Procurement Support Services

WHO/UNICEF Technical Briefing Seminar on Essential Medicines Policies,

October 29th - November 2nd 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 ManagementHighest 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 Activity Risks

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

IMPACT MARKET OUTCOMES GLOBAL FUND COMMITMENTS

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 LLINsSavings of > US$38 million (16%)*

lowest price achieved = US$ 2.80 (Liberia)

Cameroon, 20118.5 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 2009- Sep 2012 * Compared to budget based ; subset of largest transactions 2009-2011

VPP – 421# Million Doses ARVsSavings of > US$11 million (17%)*

Unit Prices• 3% in the last year•14% below 2012 CHAI negotiated ceiling priceDelivery timelines• 15%, with 50% delivered in less than 5 months

Uganda 2011/2Procurement 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 2009- Sep 2012 * Compared to budget based ; subset of largest transactions 2009-2011

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

• 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

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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-sourcedProcurement 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