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8/17/2019 PRESENTATION: Health Commodity Supply Chain Management 0516
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HEALTH COMMODITYSUPPLY CHAIN MANAGEMENT
16 May 2016
ABOUT
5 THINGS Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or
policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not
guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use.
Terminologies used may not necessarily be consistent with ADB official terms.
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#1Effectivecommodity supply
chains are crucialfor health security
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More lives saved and improved quality of life
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Effective health supply chains improveefficiencies and service quality
Increasesprogramimpact
• Builds trust inthe health system
• Increasedhealth service use
Enhancesquality ofcare
Improvescostefficiencyandeffectiveness
•Improved servicedelivery
• Motivates staff
•Reduces overstock,waste, expiry,
damage, pilferage,and inefficiency
•Protects programinvestments;
• Accelerates cost recovery
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Health commodity managementcapacity needs to keep up with Asia’s
expanding pharmaceutical market
UHC: Expansion of access to
health careIndonesia: 155M covered
60%
Expanding pharmaceutical market
13% annual growth rate
$214B
(2010)
$386B
(2017)
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Increased profitability of privatehealthcare companies31% annual growth rate
Average revenues
USD5.4M(2005)
USD27.6M(2011)
Expanding prevalence of non-
communicable diseases (NCDs)
51M(China)
43MDiabetes
(India)
Vulnerability to pandemics andnatural disasters• SARS, avian flu, earthquakes, etc.
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Supply Chain Strengthening SupportsSustainable Development Goals
SDG 3.8: Achieve universal health coverage,
including financial risk protection, access toquality essential health-care services andaccess to safe, effective, quality and affordableessential medicines and vaccines for all
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#2Health supply chainsshould be
customer-centered
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ProductSelection
Quantification
Procurement
ServingCustomers
Warehousing,
Storage andDistribution
Logistics Cycle
Source: USAID | DELIVER
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• Logistics systems begin and endwith the customer / patient
6 Logistics “Rights”
Product
Quantity
Place
Time
Quality
Cost
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#3Information is the heart of a
health commoditysupply chain
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InformationManagement
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Inventory levels & distribution
Commodity budgets
Patient Information
Management & SupervisionInformation ManagementFinancial Management
Human Resources
Management & SystemResource AllocationDecision-Making
Batch and expiry information
Product lead times
Price and market information
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#4Health supplychains are
fragmented
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Manufacturer
Regional Distributer
Wholesaler or Pharmacy
End user
Privatesupply chain
Publicsupply chain
End user
Provincial or District
Central Level
MoH Donors
MOHProcurement
Agent
DonorProcurement
Agents
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End user
Provincial or District
Central Level
MoH
Essentialmedicine
TB ReproductiveHealth
HIV Vaccines
Fundingsource
Procurementagent
Donor YDonor X
NGOs MOHProcurement
Agent
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#5Coordination andplanning is requiredto achieve efficiencyand effectiveness
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I n f o r m a
t i o n
F i n a n c
e s
M e
d i c i n e s & H e a l t h C o m m o d i t i e
s
= Rational Drug Use
= Inventory managementand reporting
= Procurement andfunding cycles
= System performance
= National drug strategiesand regulatory frameworks
= Manufacturing leadtimes
= contract monitoring &payment
= Quality Control andMonitoring
= Decentralization or
other health reform
= Procurement policies
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Indonesia after Tsunami in 2004
• 60% of products not on essential medicines list
• 70% labeled in a foreign language
• 25% had an inadequate expiry date
661 tons of medicines had to be destroyed at thecost of EUR2.4M
4,000 pounds of pharmaceutical donations
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ADB opportunities
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ADB Investments in Supply ChainLargely commodity procurements – not dedicated system strengthening
ADB Project Procurement Related Funding
CDC2Total Budget: $54M
Procurement of laboratory equipmentCambodia: $2.5MLao PDR: $1.85MVietnam $10.88M
CDC2
Additional FinancingTotal Budget: $9.5M
Procurement of malaria program equipment and
consumables (rapid diagnostic tests, artemisinin-basedcombination therapies, long-lasting insecticide-treatedmosquito nets)
Lao PolicyHealth SectorPolicy LoanTotal Budget: $20M
USD 548,000 for equipment and vehicles
R-CDTATotal Budget: $4.5M
● Purchase the minor laboratory equipment, rapid tests(January 2016 – March 2017).● $75,000 for microscopes● $186,000 for other laboratory equipment
GMS Health Security
Total Budget: $114M
● Assessment of laboratory equipment
● $9,000 budget for the purchase of laboratory equipment
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ADB Supply Chain InvestmentOpportunities
Largely commodity procurements – not dedicated system strengthening
•CMS Infrastructure at the central or regional levels
•Expanded storage facilities (hospitals, etc.)
•Fleet refurbishment
InfrastructureDevelopment
•Integrated LMIS systems
•Automated national drug quality registries
InformationManagement
•WHO MQAs accreditation
•Warehouse accreditation (ISO Organization)
•Public procurement reformManagementStrengthening
Integrate into ADB health security programming
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References
1. “Asia Rising: Health Care.” A report from the EconomistIntelligence Unit, 2014
2. “Logistics Management Units: What, Why and How ofthe Central Coordination of Supply ChainManagement.” USAID | DELIVER, April 2010
3. “Managing Access to Medicines an HealthTechnologies.” Management Sciences for Health. 2012.
4. “Rapid Analytical Review and Assessment of HealthSystems Opportunities and Gaps in Indonesia,” Health
Finance and Governance Project, USAID 2015 DRAFT
5. “The Logistics Handbook: A Practical Guide for theSupply Chain Management of Health Commodities.”
USAID|DELIVER, 2011
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ANNEX 1. Logistics Cycle
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Logistics Cycle
Serving
Customers
ProductSelection
Quantification& Procurement
Warehousing,Storage andDistribution
PolicyEnvironment
Policy
Environment
Source: USAID | DELIVER
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Logistics Cycle – Serving Customers
① ServingCustomers
ProductSelection
Quantification& Procurement
Warehousing,Storage andDistribution
Management &
SupervisionInformation ManagementFinancial Management
Human Resources
PolicyEnvironment
Policy
Environment
• Logistics system begins and end with thecustomer
• 6 Logistics “Rights”: Product, Quantity, Place,Time, Quality and Cost
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Logistics Cycle – Commodity Selection
Serving
Customers
② CommoditySelection
Quantification& Procurement
Warehousing,Storage andDistribution
Management &Supervision
Information ManagementFinancial Management
Human Resources
Policy
Environment
Policy
Environment
= List of common health problems
= Choices of standardmedicines and non-drugtreatments
= Drug TherapeuticCommittee
= National Drug Policy
= National TreatmentGuidelines
= Essential Medicines List (EML)
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Logistics Cycle - Quantification
Serving
Customers
ProductSelection
③
Quantification& Procurement
Warehousing,Storage andDistribution
Management &Supervision
Information ManagementFinancial Management
Human Resources
PolicyEnvironment
Policy
Environment
= Calculate product demand
= Morbidity based method
= Consumption-based
= Data accuracy?
= PartnerCoordination
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Logistics Cycle - Procurement
Serving
Customers
ProductSelection
③Quantification& Procurement
Warehousing,Storage andDistribution
Management &Supervision
Information ManagementFinancial Management
Human Resources
Policy
Environment
Policy
Environment
= Accuratespecifications
= Transparent vendorselection
= supplier performancemonitoring
= ProcurementPlanning
= Alignment ofprocurement andfunding cycles
= contract monitoring& payment
L i ti C l W h i St
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Logistics Cycle – Warehousing, Storage& Distribution
Serving
Customers
Product Selection
Quantification &Procurement
④
Warehousing,Storage andDistribution
Management &
SupervisionInformation ManagementFinancial Management
Human Resources
PolicyEnvironment
Policy
Environment
= Inventory control
= Product put-away, pickingand packing
= Distribution planning
= Product security & workersafety
= Distribution
= Customs clearing
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Logistics Cycle – Policy Environment
Serving
Customers
ProductSelection
Quantification& Procurement
Warehousing,Storage andDistribution
Management &
SupervisionInformation ManagementFinancial Management
Human Resources
⑤ PolicyEnvironment
Policy
Environment
= Public procurementpolicies
= National strategies
= Quality testing
= Health worker tasks
= Decentralization orother health reform
= Treatment protocols
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ANNEX 2. Supply ChainStrengthening Examples
A t O d t A hi C t
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Aggregate Orders to Achieve CostSavings – Pooled procurement
• PEPFAR’s SCMS project • USD2.5 billion in medicine and health
commodity procurements from 2005 – 2015(65 countries)
• Indefinite quantity contracts (IQCs) andblanket purchase agreements (BPAs)
• Generic procurements of ARVs increasedfrom 9.17% (2005) to 76% (2008) with an
estimated total savings of USD323M *
*Annual ARV expenditures USD116M (2005) to USD202M (2008)
St th C t l M di l St (CMS)
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Strengthen Central Medical Stores (CMS)to strengthen public system
• Pharmaceutical or medical supplywarehouse for the public sector
• Often the national procurement agent• Government main client
• Distribute to regional or provincial stores• Implement various outsourcing models –
3PL providers• Drug quality quarantine point
• Increasing trend towards independencefrom MOH
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Nepal: Introduction of “Pull” (Requisition)Logistics System reduces stock-outs
• 1994: 40% commodity stock-out rate underpush” system
• 2004 – 2010: Transitioned to a “pull” or orderingsystems at all 75 districts
• 2012:o Reduced stock outs of family planning
products to 2%o Improved inventory reporting by facilities from
88% to 96%
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Bangladesh: Coordinate supply chainthrough Logistics and Supply
Management Units• Based at the
Directorate of FamilyPlanning and centraland Regionalwarehouses
• Over 280 staff• Oversee the national
quantification,forecasting andprocurement
planning process• Manage LMIS• Identify needs and
gaps• Distribution planning• Manage international
procurements for FP
and RH commodities