Procurement Support Services WHOUNICEF Technical Briefing Seminar on

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 Supplychain Management (PCSCM) weaknesses Use of the Global Fund Grants Over 37 percent of funds are used for health products

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 • • • Delays on supply; Tenders delayed or canceled Fraud, misappropriation of funds Stock outs / treatment disruption; Quality of products • • Stock-outs Overstocks and expiry of products Degradation, losses Thefts and diversion Procurement • Planning • Quality Assurance • Governance/ Competitive and transparent procurement Supply Chain Management • Supply management • Distribution • Processes and safety

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 Increased product access & health impact MARKET OUTCOMES Lowest sustainable prices Consistent high quality Improved patient outcomes (e. g. (eg, reduced side-effects) Sustained adequate supply Optimal product design Improved value for money Rapid access to new products 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 LLINs # Savings of > US$38 million (16%)* lowest price achieved = US$ 2. 80 (Liberia) Cameroon, 2011 8. 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 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 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 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 Request VPP team Procurement Request Out-sourced (value for money aspects, budget, CPs etc. ) Procurement agent VPP: oversight Price Quotation Direct disbursement PSA confirms order to supplier Delivery Final invoice & reconciliation PQR data entry PR approval PR confirms receipt of goods

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 insecticidetreated 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