Update on P4i and Market ShapingIPC Meeting

19 June, 2015

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One Sourcing team dedicated to fundamentally change the way we work across the supply chain to increase access to products

Earlier involvement

and closer collaboration

with manufacturers

Improving our purchasing

capability and changing our contracting

models

Optimising the international

supply chain to reduce cost and improve quality and efficiency

Better planning and

scheduling to support

continuity of supply

Delivering more products at the right time and place to more

people

Recall: Since 2013, the Global Fund has stepped up its sourcing strategy through the Procurement 4 Impact (P4i) transformation

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Viral load tender: Objectives

1. To select a panel of manufacturers to enter into Framework Agreements to supply PRs both through the Pooled Procurement Mechanism and through other procurement channels of Global Fund grant recipients.

2. Whilst the choice of specific technologies will ultimately remain a country-led choice based on the needs of the programme, the responses on key elements of this RFP will provide inputs into a defined process to guide the competitive transparent selection of viral load technologies by PRs.

3. The commercial arrangements may include options for allocated or committed volumes based on aggregated forecast demand across Global Fund PRs. The term and level of any commitment will follow the Global Fund evaluation of submitted proposals and subsequent second stage review.

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Process

Stage 1 Stage 2

> Preparation, submission, preliminary examination, screening and evaluation of proposals

> Invitation of selected bidders to participate in Stage 2

> Opportunity to discuss more detailed information and seek clarifications through dialogue and meetings

> Review of assumptions for total cost of ownership model

> Submission of Best and Final Offer (BAFO)

Only bidders who were manufacturers of products in compliance with the Global Fund’s Quality Assurance Policy on Diagnostics were eligible to participate

The same 2-stage process will be followed to consider new entrants for inclusion on the panel of suppliers after they have met the Global

Fund’s QA policy

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Summary of key outcomes (I / II)A range of credible, cost-effective, competitive options now available with more transparent pricing, costs and contracting for viral load and early infant diagnosis

Leverage volumes

Enables volumes to be leveraged and promotes maximum up-time and testing throughput

Transparent contracting

Guide new selection and establish contracting modalities and templates Benchmark existing arrangements with probable forward-applicability in many cases Deliver Framework contracts and transaction agreements agreed in principle with no

major issues remaining or have been flagged

Transparent costing

Provide standardized costing applicable for most recipient countries enabling easier and more transparent decision-making

Provide clear cost build-up to Total Cost of Ownership available for first time enabling a more meaningful and fair comparison

Additional acquisition

models

Provide options of different acquisition models: purchase / lease and reagent rental– “Reagent rental” option now available from majority of suppliers that is

comparable with the equivalent “all in” bottom up price – indicating no “premium” Identify various value-added solutions available

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Summary of key outcomes, continued (II / II)A range of credible, cost-effective, competitive options now available with more transparent pricing, costs and contracting for viral load and early infant diagnosis

Broader supplier base

Include two recent new entrants into the low-and-middle income market for lab-based systems

Include two further suppliers recently QA-eligible with attractive offerings for lower throughput/near-Point-of-Care offerings with clear pricing and costs (but limited scale-up capacity/coverage plans)

Establish process for new entrants, with a clear target for pricing and contracting

Global visibility

Enable better global visibility and performance management (rather than fragmented country-level) and sustained delivery

Include agreement to make key elements of this RFP “available” in the public domain including TCO calculations

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RFP outcomes will reduce prices paid and contractual variability

• Historically little visibility with arrangements country-by- country or even user/ machine-by-machine

• 2 main suppliers dominating

• Large range of prices paid, varying by country and over time

• New prices will reduce variability and be lower than average, resulting in savings

Assuming increased transparency and more consistent pricing across suppliers, savings could be up to 33% or USD 30 million over 3 years

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Early version

available now

http://www.theglobalfund.org/en/procurement/viral-load-early-infant-diagnostics/

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Agenda

Market Shaping Strategy

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Global Fund’s market shaping strategy builds on past efforts and will be integrated with the 2017 – 2021 strategy

Procurement for Impact

• P4i transforms the way the Global Fund works across the supply chain, especially through the transition from VPP to PPM and the implementation of new long-term supplier agreements

2013

Latest market shaping strategy

• Board approved strategy “acknowledging the critical role of the Global Fund in shaping markets to maximize global access to health products…and further [emphasizing] its desire for the Global Fund to more actively shape markets…”

2011

Creation of VPP and PQR

• Based on the Board’s 2007 decision, VPP became operational in mid-2009 with 40 countries and 74 grants by end 2010

• PQR implemented to collect transaction-level procurement data

2007- 2009

Initial market shaping strategy

• Board decides that the Global Fund should play a “deliberate and strategic role in improving the impact of grants by influencing market dynamics” and endorses the creation of PQR and VPP

2007

ACT transition

• Global Fund worked with WHO to facilitate countries to rapidly switch funding from suboptimal therapies to ACTs2004

2017 – 2021 strategy

• Global Fund currently developing its next organizational strategy, to be reviewed by the Board in March 2016

2015- 2016

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The Sourcing Department is leading a refresh of the Global Fund’s 2011 market shaping strategy for the November Board meeting

Apr May Jun Jul Aug Sept Oct Nov

Boardreview

Board meeting

Lay out approach

Assess markets, role, key questions

Develop and test strategies

Socialize and iterate

Consult stakeholders

Sourcingstrategic

review

Boardreview

Boardreview

Draft report ofexternal evaluation

Final report of external evaluation

Str

ate

gy

de

ve

lop

me

nt

Ke

y m

ile

sto

ne

s

Today

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Phased approach to revise strategy

Define approach and scope of market shaping strategy

Lay out process, including consultations

Document past efforts

Assess current health of each market, identify market shortcomings

Assess enablers vs. ideal state, identify gaps

Define Global Fund role in partner landscape

Develop strategic objectives

Identify key strategic questions to address

1: Plan 2: Frame & diagnose 3: Define strategy4: Plan

implementation

Consult internal & external stakeholders; align with other Global Fund efforts

Summarize and pressure-test existing strategies

Integrate market shaping lens in TB, RDT strategies

Identify and prioritize initiatives to strengthen enablers

Address key strategic questions

Lay out high level implementation plan

Define dashboard to monitor strategy

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Definition of “market shaping” for the Global Fund

Market shaping supports health outcomes by ...

Leveraging the Global Fund’s position to facilitate healthier global markets for health products, today

and in the future

Implies proactive approach

Focused on global market outcomes, not limited to outcomes for

the Global Fund

Market shaping extends to future

possibilities, not limited to current market

conditions

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Availability

Six dimensions of market health, building on 2011 Market Shaping Strategy and partner frameworks

DimensionDimension Description of healthy marketDescription of healthy market

Design / Innovation

Quality

Affordability

• There is a robust pipeline of new products or regimens intended to improve clinical efficacy, reduce cost, or better meet the needs of patients, providers or supply chain managers

• New and/or superior products are rapidly introduced and made available to PRs

• Adequate and sustainable supply exists to meet global needs

• Products are consistently safe and effective according to Global Fund-defined quality standards

• Products are available at the lowest possible sustainable price

Long-Term Viability

• Market health is sustainable with limited intervention from public actors

• Ongoing interventions in one dimension of market health do not have negative long-term consequences on other dimensions

Adoption• Countries, PRs and patients / providers rapidly introduce and adopt the most

cost effective products (in their local context)

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Next steps are to develop strategic objectives, Global Fund role and guiding principles – based on analyses and consultation

This phase

Nextphases

Strategic objectives

Global Fund role Guiding principles

Strategic initiatives by marketInitiatives to strengthen

enablers

Implementation plan (sequencing, timeline)

M&E plan(metrics, dashboard)

2011 strategy implementation

Other market shaping initiatives (P4i)

Assessment of key strategic questions

Updated market opportunities

Market shaping enablers

Partner landscape