Procurement Support Services WHO/UNICEF Technical Briefing Seminar on Essential Medicines Policies, October 29 th - November 2 nd 2012 Mariatou Tala Jallow

Presentation Outline Rationale for VPP - Objectives Current status - Achievements and Challenges Procurement Strategy – Making VPP More Efficient

Rationale for Voluntary Pooled Procurement Objectives

Procurement and Supply Management Highest Areas of Risk Extract from Final Report of the High-Level Independent Review Panel on Fiduciary Controls and Oversight Mechanisms of the Global Fund (September 2011), Annex E: Procurement, Construction and Supply- chain Management (PCSCM) weaknesses Over 37 percent of funds are used for health products Use of the Global Fund Grants

Challenges / Risks Linked with PSM Activities PSM ActivityRisks Quantification and estimation of needs Management of Information / quality of data Stock-outs Overstocks and expiry of products Procurement Planning Quality Assurance Governance/ Competitive and transparent procurement Delays on supply; Tenders delayed or canceled Fraud, misappropriation of funds Stock outs / treatment disruption; Quality of products Supply Chain Management Supply management Distribution Processes and safety Stock-outs Overstocks and expiry of products Degradation, losses Thefts and diversion

Measures to Mitigate PSM Risks / Address Challenges Investments on Pharmaceutical Systems Strengthening Strengthening of in-country processes / systems (Long Term Strategy) –Quantification / procurement planning –Storage / Distribution Chain –Management Information Systems –Quality Assurance system Out-sourcing / Use of procurement Agent/supply chain management assistance (Short Term Strategy) –Voluntary Pooled Procurement / Capacity Building Services

Market Dynamics / Shaping Strategies – Leveraging Purchasing Power to Improve Market Outcomes and Impact Increased product access & health impact Improved patient outcomes (eg, reduced side-effects) Improved value for money IMPACTMARKET OUTCOMES GLOBAL FUND COMMITMENTS Lowest sustainable prices Consistent high quality Sustained adequate supply Optimal product design Rapid access to new products Increased product access & health impact Improved patient outcomes (e.g. reduced side-effects) Improved value for money

Voluntary Pooled Procurement – Objectives Market Dynamics / Shaping interventions –Influencing market of core health products to impact price, quality, supply sustainability and design; –Implementing targeted market shaping interventions – for example to secure the fragile pediatric ARV Market (small market and high risk) Grant performance –Addressing and resolving PSM challenges impeding grant implementation Risk mitigation –Mitigating financial and PSM related risks

Current Status Achievements and Challenges

VPP – 115 # Million LLINs Savings of > US$38 million (16%) * lowest price achieved = US$ 2.80 (Liberia) Cameroon, million LLINs and savings of US$ 5.7 million through managing the procurement and support to the PR to receive and distribute 500 containers of LLINS # for period Jun Sep 2012 * Compared to budget based ; subset of largest transactions

VPP – 421 # Million Doses ARVs Savings of > US$11 million (17%)* Unit Prices  3% in the last year 14% below 2012 CHAI negotiated ceiling price Delivery timelines  15%, with 50% delivered in less than 5 months Uganda 2011/2 Procurement costs reduced by U$2.3 million (16%) through timely order placement and alignment of the procurement and financing timelines to obtain lowest available pricing and to be able to utilize sea/road freight # for period Jun Sep 2012 * Compared to budget based ; subset of largest transactions

In-Country PSM Capacity Pharmaceutical Systems Strengthening Holistic approach, with emphasis on investments on Pharmaceutical Systems Strengthening Procurement and Supply Chain Management Systems –Quantification / forecasting; –Procurement planning –Logistics management (storage, inventory control, transportation, distribution and management information systems) –Quality assurance activities –National / Central Medical Stores and its affiliates

Some Challenges Related to Shipment & Distribution Logistical challenges Contingencies Volumes 237,000 LLINs

Challenges Demand aggregation – irregular participation of PRs; Global Fund grant architecture (multiple grants); individual (multiple) PSM plans and non-coordinated procurement cycles; Emergency Orders - inadequate procurement planning; Use of VPP as “last resort”; Expectations from PRs – quicker results, especially unrealistic delivery times; resolution of long-standing PSM bottlenecks or Condition Precedent (CPs) on grants; abdication of responsibility Non-core products (Drugs for opportunistic infections; lab supplies) – low volume / low value; difficult to source; non-quality assurance standards; region specific, and non-focus for VPP 14

Procurement Strategy Making VPP More Efficient

VPP Procurement Process Principal Recipient Procurement agent VPP team (value for money aspects, budget, CPs etc.) PSA confirms order to supplier Price Quotation Delivery Final invoice & reconciliation PQR data entry PR approval PR confirms receipt of goods Procurement Request VPP: oversight Direct disbursement Out-sourced Procurement Request

Market Shaping / Procurement Strategies Strengthen Secretariat capacity and systems to conduct strategic market shaping Improve and reform the VPP mechanism to enable it to shape markets Accelerate implementation of Market shaping interventions for ARV drugs Apply market shaping strategy to long-lasting insecticide- treated nets Develop expansion of market shaping interventions to other major products

VPP Mechanism to be More Efficient EXPECTATIONS Cost efficient procurement + Improved grant performance + Procurement & financial risk mitigation REQUIREMENTS PRs and Procurement Agents meeting their responsibilities + Improved VPP financial and operational procedures + Support from partners and stakeholders

Accessing VPP and CBS