2001 2002 2003 2004 2005 2006 2007 Are we diagnosing and mitigating the risks? 33 CPARs conducted from FY99-07 in Africa Less than 30% conducted a specific assessment of health sector Only two addressed the impact of procurement processes on healthcare supply chains Are we addressing the health sector in procurement reforms? Review of Procurement Reform Projects in top 10 African countries conducting the most healthcare procurement – 9 out of 10 did not address any specific procurement reform for the health sector. (Documentation was not available for the last one) However, there is hope... ANNEX 2: World Bank Strategies Addressing Health Sector Supply Chain Issues Distribution (inventory management, logistics Procurement information management, transport and warehousing) Capacity Building (specifically in supply chain management, logistics, and/or procurement) Included in results framework &/or implementation plan? Year published General Forecasting Health, Nutrition, and Population Sector Strategy 1997 # 0 ** 0 0 Y HNP Strategy to Strengthen Health Systems 2007 ** 0 ** # 0 double check pub, not found in online doc Intensifying Action Against HIV/AIDS in Africa: Responding to a Development Crisis 2000 * 0 # * 0 Y Barely: The Task Force, with the Theme Group, will review and revise existing policies and develop new policies where needed to protect the blood supply, facilitate condom distribution by subsidizing costs, ensure adequate supply and accessibility of drugs for STIs and opportunistic infections... Global HIV/AIDS Program of Action 2005 ** 0 ** # ** Y Continue to support the global partnership on ARV procurement and logistics management capacity building The World Bank's Commitment to HIV/AIDS in Africa: Our Agenda for Action, 2007-2011 2008 ** 0 ** # ** Y SCM as part of strengthening national systems in health service delivery Rolling Back Malaria: The World Bank Global Strategy and Booster Program 2005 * # ** * 0 Y In terms of developing procurement guidelines for malaria commodities 2005 ** ** ** ** 0 Y Progress indicator: Percent of health facilities with no supply interruptions of 1 week or more in nationally recommended anti-malaria drugs during the last 3 months 2008 ** ** ** 0 ** waiting for revised version 2005 # 0 # 0 # Y See p. 46 - In terms of HD operations emphasizing the removal of critical weaknesses in the service delivery chain (e.g. drug delivery and logistics); 2007 # 0 # 0 # Y See p. 32 re: malaria - Focus on financial management, procurement supply chain and M&E 2007 ** # ** ** * N/A Strategy/Supply Chain Issues Framework for Action: Booster Program for Malaria Control in Africa Booster Program for Malaria Control in Africa Phase II Strategy Meeting the Challenge of Africa's Development: A World Bank Group Action Plan (AAP) Accelerating Development Outcomes in Africa: Progress and Change in the Africa Action Plan (AAP) The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives, (IFC) How? Streamline business processes and procurement procedures to HNP There is not an implementation plan since this is not a formal strategy - double check 3rd section once you get the book--The Case for Investing in the Private Health Care Sector in Sub-Saharan Africa Key: Strong Inclusion/Discussion: ** Adequate Inclusion/Discussion: * Minimal Inclusion/Discussion: # Not Included/Discussed: 0 NOTES: - Intensifying Action, The Global AIDS Program of Action and the AFA discuss distribution in terms of condoms, and is discussed more so in Intensifying Action. - The AFA addresses capacity building in supply chain management by emphasizing efforts to improve donor coordination and harmonization of procurement practices. - The AAP mentions supply chains once in the context of drug delivery and logistics (p.46), and addresses logistics through addressing improvement facilitation (e.g. reducing customs clearance, cross border and transport and handling processes in terms of time and costs (p.78). While the AAP discusses procurement issues and capacity building in procurement, it is only in broad context and with no specific reference to issues in the health sector. - The AAP Update mentions supply chains and procurement once in the context of malaria, and logisitcs systems for pharmaceuticals. - The 2007 HNP Strategy mentioned distribution of both drugs and bednets on pgs. 26 and 53. The 1997 HNP Strategy mentions improving the supply of essential drugs and consumables. Strategies Supply Chains, discussed and identified: HNP Sector Strategy Global HIV/AIDS Program of Action The World Bank’s Commitment to HIV/AIDS in Africa: Our Agenda for Action, 2007 – 2011 Booster Program for malaria Control in Africa – Phase II strategy