Part IV: The Role of the RBM Partnership
7. Procurement and Supply Chain Management
Procurement and Supply Chain Management (PSM) is crucial to ensuring that high-quality interventions reach the target population of end users. Close to 50% of Global Fund budgets are used to procure interventions.Mid-year report. The Global Fund to fight AIDS, Tuberculosis and Malaria, 2006.
Click for source The main procuring bodies for malaria interventions are governments of malaria-endemic countries at the national level and United Nations agencies and international organizations at the global level.Global Strategic Plan 2005-2015. Geneva, Roll Back Malaria, 2005.
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International PSM efforts support in-country supply chain management and procurement activities, such as forecasting, availability of interventions, procurement guidelines for quality control/quality assurance, and pooled procurement. An ongoing international dialogue around PSM issues has largely concluded that in-country PSM for malaria should be integrated with PSM for other diseases where appropriate to prevent the creation of multiple parallel structures. Private sector mechanisms, such as those used within countries for distribution, are also important for procurement and supply of malaria interventions.
PSM is critical to ensure that countries can achieve their 2010 targets of universal coverage with malaria interventions.
International level. At the international level, several major issues must be addressed.
- Limited forecasting and intervention tracking
- Limitations to raw materials supply
- Need for updated procurement guidelines
- Different product eligibility criteria across donors
- PSM challenges regarding malaria intervention specifics
- Need for preparation for PSM systems for new malaria tools
Forecasting and intervention tracking. To strengthen PSM internationally and locally, better forecasting capabilities are needed to match capacity to the demand for interventions (anti-malarial drugs, insecticide-treated nets, rapid diagnostic tests (RDTs), insecticides). Tracking consumption of interventions, an activity in close connection with monitoring and evaluation activities, is also important to determine where interventions have been disbursed, to recognize any roadblocks in PSM, and to assess whether the universal coverage targets can be achieved.
Limitations to raw materials supply. Adequate quantities of raw materials are needed to produce and supply sufficient intervention quantities to support scale-up efforts. For example, in view of the long-lead time in producing the plant needed for ACTs, there is a need to address supply of artemisinin raw material to ensure it will be available to support the planned scale-up of treatment.
Updated procurement guidelines. Updated international guidelines for malaria interventions, both in terms of PSM guidelines and technical specifications, will support countries with their procurement and supply management. Taking RDTs as an example, procurement guidelines are needed for quality assurance, quality control and supply management as well as quality tests for use at peripheral levels at time of diagnosis (note: RDT product testing ongoing in 2008).
Different product eligibility criteria across donors. Different requirements among donors in terms of product eligibility complicate the procurement of products by countries; this has been the case for ACTs.
PSM challenges regarding malaria intervention specifics. One major challenge is the shelf-life of ACTs (approximately 2 years), which combines with the customary delays in procurement and supply management (in optimal cases 6 months) to reduce the remaining shelf-life significantly.Information from the Procurement and Supply Chain Management Working Group Meeting, Woerden, 29 April 2008. Another challenge is the bulkiness of a number of malaria interventions (ACTs and LLINs) which require a significant amount of storage space.
Need for preparation for PSM systems for new malaria tools. Although not yet an issue, the RBM Partnership will likely need to support PSM for a potential malaria vaccine which, according to current planning, will be launched in 2012.
Country level. At the country level, there is an urgent need for more international guidance and support to address country-specific PSM challenges.Shretta R. Summary of lessons learned in the implementation of ACT policies in Ghana, Nigeria and Guinea-Bissau. The Global
Fund to fight against AIDS, Tuberculosis and Malaria, June 2007.
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- Insufficient emphasis on planning for PSM development
- Challenge of multiple parallel distribution systems
- Challenges with in-country logistics
- Inadequate quality assurance and quality control
- Quality assurance of the supply-chain, particularly for ACTs and RDTs
- Time consuming regulatory issues (see Part IV - Chapter 3: Policy and Regulatory)
Insufficient emphasis on planning for PSM development. Insufficient emphasis is placed on establishing comprehensive PSM plans within countries. Comprehensive plans would include recognition of country-specific bottlenecks and excellent coordination of all stakeholders within the country who are involved in PSM. Furthermore, incorrect budgeting of implementation costs, such as warehousing and distribution, may occur at the country level.
Challenge of multiple parallel distribution systems. Malaria intervention disbursement and supply management often occurs in multiple parallel systems, rather than integrated within existing structures. This leads to inefficiencies and makes in-country logistics difficult.
Challenges with in-country logistics. Countries experience challenges with in-country logistics, including areas such as inventory management, distribution, consumption data collection and logistics management information systems (LMIS). These challenges, for example with distribution, can lead to malaria interventions staying in storage warehouses and never reaching the end-user. Another problem is that there are few best practice examples for countries who wish to leverage different distribution systems (such as private, public, and NGO systems) for malaria interventions.
Inadequate quality assurance and quality control. Few countries have adequate country quality assurance and quality control systems. This leaves room for counterfeits or poor quality of products to enter the public and private markets. (See Part IV - Chapter 3: Policy and Regulatory).
Priorities for scaling up. Given all these challenges, the PSM WG will focus on the most urgent issues to achieve the 2010 and 2015 targets. The PSM WG priorities to achieve the 2010 targets are given below.
A) Continue to support innovative procurement mechanisms for ACTs. (For a description of AMFm, see Box IV.2 in Part IV - Chapter 6: Financing). The PSM WG will continue to work with the Global Fund and the AMFm taskforce to design the most effective mechanism for AMFm.
B) Implement direct payment as an option for countries. Direct paymentA direct payment as defined by the Global Fund is the disbursement made directly from a trustee fund to others than the principal recipient (PR). The direct payment can be made to a procurement agent (PA), a supplier or a fiduciary agent as opposed to payment directly to the PR, who then subsequently pays the PA, supplier or fiduciary agent. PRs can request the Global Fund to make a direct payment. is a useful option for certain countries wishing to scale-up rapidly. The direct payment option has been used in about 14% of the malaria disbursements from the Global Fund over the last 12 months in 19 countries.Afghanistan, Bangladesh, Cameroon, Ethiopia, Ghana, Guinea-Bissau, India, Kenya, Mali, Nepal, Nigeria, Papua New Guinea, Somalia, Sri Lanka, Tanzania, Uganda, Yemen, Zambia and Zimbabwe. The principle reason for using this option could be to avoid internal procedures for disbursements of funds to a procurement agent or supplier which for some countries can be quite time-consuming. Direct payment could also reduce transaction costs, such as bank fees and exchange rate losses, which could potentially reduce overall costs and/or time to delivery of goods. The LLIN taskforce established at the RBM Board meeting in May 2008 will evaluate how best to implement direct payment if it is determined to be one of the key strategic PSM priorities. The PSM WG will work closely together with the LLIN taskforce to give input and review analyses.
C) Support countries to use voluntary pooled procurement. Pooled procurement can help countries increase the speed and reliability of the procurement process by minimizing stock outs, decreasing lead times, lowering and stabilizing prices, increasing longer-term supply reliability and generally ensuring availability of high quality products. In line with the Global Fund’s decision to support voluntary pooled procurement, the PSM WG will help countries assess when to use pooled procurement services and support them in setting up the appropriate in-country mechanisms and choosing the best procurement option. The LLIN taskforce will look into the mechanism for pooled procurement for LLINs at the global level.
D) Encourage private sector contracting and good practices sharing. The private sector can play an effective role in the procurement and distribution of malaria interventions. Often private sector systems are more adept than the public sector at serving remote populations or in rapidly scaling up distribution systems. The PSM WG will encourage countries and private sector partners to work closely together to contract private sector partners when appropriate. In addition, the PSM WG will work with countries and private sector partners to identify best practices and encourage best practice sharing among countries and companies.
E) Identify and remove delays in PSM processes. To assist countries in rapidly scaling up interventions, the PSM WG will continue its work to identify and remove delays at all levels of the supply chain. The first step identified ways to shorten the delay between Global Fund proposal submission and fund disbursement, thereby shortening the process from two years to 10 months for many countries. The next step will be to monitor delays in other parts of the procurement and supply process to identify solutions to speed up delivery of interventions to the end user. The PSM WG will lead this process and offer technical assistance to countries to speed up overall time to delivery.
F) Prepare and update procurement guidelines and provide overview of tools. To provide guidance to countries for the procurement of products, the PSM WG will support the ongoing process to update existing procurement guidelines for interventions, with an initial focus on ACTs and RDTs, and to assess whether any new guidelines should be added. Furthermore, the PSM WG will collate tools for PSM gap analysis and capacity strengthening.
G) Improve quality of PSM plans. There are two parts to improving the PSM planning process for countries:
- Harmonize PSM requirements and plans among donors. Currently the Global Fund, the President’s Malaria Initiative (PMI), and other donors have different requirements for PSM. PSM WG will hold round-table discussions with donors and countries to agree on a common framework of requirements supported by donors for country PSM plans.
- Support countries with PSM Plans. It is important to provide guidance to countries with PSM plans to help both with the acceleration of funds to countries by shortening the time until grant signature and also by ensuring countries have the PSM structures in place to adsorb and distribute the malaria interventions. The PSM WG will continue to provide support in the form of Workshops and technical assistance by consultants within countries to develop their PSM plans.
H) Provide technical assistance to countries to resolve local PSM bottlenecks. It is crucial that the RBM Partnership provides technical assistance to countries to assist them in resolving PSM bottlenecks. Technical assistance may be provided by consultants working directly with key stakeholders in countries. PSM WG will keep an up-to-date list of PSM consultants who could support countries. Technical assistance will be required to establish and strengthen integrated PSM systems within countries. These improved PSM systems will help with forecasting and tracking activities to increase monitoring and evaluation. PSM coordination committees may be considered as a country mechanism to coordinate and establish integrated PSM systems. Helping countries use available PSM mechanisms (public sector, private sector or NGOs) and strengthening mechanisms to improve coverage with interventions will be important to ensure universal coverage can be achieved by 2010 in line with the RBM Partnership targets.
A further approach to resolving bottlenecks within countries and helping with the coordination of the key stakeholders and partners is to establish a number of more permanent experts who operate predominantly at the country level and work with all stakeholders, international and national, to resolve key bottlenecks. The benefits would be the expertise regarding the international requirements as well as country/field experience and an ability to have a longer time commitment to support individual countries.Dr. Chavasse, PSI Malaria Control, personal communication, 2008. While individual partners already provide such support within countries, the support is used mostly to resolve bottlenecks for the partner programs in the respective country.
I) Support capacity building and strengthening for PSM within countries. Besides the technical assistance to resolve critical roadblocks to achieve universal coverage, it will be important to strengthen PSM systems so that there is no need for ongoing technical assistance and there can be a shift to more routine distribution systems rather than campaigns.
J) Strengthen forecasting at the international level and quantification at the national level. A critical component for PSM at both the international and national levels is accurate country-level forecasting of malaria intervention needs. One example is that malaria intervention needs in sub-Saharan Africa from 2008 to 2010 are being provided by the comprehensive needs assessments that are being carried out. Establishing a regular forecasting process will involve identifying the best approach regarding forecasting for ACTs, RDTs, LLINs and insecticides used in IRS for both the public and private sectors; reviewing forecasts with donors and suppliers; and establishing a system to regularly update forecasts. This would include the forecasting of raw materials required for interventions, such as Artemisia annua for ACTs. Regular reports with forecast numbers can then be prepared to share with donors, suppliers and countries.
Priorities for sustained control and elimination. Focusing more on capacity building and supporting sustained control within countries, the RBM Partnership priorities are given below.
K) Prevent market failure without distorting the markets. The RBM Partnership will work closely with partners to ensure well-functioning and stable malaria interventions markets. It will investigate and support the development of strict quality-oriented sourcing and procurement guidelines for artemisinin as an active ingredient, as well as for other malaria intervention supplies. The RBM Partnership will also work closely with malaria intervention manufacturers in malaria-endemic countries and producers to help them meet international standards, such as Good Manufacturing Practice standards and pre-qualification by WHO.
L) Support planning for PSM of malaria vaccine. There will need to be consideration of how a malaria vaccine will be distributed and supplied within countries, for example, how it will be integrated within the Expanded Program for Immunization (EPI). Furthermore, a malaria vaccine would need adequate PSM structures such as cold chains distribution systems and increased refrigeration capacity.
M) Advocacy for PSM. Together with the advocacy community there will be continued and reinforced advocacy for:
- Improved product presentation (packing / dosages); for example, there have been some difficulties with bulky ACT packages in storage
- Behavior change communication and in-country communication to ensure product acceptance and proper use by patients at the end level
- The removal of taxes and tariffs on malaria interventions, as well as essential supplies for the manufacturing of malaria interventions.
Currently, different partners support countries with product procurement (e.g. the RBM Partnership Secretariat Intervention Services, WHO Procurement, UNICEF's supply division, UNOPS) and in-country supply chain issues (e.g. IDA Solutions, Management Sciences for Health - Strengthening Pharmaceutical Systems, John Snow Inc, UNICEF supply division). Furthermore, a number of large manufacturers of malaria interventions are actively engaged within the RBM Partnership (e.g. Novartis, GlaxoSmithKline and Vestergaard Frandsen).
Within the RBM Partnership, the PSM WG has a facilitating role and coordinates responses to key issues around PSM, as well as providing support to countries with the development of PSM plans for Global Fund applications. Currently, the PSM WG focuses on a number of thematic issues/needs including, among others, technical assistance to countries to identify and resolve PSM bottlenecks, forecasting and quantification of malaria interventions and quality assurance and control issues related to product selection and supply management.More information available on the Roll Back Malaria Procurement and Supply Chain Management Working Group webpage.
Click for source Furthermore, the PSM is closely involved with the AMFm activities particularly regarding buyer eligibility and country preparedness.
Table IV.8: Summary of PSM Activities
|Reference to priority||Major actions||Completed by||Coordinator (bold) / Sub-coordinatorsa|
|J||Identify approach and prepare forecast of global demand of LLINs, insecticides for IRS, ACTs, RDTs||Q4 2008||PSM WG Forecasting Task Force|
|F, H||Prepare LLIN procurement guideline and identify key bottlenecks to support LLIN scale-up activities||Q1 2009||PSM WG, LLIN taskforce, HWG|
|H||Identify and resolve PSM bottlenecks within SUFI countries with technical assistance||2010||PSM WG, SRNs, Regional RBM partnersb|
|E, G, H||Offer technical assistance and training to build PSM capacity within control countries||2010||PSM WG, SRNs, Regional RBM partnersb|
|D||Prepare, update and disseminate international procurement best practices for malaria interventions with an initial focus on ACTs and LLINs||2010||PSM WG|
|H||Map global supply side of malaria commodities||2010||PSM WG|
|K||Provide technical assistance to manufacturers of malaria commodities (initial focus on ACTs and LLINs) in malaria-endemic countries to help them meet international standards||2015||PSM WG|
|L||Establish group to coordinate planning and implementation for PSM process and structures for the roll-out of new tools and technologies (e.g. potential vaccine)||2015||PSM WG|
|K||Provide guidance and technical assistance to countries in elimination to resolve PSM bottlenecks, such as ensuring stocks of malaria commodities are available for malaria outbreaks despite low number of malaria cases||Beyond 2015||PSM WG, Regional RBM partnersb|
a Main coordinating group / body in the RBM partnership indicated in bold. Closely linked contributors within the RBM partnership are also listed. RBM partners are not listed explicitly as their involvement occurs through the Working Group.
bRegional RBM partners are country/regional offices of the WHO, UNICEF, World Bank, NGOs and other organizations