1. 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

2. 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

3. 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

4. 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

5. 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

6. BATTLING HIV/AIDS:
A decision maker's guide to the procurement of medicines and related supplies …..
CHAPTER 5: page
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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. Stock arrive
Place order

22. 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

23. 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

24. 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

25. 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

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

28. 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

29. 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

30. 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