SCMS Practices: Quantification and forecast of ARVs and procurement strategies to increase efficiencies WHO AMDS Annual Stakeholders & Partners Meeting David Jamieson, Deputy Director, Global Partnerships, SCMS September 29-30, 2014, Geneva, Switzerland Scope of this presentation • PEPFAR-funded Supply Chain Management System, managed by USAID , implemented by Partnership for Supply Chain Management • Adult ARVs 1st and 2nd line • Procurement strategy for supply of bulk ARVs to around 12 high burden countries • Based on experience from 2006 to date 2 PEPFAR Implementing Partner Project Objectives • Establish and operate a safe, secure, reliable, and sustainable supply chain and develop self sustaining supply chain skills and capability within the countries. 1. Ensure patients have access to commodities 2. Reduce product and supply chain costs 3. Ensure product quality 4. Elevate importance of supply chain to delivery of health care 3 PEPFAR Implementing Partner Operating parameters • All procurement must comply with US Government Federal Acquisition Regulation and associated USAID guidelines • Quality assurance - all ARVs supplied must be approved or tentatively approved by USFDA • Quality assurance – products must be of fresh manufacture • All ARVs supplied must be registered for use in the importing country, or be subject to a government issued waiver 4 PEPFAR Implementing Partner High-level strategic objective To achieve: US Government care and treatment goals through a supply chain approach integrated with pooled procurement based on: • robust forecasts of need and secure funding • long-term supplier relationships (partners) • a deep understanding of market dynamics (demand and supply-side) • leveraging PEPFAR spend to shape a healthy market 5 PEPFAR Implementing Partner RDC advantages: Efficiency and cost savings Sea freight inbound Smaller, regular shipments to protect local systems Timely, accurate and safe transport including cold/cool chain commodities Delivery of drugs and commodities door-to-door Physical security en route as well as at facilities Chain of custody from supplier to recipient Rapid response to emergency requests Product closer to market PEPFAR Implementing Partner Primary Logistics Strategy: Regional Distribution Centers in key markets Nairobi, Kenya * Robust Country Forecasting & Supply Planning is a multi-stakeholder process Forecast • 2 year national forecast • Current patients • Growth targets • Regimens • Switching rates = Annual demand SCMS Supply Plan • Stock on hand • Orders in process • Monthly consumption = New deliveries/ orders required 7 PEPFAR Implementing Partner Forecasting & Supply Planning Schedule 24 Month Quantification 12 Month supply plan – Mths 1-12 2nd supply plan – Mths 3 -15 3rd supply plan Mths 6 -18 8 PEPFAR Implementing Partner Current supply plan estimates for 2015 quantities (btls) in 12 countries Product PEPFAR/ SCMS EFV/3TC/TDF 600/300/300mg 30 Tabs 3TC/NVP/AZT 150/200/300mg 60 Tabs 3TC/NVP/AZT 30/50/60mg disp 60 Tabs EVF 600mg 30 Tabs 3TC/TDF 300/300mg 30 Tabs 3TC/AZT 150/300mg 60 Tabs NVP 200mg 60 Tabs LPV-R 200/50mg 120 Tabs ABC/3TC 60/30mg 60 Tabs LPV-R 200/50mg [Aluvia] 120 Tabs Other 58 formulations TOTAL 9,202,292 3,620,981 1,172,440 681,379 582,249 542,158 401,879 398,276 310,843 228,007 1,332,135 18,472,638 GLOBAL FUND/Other/ Unfunded Grand Total 32,982,482 42,184,774 4,267,865 7,888,846 1,597,709 2,770,149 1,419,838 2,101,217 1,221,085 1,803,334 886,682 1,428,840 518,637 920,516 386,460 784,736 24,122 334,965 118,725 346,732 5,410,196 6,742,331 48,833,800 67,306,439 9 PEPFAR Implementing Partner Product EFV/3TC/TDF 600/300/300mg 30 Tabs 3TC/NVP/AZT 150/200/300mg 60 Tabs 3TC/NVP/AZT 30/50/60mg disp 60 Tabs EVF 600mg 30 Tabs 3TC/TDF 300/300mg 30 Tabs 3TC/AZT 150/300mg 60 Tabs NVP 200mg 60 Tabs LPV-R 200/50mg 120 Tabs ABC/3TC 60/30mg 60 Tabs LPV-R 200/50mg [Aluvia] 120 Tabs Other 38 formulations PEPFAR/ SCMS 9,202,292 3,620,981 1,172,440 681,379 582,249 542,158 401,879 398,276 310,843 228,007 1,332,135 Current SCMS only supply plan estimates for 2015 quantities (btls) in 12 countries LPV-R ABC/3TC LPV-R 200/50mg [Aluvia] 200/50mg 60/30mg 1.2% 2.2% NVP 1.7% Other 38 formulations 7.2% 200mg 3TC/AZT 2.2% 150/300mg 2.9% 3TC/TDF 300/300mg 3.2% EVF 600mg 3.7% 3TC/NVP/AZT 30/50/60mg 6.3% PEPFAR Implementing Partner Acknowledgements: Robert Burn, Principal Quantification Adviser Claire Albert, Quantification Analyst EFV/3TC/TDF 600/300/300 mg 49.8% 3TC/NVP/AZT 150/200/300m g 19.6% 10 Aggregating the country plans we create a global plan to inform our procurement 24 month forecast (Quantimed) 12 month supply plan (Pipeline) Program delivery schedule Price Quotations for 6- 12 month orders Note orders: 1-2 months firm 3-4 months some flexibility Quantification Review Forecast Revised supply plan (12 months) New orders 6 mths ahead Document assumptions Quarterly update 4-6 months greater flexibility Quarterly update Review forecast Revised supply plan (12 months) New orders 6mths ahead Document assumptions Quarterly update PEPFAR Implementing Partner Review forecast Revised supply plan (12 months) New orders 6 mths ahead Document assumptions 11 The US Government’s financial structure in SCMS enables continuous commodity supply Financial Structure Business Model Operational Strategies Quality System USAID working capital fund enables pooled procurement • • • • Country operating plans developed annually $ deposited upfront Funds are not time bound Funds not directly linked to Implementing Partner and accounted for when product delivered • Delinking funds facilitates pooled procurement based on country supply plans • Enables prompt vendor payment • Blended inventory price, not unique country cost 12 PEPFAR Implementing Partner Business model aligns country requirements with donor values enhancing flexibility Financial Structure Business Model Operational Strategies Quality System Unique USG contract promotes flexibility in strategy, structure, people, and processes Long term master supply contracts enable large volume pooled procurement across countries to achieve lowest landed cost Focus on best value for global program balanced by country requirements Enables market dynamic procurement decisions Logistics model integrates global supply chain with country supply chains and pre-positions stock close to point of use 13 PEPFAR Implementing Partner Operational strategies implement private sector supply chain best practices Financial Structure Business Model Operational Strategies Quality System FDA-level standards in public health Strategically manage vendor relationships Share procurement history and supply plans with manufacturers Focus on detailed forecasting and supply planning quarterly Cost effective freight forwarding, tracking and security systems Harmonized labeling and product registration achieves operational efficiencies and lower costs 14 PEPFAR Implementing Partner Sourcing Strategy POOLING SOURCING Best Value RFP PEPFAR Implementing Partner In summary, to achieve competitive prices and efficient service within a health market • SCMS seeks new price and delivery quotes approximately quarterly for our restocking orders and direct deliveries • We award on a best value basis (price & service) splitting orders to suppliers within a competitive range – winner does not take all • Available production capacity is considered in making awards • Vendor performance is actively tracked and we hold monthly vendor performance calls and meet in person at least twice yearly 16 PEPFAR Implementing Partner To understand the market we also Closely follow developments at normative agencies and global donors Contribute to and learn from WHO/UNAIDS joint forecast of need and demand Meet regular with other major procurers Track supply side development, including API, excipients and other production inputs Monitor supply side and delivery risks Contribute to major conferences and as appropriate provide comment to policy makers 17 PEPFAR Implementing Partner To end, two old slides showing how essential generic supply is to a competitive cost per patient year $400 singles $423 FDCs AZT/3TC + EFV Lowest Originator: $ 434 $165 singles $151 FDCs 2 PEPFAR Implementing Partner 3 4 5 6 # of tFDA approved generic suppliers of EFV 600mg 18 Cost per patient year for Tenofovir (TDF), Lamivudine (3TC) and Efavirenz (EFV) TDF + 3TC + EFV Lowest Originator: $ 505 $473 singles $159 singles $155 FDCs # of tFDA approved generic suppliers of TDF 300mg PEPFAR Implementing Partner 1 2 3 4 19 Thank you! 2014: Winner World Bank’s Science of Delivery Award for the Procurement in Complex Situations Challenge 2012 Finalist David Jamieson, Deputy Director, Global Partnerships Partnership for Supply Chain Management Email: [email protected] Phone: +1 571 227 8669, Cell +1 202 316 4999 20 PEPFAR Implementing Partner
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