SUPPLY CHAINS - Africa Pharmaceutical Summit

Report
AFRICA PHARMACEUTICAL SUMMIT
2013
Effective pharmaceutical procurement and supply chain management
Henk den Besten, Senior Supply Chain Advisor,
Partnership for Supply Chain Management (PFSCM)
Eric Mallard, Senior Health Specialist, The World Bank
Christopher Game, Chief Procurement Officer, The Global Fund to Fight AIDS, Tuberculosis
and Malaria
Dr. Mark Abani, Country Director, Nigeria,
Crown Agents
Emmanuel Higenyi, Head, Capacity Development, Joint Medical Stores, Uganda
Moderator: Dr. Guy Bertand Njambong, Technical Sales Manager, Africa,
Unipex Solutions
The Partnership for Supply Chain
Management
Inspiring supply chain innovation for public health
August 2013
PFSCM was established in 2005 to bid on the
SCMS contract, but our work is expanding
PFSCM
USAID
Global Fund
SCMS
2005
PPM
2009
UNITAID
CPP
2012-2013
3
PFSCM’s public-private partnership brings the
multi-sectoral expertise of non-profit and
commercial organizations
4
PEPFAR awarded the Supply Chain Management
System (SCMS) project to PFSCM in 2005
President’s
mandate:
Establish and operate a safe, secure, reliable, and
sustainable Supply Chain Management System (SCMS)
and develop self-sustaining supply chain skills and
capability within the countries
Health impact: 8 million on treatment by 2015 have the drugs they
need (not all supplied by SCMS)
Value
proposition:
1.
2.
3.
4.
Ensure patient access to commodities
Reduce product and supply chain costs
Ensure product quality
Elevate value of supply chain to health
5
Why was SCMS needed?
Supply Chain Barriers
• Poor coordination among
governments, funders, aid
providers
• Little long-range planning
and forecasting
• Limited procurement
capacity
• Lengthy procurement cycles
• Lack of timely order
placement
• Inadequate warehousing and
distribution
Impact on Treatment Programs
• Stockouts, overstocks, high
product expiry, inappropriate
treatments
• High costs, long lead times,
poor quality
• Unreliable delivery,
rationing, treatment
interruptions
• Confusion, redundancies,
gaps
6
Innovative design and a willingness to
do things differently enabled our work
• The USG’s forward-thinking design established a structure for
SCMS that is:
• Scalable
• Flexible
• Robust
• Cost effective
• Key USG innovations:
• USAID working capital fund
• USFDA approval of generic drugs
• Country-led programs
7
Going to scale
• 15,600+ commodity
shipments worth $1.51
billion to 57 countries
• Only $177K loss (0.1%)
• 1,644 products (128 ARVs)
in e-catalog with >4,700
separate products
procured over life of
project
Using regional distribution centers (RDCs)
• Smaller, regular shipments to protect
local systems
• Rapid response to emergency and routine requests
8
*Data are for life of project as through October 2012, except as noted
Saving money saves lives
68%
Reduction
• Saved $1.38B over
Accelerated Access Initiative
prices
• USFDA approved generics
~90 percent of purchases
• Saved $119 M in freight costs
using sea and road, and
RDCs instead of air
• In South Africa, helped
reduce ARV prices by 50
percent, saving USG $93M
and the GoSA $630M
• Pooled procurement helped decrease prices
68% reduction in average generic ARV prices
30% reduction in male circumcision kit prices
• SCMS prices at or below all others
9
Connecting the global and national levels
• Building
capacity in
22 countries
• Virtually no
stockouts of
ARVs or HIV
rapid test
kits at
central level
in PEPFAR
countries
• US small
business
participation:
$51.6M*
Strengthening local economies
• Contracts with 650 local firms and vendors
* As of March 31, 2013
10
SCMS uses public- and private-sector best
practices to institutionalize sustainable, costeffective national supply chains
• Drives down prices for large and small
programs through global pooled
procurement
• Strengthens national supply chains, does
not create parallel systems
• Improves infrastructure, including warehousing and
distribution
• Builds systems (e.g., LMIS, forecasting/quantification,
automated or manual WMS, ERP)
• Optimizes laboratory systems
(harmonization, maintenance and rational
procurement)
• Enhances quality assurance capacity (e.g.,
new technologies, waste management)
11
Building sustainable capacity in national supply
chains
12
Urgent response
• Responsive, flexible systems make us the emergency provider of
choice for other donors
• Delivered $8 M in unplanned orders from October 2012 to March
2013.
• Helped prevent stockouts in 20 countries in the last year.
Haiti
Côte d’Ivoire
SCMS office/Côte d’Ivoire
Challenges on our way to 2015
• Supporting countries to get to 15 million on
treatment
• Supporting USG goal to get to 4.7 million
VMMC
• Working with suppliers to make sure there
is enough API and medicines supply
• Increasing capacity of African suppliers to
provide quality-assured commodities
• Reducing costs of in-country supply
chains to maximize treatment numbers
• Coordinating with global partners to
optimize the use of available resources
14
Can local production help
PFSCM/SCMS uses local production sources to increase access
to quality Essential Medicines
- Use SRA or WHO PQ’d sources for EM
- Apply country specific solutions, PV model in Tanzania, FO
managed procurement in Ethiopia
- Base the sourcing on a defined (short) list of products
- Collaborate with local partners, both government and private
PFSCM/SCMS has experience in buying from local producers
- Pre qualification of vendors, including GMP and GDP audits
- Experience with pharmaceutical products for use in
Tanzania, Ethiopia, S Sudan, Cote Ivoire, Rwanda etc
- Food products for use in various PEPFAR countries
15
Drug Procurement and Distribution Challenges
Key procurement aspects are
- procurement planning
- funding availability
- meeting regulatory requirements, including NRA registration
- decrease the supply intervals (RDC’s or LDC’s)
Distribution challenges
- public distribution models, using regional/district stores
- distribution up to the last mile
Opportunities
- increased buying power creates demand up country
- use of “ADDO” accredited shop concept as EM outlets
16
Thank you!
Questions?
2012
Finalist
17
Effective procurement
and supply chains
Eric Mallard
Africa Pharmaceutical Summit - September 24th 2013
Find the right balance:
public/private, monopoly /multiplicity
• Public/private:
– Government involvement is desired to ensure public health mission
– Centralized supply chains come with a number of disadvantages
(limited incentives for efficiency, high capital and operating costs…)
• Quality assurance may be easier to manage in monopolistic
situations;
• However, multiplicity in supply systems is desired as a riskmitigation strategy in case of non-availability of essential
products
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
19
No magic bullet, need to adapt to the local
situation and to the product features
• Local situation can determine the most effective supply
chain
– Fragile state (e.g. Zimbabwe)
– Maturity of the private sector (e.g. Ghana)
– Country size and geographical features
• Product characteristics and customer needs can shape
the supply chain:
– Direct delivery system for short shelf-life or high value products
– Limit redundancy of high CAPEX channels (cold chain)
• Supply chain segmentation will play an important role in the
future
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
20
Managing quality upstream and
downstream is key to maintain safety
• Procuring from qualified manufacturers and wholesalers
– Leverage the WHO pre-qualification process
– Regulatory harmonization initiatives are key to accelerate convergence
towards Stringent Regulatory Authorities
– Opportunity for joint identification, selection and pooled procurement
• Sampling and testing are required to ensure quality
maintenance
– Risk-based approach to ensure cost-efficiency
– Investment into a local or regional specialized QC laboratory
– Mobile minilab opportunity
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
21
Can local production help strengthen
weak public distribution networks?
• Local manufacturing provides an additional incentive to
governments to strengthen supply chain:
– ensuring sustainable local market opportunity for this local industry
– Aligning supply and demand around a common interest
• Downstream quality management is facilitated with local
production (reduced consignment or recall time)
• Local manufacturing can be attractive for products with
specific characteristics (short shelf-life)
• It can end up with a win/win situation for the local industry,
regulatory bodies and patients (e.g. SCMS in Tanzania)
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
22
Effective procurement
and supply chains
Eric Mallard
Africa Pharmaceutical Summit - September 24th 2013
Find the right balance:
public/private, monopoly /multiplicity…
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
24
Find the right balance:
public/private, monopoly /multiplicity…
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
25
No magic bullet, need to adapt to the local
situation and to the product features
• Local situation can determine the most effective supply chain
– Fragile state (e.g. Zimbabwe)
– Maturity of the private sector (e.g. Ghana)
– Country size and geographical features (e.g. Chad)
• Product characteristics and customer needs can shape the
supply chain:
– Direct delivery system for short shelf-life or high value products (e.g.
ARV in Angola)
– Limit redundancy of high CAPEX channels (cold chain)
• Supply chain segmentation will play an important role in the
future
• Growing importance of defining successful outcomes and
assessing cost-effectiveness
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
26
Exploring options for more effective
procurement
• Procurement breakdown according to the type of product
– Central for vertical programs (ARVs, malaria, family planning…)
– Framework contracting for high volume essential medicines procured at
the periphery to ensure economies of scale, affordable and high quality
medicines (e.g. World Bank and WHO recommendations to Ghana)
• Performance-based financing as a tool to strengthen
accountability
– World Bank’s Nigeria State Health Investment Project proposes to
improve health systems governance at all levels
– local government authorities (LGA) enter into a performance contract
with the State Governor, which includes quality assessment of the drugs
– States enter into a performance contract with the Federal Government,
which includes timely funding release to LGA and LGA performance
assessment transparency
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
27
Focusing on the “enablers” to improve
public central medical stores efficiency
Competition
Efficiency
CMS
Autonomy
Flexibility
Incentives
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
28
Improving logistics capacity at the district
level and optimizing the distribution
World Bank-funded pilot supply chain project in Zambia
Number of days of stock outs in Q4 2009
40
30
20
10
0
comparison districts
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
B districts
29
Managing quality upstream and
downstream is key to maintain safety
• Procuring from qualified manufacturers and wholesalers
– Leverage the WHO pre-qualification process
– Regulatory harmonization initiatives are key to accelerate convergence
towards Stringent Regulatory Authorities
– Opportunity for joint identification, selection and pooled procurement
• Sampling and testing are required to ensure quality
maintenance
– Risk-based approach to ensure cost-efficiency
– Investment into a local or regional specialized QC laboratory
– Mobile minilab opportunity
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
30
Can local production help strengthen
weak public distribution networks?
• Local manufacturing provides an additional incentive to
governments to strengthen supply chain:
– ensuring sustainable local market opportunity for this local industry
– Aligning supply and demand around a common interest
• Major manufacturers develop an integrated distribution
business (e.g. Ghana: regional distribution points, mobile vans)
• Downstream quality management is facilitated with local
production (reduced consignment or recall time)
• Local manufacturing is an asset for products with specific
characteristics (short shelf-life)
• It can end up with a win/win situation for the local industry,
regulatory bodies and patients (e.g. SCMS in Tanzania)
Africa Pharmaceutical Summit | Eric Mallard | Sept 2013
31
Effective
procurement
and supply
chains.…….
getting the first Mile right,
drives the........Last Mile
24 September 2013
Christopher Game
Chief Procurement Officer
32
What is The Global Fund ?
600 Employees
• 4.2 Million
• 4.2 Million People currently receiving ARV therapy
• 9.7 Million
• 9.7 Million New smear-positive TB cases detected and treated
• 310 Million
• 310 Million Insecticide-treated nets distributed
$3Bn
Since its inception in 2002, the Global Fund to Fight AIDS, Tuberculosis and Malaria has
become the main multilateral funder in global health . It channels 82 percent of the international
financing for TB, 50 percent for malaria, and 21 percent of the international financing against
AIDS. It also funds health systems strengthening, as inadequate health systems are one of the
main obstacles to scaling up interventions to secure better health outcomes for HIV, TB and
malaria.
What started as a Procurement Transformation……..
Is directly aligned to the Global Fund’ s strategy and creates a flow into
country centric operations………..
The Global Fund will endeavour to become the benchmark
organisation in the sector for Sourcing and Procurement
Using simple, clear leading
edge processes and tools
designed by and for
the organisation
Minimising waste and
eliminating non value adding
activities
With measurable
performance
in value and lives saved
Ensuring effective governance
and watertight compliance
Building collaborative relationships with partner agencies
suppliers and donors
34
Industry must love us as a sector ?
•
•
•
•
•
•
•
We are silo’d
We are fragmented
We are impeded by process / bureaucracy
We have poor funds flow
Inadequate planning & forecasting
Much of what we do is outsourced
How
Regulatory barriers
Or perhaps they don’t ?
can we
become a
customer of
choice ?
• All of these carry a $$$$ premium
• Risk increases with fragmentation, and we pay for that risk
• Long lead times reduce system stress at manufacturers
35
What started as a Procurement Transformation……..
Turned into a process for industrializing thought leadership
•
•
•
•
•
•
•
•
•
•
•
I soon realised that we are not a customer of choice
Many inputs, few outputs
Data often out of date and not easily refreshable
Slow and operating in silos'
That too many are thinking and too few are doing
Substantial amount of people feeding at the table
Numerous barriers to improvement (agent structures and cash flow)
Drugs often mid-late lifecycle
Partial aversion or fear of the private sector……
Our behaviors may erode the incentive to innovate
Complex regulatory landscape
• That upstream leverage irons out some downstream supply issues
36
Working Upstream to improve the Downstream
I am going to illustrate how upstream transformation can drive downstream performance
What we soon realised :-
How we responded :-
•
•
•
•
•
•
•
•
•
•
•
•
Lack of Accountability
High Agency Costs
Multiple Agencies Incentive model
Agency ‘local versus Global’ expertise
Poor visibility of lost innovation
Lack of ownership / supplier relationships
Poor funds flow driving wrong behavior
Fragmentation = difficult to plan
Little competition in pricing
Role of many funders largely executional
No volume leverage/Many spot purchases
•
•
•
•
•
•
•
•
•
•
•
Subscription, (spend under control) driven by
transparency and ease of application
Leverage with other large funders / donors to
become a customer of choice
Agency accountability (track & trace)
Vendors incentivized to innovate
Creation of product market & supply chain
experts
Ownership of relationships, up and downstream
Greatly improved funds flow ? Cash flow
Simple user designed processes
Comprehensive market intelligence
Frequent price competition
Scalable and can be leveraged
COGS versus Market based costing
37
So how does this relate to local manufacture ?
• It creates the foundation to attract partners
• We will have scale
• We will be able to de-couple at various process stages
• Funds flow will be greatly improved
• Risk will decrease
• Relationship will give better access to pipelines
Where are our supply chains broken ?
•
•
•
•
•
•
We lack accountability – outsourcing can lead to poor partner choice
Funds flow breaks the process
Track and Trace is sporadic
We manage our service providers without rigid deliverables
The private sector should be a source of learning and leverage
Just as we are partnering upstream we should be partnering
downstream to reduce redundancy
38
1. Fixing the Plumbing first ? Creating the Ecosystem
Upstream partnering facilitating downstream partnering creating the Ecosystem
Phase 1 : Creating Partnerships
Manufacturers / Logistics
Substantial Duplication of Effort
Funders
Countries
39
Fixing the Plumbing first ? Creating the Ecosystem
Upstream partnering facilitating downstream partnering creating the Ecosystem
Phase 2 : Creating Capacity and Capability
•
•
•
Leveraged Funders
Leveraged Regulatory
Leveraged Quantification
Common Accountability for OTIF
•
•
•
Optimized Supply Chains
Leveraged Regionally
Centre's of excellence
Manufacturers / Logistics
A Single Ecosystem
Underscored by common
systems and transparency
Funders
Countries
40
To Reflect – How does fixing the first mile influence the
last mile ?
How upstream transformation can drive downstream performance
Phase 1 (Upstream) :-
Phase 2 (Downstream) :-
•
•
•
•
•
•
•
•
•
•
•
Make the Public Sector a customer of
choice for the private sector
Leverage funders / buyers
Harmonize specifications
Improve forecasting
View longer term replenishment cycles
Improve planning
Standardize track & trace
Open leverage to smaller buyers +cost
of doing business
Pay on time
Create transparency
•
•
•
•
Use savings generated to build
country level capacity
Take an academic approach to
buffering supply chains
Harmonize regulatory landscape
Create regional centers of excellence
building on upstream partner leverage
Make logistics partners accountable
and KPI to that accountability
41
How does one de-couple
One works backwards of course……….
Logical Manufacturing Flow in simple terms
Starting
Materials
Intermediates
Advanced
Intermediates
API
1
2
3
4
Formulation
Primary
Packaging
Secondary
Packaging
Distribution
6
7
8
5
1
Easier
•
2
3
Implementation
•
•
4
5
Complex
•
Best sourced
globally at
lowest cost
•
•
High barrier to entry
in terms of cost
Scale needed
•
•
The final step
of true local
industry
High
complexity
•
•
Logical next
step
Builds on
experience
Allows for
smaller batch
runs / greater
variation when
needed
Quicker
responses
•
•
•
•
•
Quick route to establishing
the basics of a pharma’
plant
Easier to qualify
Flexible for differing donor
or country requirements
Allows for regional flexibility
Opens up a whole new
industry around the
manufacture of folding
boxes and other materials
•
•
•
•
Map and
leverage
supply chains
irrespective of
source
Amalgamate
demand
Common
Regulatory
landscape
Harmonize
identification
and recognition
platforms
Rigid KPI
driven track &
trace
Local Manufacture in simple terms
42
How do you choose a partner ?
Important questions to ask
•
•
•
•
•
•
•
•
•
Generic ? – large portfolio – speed – simplicity – cost
Originator ? – slower – integrity – quality – infrastructure - $$$
A mix ?
Understanding the reasons behind a partner wanting to enter
developing markets
How late in lifecycle are the drugs on offer ? Are we extending the
market life and restricting new therapies ?
How transferred is “Tech-Transfer” ?
What is the ownership and profit model
What does the pipeline look like, does the partner have the right
portfolio
How sustainable is the partnership, will excitement turn into
complacency ?
43
Back Up
Q&A
Place
Day Month Year
44
The Commercial Relationship
To ensure we maintain a competitive price in a longer term
contractual framework we will need to change our commercial
model.
45
i-Fund for The Global Fund
Partners
Suppliers
Knowledge & Collaboration
Equipment ,
Goods and
Services
team
Health
Products
Team
Track
&
Trace
The Support
Group
GF PSM’s
Suppliers
Country Ownership & Supply
46
WWW.CROWNAGENTS.COM
EFFECTIVE PROCUREMENT AND SUPPLY CHAINSTRANSITION TO COUNTRY OWNED SYSTEMS
48
EFFECTIVE PROCUREMENT AND SUPPLY CHAINSTRANSITION TO COUNTRY OWNED SYSTEMS
49
EFFECTIVE PROCUREMENT AND SUPPLY CHAINSTRANSITION TO COUNTRY OWNED SYSTEMS
50
Discussion Themes
APS-23-24 September
Emmanuel Higenyi; B.Pharm, MPH, PgD-Management ,
Business and Law Studies
Supply Chain definition and
Information requirements
• This is a system for the flow of materials,
information, money, and people:
– between pharmaceutical scientists, regulatory
authorities, manufacturers, distributors and
health care providers.
• Supply chain information requirements include
morbidity & demographics, logistics, physical &
technical capacity, pharmacovigilance, and
pharmacoeconomics.
Supply Chain Activities
Disease
Surveillance
Drug
Discovery
Utilization
and Review
Drug
Development
Procurement
Storage &
Distribution
Commercial
Production
Prevalence of substandard and counterfeits (data from 2009 to 2013)
40%
35%
30%
25%
20%
15%
10%
5%
Tanzania
Cameroon
P R Congo (2006)
Egypt
Uganda
Ghana
Ivory coast
Kenya
Angola
Nigeria
0%
Challenges for the African
Pharmaceutical Industry
Supply Chain
Activity
Drug discovery
Challenges
Drug
development
Regulatory hindrances on clinical trials for herbal
medicines
No guidelines on herbal research
Limited local production infrastructure
Shortage of skill in pharmaceutical technology
Small markets
Commercial
production
Limited scientific infrastructure to facilitate drug
discovery
Limited linkages between universities and
pharmaceutical firms
Limited know-how in translational research
Challenges for the African
Pharmaceutical Industry
Supply Chain
Activity
Challenges
Procurement Constraints from public procurement and disposal of
Storage and assets regulations
distribution Substandard and Counterfeits drugs
Poor inventory management at national and facility
Lack of tools for forecasting and supply planning
Fragmentation of the procurement process
Inadequate technological infrastructure for
distribution route planning
Transport industry with limited experience in
distribution of pharmaceuticals
No guidelines on transportation of pharmaceuticals
Shortage of personnel with training in supply chain
Challenges for the African
Pharmaceutical Industry
Supply Chain
Activity
Challenges
Utilization
Review and
Evaluation
Non adherence to treatment guidelines
Inadequate collection, processing, analysis and
interpretation of supply chain information
Lack of monitoring and coordination mechanisms
Limited skill in pharmacoeconomic evaluation of
drugs
Disease
surveillance
Limited capacity to predict outbreaks
Limited data on incidence and prevalence
Limited data on drug resistance
Promoting drug discovery
Zimbabwe
Madagascar
S. Africa
E .& C Africa
Africa
Uganda
African Institute of Biomedical Science and
Technology
Madagascar drug discovery project
Drug Discover Centre
Natural Products Research for Eastern and Central
Africa (NAPRECA)
Pan-African natural product library (P-ANPL)
Chemotherapeutics research laboratory
Sources
•
•
•
•
•
•
•
•
http://www.scidev.net/global/health/news/africa-gets-holistic-drug-discoverycentre.html
https://www.google.co.ug/#q=African%20Institute%20of%20Biomedical%20Scienc
e%20and%20Technology
http://news.nationalgeographic.com/news/2004/08/0826_040826_rainforest_dru
g_2.html
http://www.who.int/medicines/services/counterfeit/impact/TheNewEstimatesCou
nterfeit.pdf
http://www.medwelljournals.com/fulltext/?doi=rjmsci.2011.257.261
http://www.havocscope.com/rate-of-counterfeit-drugs-in-nigeria-in-2013/
http://www.havocscope.com/tag/counterfeit-drugs/
http://www.whpa.org/background_medicines_counterfeiting_in_africa_chioma_j
o_onwuka11-2010.pdf
1.
Effectiveness and Efficiency of Supply Chains
for safe and quality medicines
2.
Local production to enhance supply chains
APS-23-24 September
Emmanuel Higenyi; B.Pharm, MPH, PgD-Management ,
Business and Law Studies
Supply Chain definition and
Information requirements
• This is a system for the flow of materials,
information, money, and people:
– between pharmaceutical scientists, regulatory
authorities, manufacturers, distributors and
health care providers.
• Supply chain information requirements include
morbidity & demographics, logistics, physical &
technical capacity, pharmacovigilance, and
pharmacoeconomics.
Supply Chain Activities
Disease
Surveillance
Drug
Discovery
Utilization
and Review
Drug
Development
Procurement
Storage &
Distribution
Commercial
Production
Models and formats
• Programme-based e.g. EMP, MCP, ACP, UNEPI
• Product-based e.g. FP, MH
• Sector-based e.g. PNFP, Public, PFP
Experiences and Lessons
•
•
•
•
•
•
•
•
•
•
Develop METRICS, measure, monitor, evaluate
Start COLLABORATIVE forecasting and replenishment
Ensure supply chain SECURITY
CLARIFY roles
Ensure INVETORY VISIBILITY across the chain
Actively perform POST MARKETING surveillance
Develop SPECIFICATIONS
Remove information ASYMMETRY between levels
HARMONIZE clinical and logistical aspects
Develop guidelines for TASK SHIFTING in pharmaceutical
care
Design or Redesign supply chain
•
•
•
•
•
•
Pull vs push vs hybrid
Replenishment intervals
Inventory levels
Quantifications rules and procedures
Monitor, review and evaluate systems
LMIS

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