Procurement and Supply Management for pharmaceutical and health products exhibits specific challenges. On average procurement and supply chain management and related training activities comprise over half of every Global Fund grant, so building capacity in this area is of paramount importance to ensure the smooth implementation and sustainability of grants.
In addition, pharmaceutical and health product management is an area in which countries can work to ensure greater efficiency and value for money in the prices secured for certain drugs, allowing for a greater number of people to access treatment. Over the past decade, there has been a dramatic reduction in the prices of first-line ARV medicines, largely thanks to competition from generic equivalents.
Procurement and Supply Management refers to all activities required to ensure the continuous and reliable availability of sufficient quantities of quality-assured, effective products and services to end-users, procured at the lowest possible prices, in accordance with national and international laws. Pharmaceutical Products refers to products (intended for human use) that contain an active pharmaceutical ingredient in their finished dosage form, and Health Products refers to pharmaceutical products and other health-related products (such as bed nets, laboratory and radiology equipment) and single-use health products (such as condoms, rapid and non-rapid diagnostic test kits, insecticides and injection syringes).
|Capacity Area and Scope||Capacities||Indicators|
|Management and Coordination – to ensure adequate organisational structure, staffing and management for procurement functions; effective procurement monitoring and reporting; and appropriate oversight to ensure effective Sub-Recipient procurement.||
|Procurement Policies and Systems – ensuring adequate procurement policies and procedures; competitive, efficient and transparent procurement processes; a timely procurement cycle; appropriate intellectual property rights and policies for pharmaceutical products; national treatment guidelines in place and available, where needed; and mechanisms to encourage adherence to, and monitoring of, treatment.||
|Procurement Regulatory Framework||Many countries have a robust legal and regulatory framework for compliance, yet compliance can be weak. Look for evidence of compliance, and verification of adherence to regulations.|
|Decentralisation||In an organisation that has a decentralised procurement function, consider the integration of information and plans between locations as well as the oversight functions ensuring compliance with organisational guidelines.|
|Quality Assurance||Quality assurance is a wide-ranging concept covering all arrangements made to ensure that pharmaceutical products are of the quality required for their intended use. QA also refers to a set of international standards to be met by suppliers of certain products to ensure that the supplier is capable of manufacturing safe and effective products, and by procurement agents and logistics service providers along the supply chain. Therefore procedures for verifying quality at various stages should be considered.|
|Procurement and Budgeting||Consider the level of integration of procurement planning and forecasting with budgeting processes, ensuring the availability of funds to meet prospective needs.|
|Intellectual Property Rights||Procurement and supply focal points should be trained to understand the impact of IPR on access to medicines and how to work with relevant national actors to improve access and secure better value for money.|
|Logistics Management Information Systems||These systems are fundamental to provide accurate and timely information essential to effective stock management at all levels of the national supply chain system. They provide information required for accurate quantification, procurement and distribution, and are the basis for regular monitoring of the performance of the national procurement and supply chain system.|
|Supply Chain Issues||Management of the supply chain of products from receipt to point of delivery is often an area requiring strong capacity strengthening. The degree of geographical distribution involved, number of actors and partners, need for detailed tracking and information, opportunities for fraud, and storage requirements for pharmaceuticals all play a part in providing effective supply chain services.|
|Procurement and Transition||As PR, UNDP uses long-term agreement contracts for procurement of pharmaceuticals and other health products, while government procurement functions typically do not have such arrangements. In these situations, capacity interventions should investigate alternate contractual options that governments can adopt.|
|Value for Money||UNDP defines value for money as the optimal combination of quality and cost appropriate to the requirements of the organisation. Cost is defined as the 'total cost of ownership’; i.e. including not only the purchase price of a product or service, but also costs related to installation, maintenance/running costs and residual value after a pre-defined life span.|
Procurement and Supply Management
Back in 2000, HIV medicines costed over US$ 10,000 per patient per year. Within a year this prohibitive price plummeted when generic manufacturers began to offer treatment for US$ 350 per year. Since then, and thanks to healthy competition among quality-assured generic manufacturers, the price continued to fall to around US$ 150 per patient per year. These dramatic price reductions made it possible to provide HIV treatment to 15.8 million people, up from a mere 700,000 people 15 years ago.
A range of actions by UNDP have led to this significant savings and important milestone: long-term agreements and improved procurement planning with countries and manufacturers; volume discounts on large, pooled orders; reductions in transport and handling costs; increased competition between manufacturers through a broad supplier base; and essential support from partners including the Global Fund, UNICEF, and WHO.
These savings free up funds that allow countries to put more people on treatment and keep more people alive. Putting additional people on treatment contributes to curbing new infections and realizing the global goal of ending AIDS as a public health threat by 2030.
As a notable success story, the Ministry of Health and Child Care in Zimbabwe is providing HIV treatment to 850,000 people and is set to reach 1 million people next year, with the support of the Global Fund, PEPFAR, DFID and UNDP. In this latest round of procurement, UNDP was able to purchase 4.8 million packs of medicines for US$ 40 million for Zimbabwe – resulting in savings of over US$ 11 million compared to previous orders. With these savings, an additional 110,000 people in Zimbabwe can now be put on HIV treatment – the equivalent of all HIV patients in the France and Sweden combined.
Procurement and Supply Management