ENSURING SECURE and RELIABLE SUPPLY and DISTRIBUTION SYSTEMS in DEVELOPING COUNTRIES, in the CONTEXT OF HIV/AIDS and PMTCT PROCUREMENT PLANNING: policies, systems, capacity, price monitoring Helene Möller , (M.Pharm, PhD) UNICEF Supply Division, Copenhagen July 2005

OVERVIEW OF PRESENTATION Good Pharmaceutical Procurement Principles Introduction Operational principles for good pharmaceutical procurement Key consideration in planning the procurement of HIV related supplies Prices, price monitoring Conclusion Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

OBJECTIVE OF PROCUREMENT The process of acquiring - the right quantity - of the right health products - of the right quality - for the right customer - at the right time - in the most efficient, safest, and least costly way possible. Cost effective Reliable suppliers of quality assured Timely delivery Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

INTRODUCTION: Pharmaceutical Procurement has it’s history ….. Public sector staff with little/no experience in responding to market situations; lack of trained procurement staff Absence of comprehensive procurement policies, rules, regulations and structures to PSM Insufficient government funding; donor agencies with conflicting procurement regulations Fragmented procurement at decentralised levels ( provincial, district, etc) Lack of unbiased market information, etc … Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division Jul 2005

THE PROCUREMENT CYCLE Managing Drug Supply; Second Edition Review Drug Selection Determine Quantities needed Collect Consumption Information Reconcile needs and funds Distribute Supplies Choose Procurement method Make Payments Locate and select suppliers Receive and Check Supplies Specify contract terms Monitor order status

BATTLING HIV/AIDS: A decision maker's guide to the procurement of medicines and related supplies ….. CHAPTER 5: page 63 - 78 Project teams are required to assess the capacity to administer procurement effectively Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division Jul 2005

STRATEGIC OBJECTIVES for Good Pharmaceutical Procurement Procure the most cost-effective drugs, in the right quantities all procurement agencies should have a list of essential supplies to make sure that only the most cost-effective products are procured procedures must be in place to support accurate forecasting of order quantities, to ensure continuous supply Select reliable suppliers of high quality products suppliers of quality products must be pre-selected active QA systems must be in place Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

STRATEGIC OBJECTIVES for Good Pharmaceutical Procurement Ensure timely delivery procurement and distribution systems must ensure timely delivery of appropriate products, in appropriate quantities, when and where they are needed Achieve the lowest possible cost controlling the actual purchase price of products manage hidden costs due to poor product quality, poor supplier performance or short shelf life inventory holding costs at various levels of the supply system, operating costs and capital loss by management and administration of the procurement and distribution system Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

OPERATIONAL PRINCIPLES for good pharmaceutical procurement EFFICIENT AND TRANSPARENT MANAGEMENT Procurement functions and responsibilities should be divided among different offices, committees and individuals, each with the appropriate expertise and resources for the specific function Procurement procedures should be transparent, following written procedures throughout the process, using explicit criteria to award contracts Procurement should be planned properly, performance should be monitored regularly, monitoring should include an annual external audit Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

OPERATIONAL PRINCIPLES for good pharmaceutical procurement DRUG SELECTION AND QUANTIFICATION Public sector procurement should be limited to an essential drugs list, or a national/local formulary Procurement and tender documents should list pharmaceuticals by their INN ( generic ) name Order quantities should be based on reliable estimates of needs Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

OPERATIONAL PRINCIPLES for good pharmaceutical procurement FINANCING AND COMPETITION Mechanisms should be put in place to ensure reliable financing for procurement. Good financial management procedures should be followed to maximise the use of financial resources Procurement should be effected in the largest possible quantities in order to achieve economies of scale; this applies to both centralised and decentralised systems Procurement of public sector goods should be based on competitive procurement methods, except for very small emergency orders Procurement of all contracted items should be from the supplier that holds the contract for the respective items Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

OPERATIONAL PRINCIPLES for good pharmaceutical procurement SUPPLIER SELECTION AND QUALITY ASSURANCE Prospective suppliers should be pre-qualified, and selected suppliers should be monitored through a process which considers product quality, service reliability, delivery time and financial viability Procurement procedures/systems should include all the assurances that the pharmaceuticals purchased are of high quality, according to international standards Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

ENSURING SECURE and RELIABLE SUPPLY and DISTRIBUTION SYSTEMS in DEVELOPING COUNTRIES, in the CONTEXT OF HIV/AIDS and PMTCT Procurement of essential supplies PLANNING YOUR PROCUREMENT

PROCUREMENT OPTIONS DIFFER (products) Health Products: Pharmaceuticals Laboratory Medical Devices Goods – Office Equipment, air conditioners, Vehicles, etc. Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

PROCUREMENT OPTIONS DIFFER (services) – sub-contracts, engagement of technical advisers, MIS developers, pharmacists, doctors, trainers, facilitators, security, assessment works, other individual/firm experts, etc. Works – Office renovations, shelves, installations, minor civil works, etc. Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

PROCUREMENT METHODS Request for Quotation (RFQ) most flexible and least formal Request for Proposal (RFP) used in the procurement of services and complex goods (e.g., functional specifications cannot be expressed) Single Source /Direct Contracting / Waiver of Competition there is no competitive market for the requirement, previous tender failed Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

PROCUREMENT METHODS Invitation to Bid (ITB) National Competitive Bidding (NCB) with prequalification International Competitive Bidding (ICB) with prequalification Limited International Bidding (LIB) International Shopping (IS) Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

PROCUREMENT METHODS Use of specialized low cost international procurement suppliers or UN Use of Pooled Procurement (PP) Are we using the most effective procurement method in the HIV/AIDS market place ? Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

ENSURING SECURE and RELIABLE SUPPLY and DISTRIBUTION SYSTEMS in DEVELOPING COUNTRIES, in the CONTEXT OF HIV/AIDS and PMTCT GROUP DISCUSSION 1: Review current systems for Procurement of essential supplies HIV, TB, Malaria related supplies How is procurement organised, what is working, what is not working ? 3 MOST IMPORTANT considerations to ensure effectiveness

PROCUREMENT PLANNING HOW WILL THIS ACTIVITY GO TO SCALE ? Identify requirements to initiate and complete your procurement Schedule all tasks Scheduling procurement Identify and Manage Cost Factors Identify critical path items Expedite: Product available for use HOW WILL THIS ACTIVITY GO TO SCALE ? Some of these resources – specifically the storage issues – might not be directly related to Procurement, but Procurement manager needs access to this information. Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

Stock arrive Place order

ENSURING SECURE and RELIABLE SUPPLY and DISTRIBUTION SYSTEMS in DEVELOPING COUNTRIES, in the CONTEXT OF HIV/AIDS and PMTCT Procurement of HIV related supplies PRICE MONITORING

ARV PRICES - effect of generic competition… D4t+3TC+NVP lowest world price/year Some of these resources – specifically the storage issues – might not be directly related to Procurement, but Procurement manager needs access to this information. MSF: Untangling the web of price reductions 7th ed, Feb 2005 Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

PRICE MONITORING treating less people with the same money… MSF: Untangling the web of price reductions 7th ed, Feb 2005 Some of these resources – specifically the storage issues – might not be directly related to Procurement, but Procurement manager needs access to this information. Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

ARV PRICES - is it worth shopping around ? Some of these resources – specifically the storage issues – might not be directly related to Procurement, but Procurement manager needs access to this information. MSF: Untangling the web of price reductions 7th ed, Feb 2005 Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

ACCESS TO ARV’s Procurement, logistics, infrastructure ….. CONCLUSION

CHALLENGES in ensuring reliable procurement for programmes  Need for coordination, particularly in scaling up  Integration into existing strategies Integration into existing (non-functioning) systems  Synchronising availability of supplies with programme launch/roll out Selection of and specifications for commodities Quantification of needs Access to basic essential drugs lacking Challenges with storage and distribution, etc  Monitoring and evaluation / Operational research Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

STREAMLINING your PROCUREMENT What is critical to have ??? PROCUREMENT STRATEGY need a drug supply strategy at facility level ordering interval, recognising lead times from industry need to have an idea of stocks in the system, information on expiry dates enrolment rates by your implementing programme need to be able to redistribute as needed Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005

products and suppliers have to perform equally PROCUREMENT and SUPPLY MANAGEMENT in the context of HIV/AIDS care We expect a lot from users, but products and suppliers have to perform equally Patient compliance & adherence Product quality & efficacy Procurement reliable & affordable Procurement planning, policies, systems, capacity and price monitoring UNICEF Supply Division July 2005