1. Mind the Gap: Evaluating Internal Controls in Pharmaceutical Supply Chains across Sub-Saharan Africa AIDS 2012: July 22-27 Julianna Kohler, Revathi Avasarala, Alex Kruzel, and Alan Fowler Deloitte Consulting LLP Disclaimer: This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

2. Copyright © 202 Deloitte Development LLC. All rights reserved. 1 SLICE methodology provides an overarching view of controls across the supply chain Control Environment

3. Copyright © 202 Deloitte Development LLC. All rights reserved. 2 The SLICE methodology is used at each level of the supply chain to gain a holistic view of strengths and deficiencies: 1.Formal interviews with specific personnel 2.Review of documentation 3.Supply Tracer and Reconciliation (“STAR”) ClinicDepotCentral ~917,000 Presentations Distributed 1/2010 – 5/2011 Depot 1 No Loss Health Post Loss Depot 2 No Loss Hospital 2 No Loss Clinic 1 No Loss Depot 3 Loss Clinic 2 Loss Questions to identify control gaps Site #1Site #2Site #3Site #4Site #5 PE7 - How are employees recognized for good performance? S21 - Are commodities insured during storage? S5 - When was the last inventory conducted? 1 1 S7 - How are reconciliation exceptions handled?-2 3 R9 - How quickly are inventory records updated upon receipt?-221 S13 - Is there sufficient room for all products to be stored orderly?2-2 22 D9 - Is Proof of Delivery (POD) documentation properly utilized and executed?-2 2 2 Formal interviews yield “question maps” that pinpoint gaps Tracer reconciliation identifies loss by facility and commodity SLICE — Supply & Logistics Internal Control Evaluation

4. Copyright © 202 Deloitte Development LLC. All rights reserved. 3 Results from the SLICE methodology highlighted specific gaps and risks in supply chain performance Heat map analysis highlights trends, such as increased risk at sub-district levels and weak monitoring & evaluation (M&E) capabilities Correlations between risk score and loss give stakeholders necessary information to prioritize interventions with the most impact Source: SLICE Project, Deloitte LLP

5. Copyright © 202 Deloitte Development LLC. All rights reserved. 4 Results from SLICE highlight specific gaps and risks in supply chain performance Trends Figures  Inconsistent central warehouse oversight and performance  Insufficient space and inadequate conditions for commodity storage  Inadequate temperature control during transportation  Absence of human capital strategies to determine staffing needs, professional education, and consistent training  $1,000,000 USD of inventory was unaccounted for across reviewed commodities in one country  $270,000 USD of HIV treatments were a loss in one country  7 (of 62) assessed facilities accounted for 85% of the unaccounted for inventory in one country  87% of assessed facilities had unaccounted for inventory in one country’s system-wide reconciliation

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