Putting Cost into the Equation:

Economic Evaluation of Public Health

Supply Chains in Three African Countries

Suzy Sacher Technical Advisor

John Snow, Inc.

November 4, 2015

American Public Health Association

Annual Meeting

Photo: Eric Montfort

1a

Presenter Disclosures

The following personal financial relationships

with commercial interests relevant to this

presentation existed during the past 12 months:

No relationships to disclose

2

Angola

Bangladesh

Bolivia

Burkina Faso

Burundi

Cambodia

D.R. Congo

Ethiopia

Ghana

Guatemala

Guinea

Honduras

India

Indonesia

Kenya

Laos

Liberia

Madagascar

Malawi

Mali

Mauritania

Mozambique

Myanmar

Nepal

Nicaragua

Niger

Nigeria

Pakistan

Paraguay

Peru

Philippines

Rwanda

South Sudan

Tanzania

Thailand

Uganda

Vietnam

Yemen

Zambia

Zimbabwe

The USAID | DELIVER PROJECT provides technical assistance

to strengthen public health supply chains in over 30 different countries:

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Nigeria

The studies focused on 3 countries

Tanzania Zimbabwe

4

Public health supply chains are big business

EVERY YEAR

Public health

supply chains in

developing

countries handle

$180 billion

worth of drugs

worldwide.

5

Purpose of Logistics Systems

RIGHT QUANTITIES of the

RIGHT GOODS to the

RIGHT PLACES at the

RIGHT TIME in the

RIGHT CONDITION at the

RIGHT COST.

6

Logistics Cycle

7

Public health supply chain 101: It’s not just the meds

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It costs serious money to operate these supply chains

Cost of public health supply chain = 20-50% of the value of commodities handled

Public health supply chains in developing countries cost > $36 billion/year.

This means..

Result: More money can be spent on medicines or critical health systems needs

$1.8 billion

annual savings

1% Improved

efficiency

5% Improved

efficiency

Improved efficiency

would equal

=

big savings

$

$ $360 million

annual savings

Should we remove a tier

of the supply chain?

Is it more cost effective to

implement an ELMIS or keep the

paper system?

Should we invest in a

direct delivery system?

Which elements of supply

chain strengthening

should we invest in?

How much should we invest in

supply chain strengthening versus

other health system areas?

Is the expense of a new

investment justified?

So many decisions … so little data

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Economic evaluations can be a critical tool to help with

these decisions.

…but the public health supply chain world

has underutilized these analytic methods 11

A Framework to Fill an Analytical Gap

Used to design and conduct studies in 3 countries

12

Study 1:

Nigeria

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Comparing four drug distribution systems

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Information capture

via inventory

counts

Information capture

via inventory

records

Dependent on

health facility

personnel

Dependent on

personnel

outside of

health facility

Information capture

and delivery occur

simultaneously

Information capture

and delivery occur

independently

System A System C

System B System D

Result: System C costs the least, per cubic meter

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System A System B System C System D

13,212

9,673

6,898

4,160

8,591

3,910

5,203

9,955

7,876

5,976

3,791

7,504

3,496 3,453

4,130

6,698 6,079

5,053

3,421

6,417

2,996 3,056

$2,500

$5,000

$10,000

R&RBauchi

R&RSokoto

R&DD MalCR

R&DDBenue

R&DD HIVCR

DDICEbonyi

DDICBauchi

IC&DD HIVBenue

Co

st p

er c

ub

ic m

eter

dis

trib

ute

d

Upper

Mean

Lower

95% confidence

interval

Bauchi Sokoto CR Benue CR Ebonyi Bauchi Benue

Study 2:

Tanzania

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Measuring the impact of management enhancements

Decision

on cost-

effectiveness

Enhancements

added:

Logistic

management unit

and

Electronic logistics

management

information

system

Economic

Evaluation: Cost Consequence

System

Design A

2013 2014 2015

System Design A

+ Enhancements

Cost Consequence

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The system with management enhancements was

more costly, but also more effective

Supply Chain Performance

Cost per value

of commodities

Enhanced

Original

Total Annual Cost

$59m

Value of Handled Commodities

Enhanced

Original

Enhanced

Original

$63m Enhanced

Original

$251m

$208m

78%

68%

Cost per value of commodities

adjusted for performance

42%

32% Enhanced

Original

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Study 3:

Zimbabwe

4

INDIVIDUAL

SYSTEMS

TRANSPORT LMIS MANAGEMENT

Impact of Merging Four Systems into One

ONE INTEGRATED SYSTEM

PERFORMANCE

Cost

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The integrated system was just as effective and less

costly, compared to the 4 individual systems:

Cost as % of Product Value Cost per Cubic Meter

17%

12%

Individual

Integrated

$960

$770

Stock Availability

87%

Total Annual Cost

Integrated

Individual

Integrated

Individual

89% $1.7m

$1.5m Integrated

Individual

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How have policy makers used these results?

Stakeholders are interested in

implementing Model C in other states Nigeria

Approach and results are being used as

a model for the international community Tanzania

Decisionmakers are using data as a key

element in national scale-up strategies Zimbabwe

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What did we learn?

• Use economic evaluation for supply chain

decisionmaking.

• Be ready to educate stakeholders about economic

evaluation.

• International development partners, in particular, are

increasingly concerned with “return on investment.”

• Economic evaluation can help.

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(Nigeria)

Study Partners

Study Co-authors

James E. Rosen

Joseph McCord Julia Bem

Cary Spisak

Noela Kisoka

Marasi Mwencha

Noel Watson

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Thank you!

Siyabonga

Tatenda

Mwashuma

Asante

Na'gode

Ese

Daalu