Transcript Yadav-SCTL
Global Health Supply Chains Prashant Yadav The health production process Patient’s ability or willingness to manage their health Health care workers Drug Supplies Health care production process Health care Clinical outcome Health production process Health Equipment (Lab+Other) Facility Infrastructure Quality of Life Patient’s ability and willingness to seek health care and pay for it Environment, Sanitation, Nutrition Patient Income and Wealth Quality of Life production process Goods and services Goods and services production process Material Inputs Yadav . Global Health Supply Chains 2 How international global health financing flows to low income countries (1) Drug Manufacturers Private Channel Buyers Private Sector International Financing Public Channel Buyers Public Sector NGO Channel Buyers NGOs End patients Yadav . Global Health Supply Chains 3 How international global health financing flows to low income countries (2) Drug Manufacturers Private Channel Buyers Private Sector International Financing Public Channel Buyers Public Sector NGO Channel Buyers NGOs Slide template borrowed from Dalberg Global Development Advisors- AMFm RBM Task Force Presentation End patients Yadav . Global Health Supply Chains 4 Banking crisis has significant impacts on international aid Source: David Roodman Yadav . Global Health Supply Chains 5 Aggregate economic shocks and infant mortality Source: Baird, Friedman and Schady (2007) Yadav . Global Health Supply Chains 6 Financial flows Public tendering process Production process Shipment and distribution process Forecasts Grant signed money disbursed PO signed Current Public tendering process Production process Shipment and distribution process Forecasts Grant pledge PO signed Grant signed money disbursed With Pledge Guarantees Public tendering process Forecasts Grant signed money disbursed Production process Shipment and distribution process PO signed With Risk Sharing/volume Guarantee Yadav . Global Health Supply Chains 7 Options for bridging uncertainties in donor financing Type of product Bond Debt issuance Trade credit Examples Description • Longer term debt instrument, guaranteed by donor countries Commercial paper • Shorter term debt instrument, for shorter term financing needs Pledge guarantee • Donor-asset or commitment backed commodity trade credit Trade credit / commodity financing Letter of credit • Loan made by exporter to importer • International Finance Facility (IFFIm used by GAVI) • ?? • RH, Net Guarantee • Export credit agencies • Bank issued and irrevocable; used in international trade Revolving funds Revolving drug fund • Stability fund to smooth financing availability for timesensitive health supplies • Often marries financing and procurement (pooling) Working Capital loan Short term commercial lending • Working capital issued by commercial lender – “bridge” or “hard money” loan • PAHO revolving fund • Commercial bank bridge loans • IBRD or IDA from WB • Grameen Growth Guarantee Yadav . Global Health Supply Chains 8 A donor coordinated pledge guarantee (PG) mechanism can provide bridge financing and decrease procurement delays (and hence stockouts) Donor pays the mechanism Pledge Guarantee (PG) mechanism 7 PG verifies pledge with donor and establishes MOU Mechanism pays 5 manufacturer or procurement agent 3 Donor 2 1 Country request mechanism to cover product cost Country Donor makes pledge Manufacturers 4 Country procures through existing process 6 Manufacturer ships product to country Yadav . Global Health Supply Chains (1) Could also be accessed by NGO or UNFPA Source: Existing McKinsey and JSI Deliver analysis; Dalberg analysis 9 Inter-organizational coordination and risk sharing can shift the push-pull boundary 5 Sale or storage of unused product; potentially waste Secondary Markets? Minimum Volume Guarantee Institution Manufacturer informs MVG of unused volume 2 6 MVG decides on volume of product and amount of risk to assume Donors and countries estimate annual purchasing volume for specified products Donor Establishes master contracts with manufacturer based on volume / risk tolerance Manufacturer ships products directly to countries 1 Country 4 Manufacturers 3 Countries and/or donors each place individual orders under master contract Yadav . Global Health Supply Chains Source: Existing McKinsey and JSI Deliver analysis; Dalberg analysis 10 Landscape of procurement options in global health Type Framework agreements Pooled procurement Full service procurement Description • Master contract established • Based on aggregate forecasting and appetite for risk in level of guarantee • Target specific product categories for group purchasing • Set price ceilings and agree on delivery terms based on agreed upon pooled volume • End to end procurement services, including freight and logistics • Agreed upon pricing at signing of agreement Examples • Clinton HIV AIDS initiative • Global Fund VPP • PEPFAR SCMS • UNICEF Yadav . Global Health Supply Chains 11