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Pharmaceutical Procurement Demystified
Managing supply chains through the Public Sector
Sangeeta RajaACTafrica
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 PortfolioThe 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….
Medical equipment, $1.3,
45%Pharmaceuticals,
$1.6, 55%
WB financed procurement of medicines and medical equipment FY99-07 (US $billion)
Source: WB Business Warehouse
Trend by Year
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
1999 2000 2001 2002 2003 2004 2005 2006 2007
US
mill
ions
Medical Equipment Pharmaceuticals
Who is buying what?
0% 20% 40% 60% 80% 100%
SAR
AFR
LAC
EAP
MNA
ECA
% of total EMD/PMP procurement
EMD PMP
Medical Equipment (EMD) versus Pharmaceutical Procurement by Region FY 99 - 07
Source: WB Business Warehouse
Procurement trends that impact supply chains
0
100
200
300
400
500
ECA EAP MNA SAR LCR AFR
Num
ber o
f pha
rmac
eutic
al c
ontra
cts
Number of medicines contracts by Region FY99-07
Procurement Efficiency
Types of pharmaceuticals procuredContract amount
(millions)
Number of
contracts
Average contract amount
% of total PMP procurements
Condoms - 10 + 80+ 80 = 170m condoms (plus 1 sampling & testing consulting svcs contract) 4,585,528 4 1,146,382 32.4
TB drugs, lab TB reagents 2,667,557 8 333,445 18.8ARVs 2,309,766 6 384,961 16.3STI and Opportunistic Infections (OI) drugs 3,041,979 14 422,208 21.5VCT test kits, STD-HIV test kits 1,298,116 4 324,529 9.2Other - accessories & pharma proj consult svcs 256,300 2 128,150 1.8
TOTAL 14,159,245 38 100.0
Table 2: Uganda HIV/AIDS Control Project - pharmaceutical contracts categorized by disease
Uganda HIV/AIDS Control Project, number of repetitive procurements
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
0 100 200 300 400 500 600 700 800 900
Vaccines
Contraceptives
Malaria commodities
Anti-TB drugs
ARVs
HIV Test Kits
$US millions
Trends in procurement of key public health commodities FY 99- 07
0
20
40
60
80
100
120
140
160
180
1999 2000 2001 2002 2003 2004 2005 2006 2007
$US
milli
ons
0
5
10
15
20
25
30
35
2003 2004 2005 2006 2007
$US
mill
ions
05
101520
2530
3540
1999 2000 2001 2002 2003 2004 2005 2006 2007
$US
milli
ons
0
5
10
15
20
25
30
35
40
45
1999 2000 2001 2002 2003 2004 2005 2006 2007
$US
milli
ons
Vaccines
Contraceptives
ARVs
Malaria
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...Strategy/Supply Chain Issues Year
published General Forecasting Procurement
Distribution(inventory
management, logistics information
management, transport and warehousing)
Capacity Building
(specifically in supply chain
management, logistics, and/or procurement)
Includedin results
framework &/or implementation
plan?
How?
Health, Nutrition, and Population Sector Strategy
1997 # 0 ** 0 0 Y Streamline business processes and procurement procedures to HNP
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 YBarely: 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
Framework for Action: Booster Program for Malaria Control in Africa
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
Booster Program for Malaria Control in Africa - Phase II Strategy
2008 ** ** ** 0 ** waiting for revised version
Meeting the Challenge of Africa's Development: A World Bank Group Action Plan (AAP)
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);
Accelerating Development Outcomes in Africa: Progress and Change in the Africa Action Plan (AAP)
2007 # 0 # 0 # Y See p. 32 re: malaria - Focus on financial management, procurement supply chain and M&E
The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives, (IFC)
2007 ** # ** ** * N/A 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
ANNEX 2: World Bank Strategies Addressing Health Sector Supply Chain Issues
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.
Key: Strong Inclusion/Discussion: **Adequate Inclusion/Discussion: *Minimal Inclusion/Discussion: #Not Included/Discussed: 0
Strategies
Supply Chains, discussed and identified:HNP Sector StrategyGlobal HIV/AIDS Program of ActionThe World Bank’s Commitment to HIV/AIDS in
Africa: Our Agenda for Action, 2007 – 2011Booster Program for malaria Control in Africa –
Phase II strategy
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