Transcript Solutions for Children UNICEF in the World Today

SOLUTIONS
FOR
CHILDREN
UNICEF IN THE
WORLD TODAY
standard 1 UNICEF&SD
Agenda
 Procurement
statistics
 Major commodity areas
 Drug Procurement
 Supply
 Distribution
 Case Study
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SUPPLY DIVISION AT A GLANCE
2002
Total procurement: $541 million
 Offshore procurement:$353 million
 Regional and local procurement: $188 million
 Donations in Kind: $9 million
SUPPLY DIVISION AT A GLANCE
Commodities Purchased by UNICEF in 2002
(Offshore, Regional and Local Procurement)
220
(Millions of United States Dollars)
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SUPPLY DIVISION AT A GLANCE
Top 10 Supplier Countries 2002
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(Millions of United States Dollars)
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SUPPLY DIVISION AT A GLANCE
Receiving countries 2002
(Millions of United States Dollars)
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Summary
 An
effective procurement process should:
 Procure right drugs in right quantities
 Obtain lowest possible purchase price
 Recognized standards of quality
 Timely delivery
 Supplier reliability
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Drug procurement
Procurement of pharmaceuticals differ from
procurement of other commodities because the effect
of receiving and utilizing a substandard/poor quality
product can have severe consequences in terms of
damage to the consumers health or treatment failure,
because the product does not have the intended
effect. Therefore a number of precautions need to be
taken when buying pharmaceutical products and
these should be followed in a systematic manner.
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Strategic objectives for drug
procurement
Procure the most cost-effective drugs in the
right quantities
 Select reliable suppliers complying to GMP
 Ensure high quality products
 Ensure timely delivery
 Achieve the lowest possible total cost

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Principles of Good Pharmaceutical
Procurement
Procurement by generic name;
 Limitation of procurement to the
EML/National List;
 Procurement in bulk;
 Formal supplier qualification/monitoring;
 Competitive procurement;
 Sole-source commitment;

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Principles of Good Pharmaceutical
Procurement
Order quantities based on reliable estimate of
actual need;
 Reliable payment and good financial
management;
 Transparency and written procedure;
 Separation of keys functions;
 Product quality assurance programme;

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Sourcing






Through direct contacts
Special catalogues of manufacturers
in a specific area, eg. drugs
Through trade missions in
respective embassies
Exhibitions, fairs
UN Business Seminars
Internet
Important to realize:
Regarding sales and
marketing efforts, all UN
organizations should be
treated as individual
companies, it is not
sufficient to deal with only
one of them and expect
the information to be
replicated automatically to
everyone in the UN family.
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Drug procurement scenarios
Who are the potential suppliers?



Pharmaceutical manufacturers
Pharmaceutical wholesalers
International drug supply agencies
Where are they situated?


Well-regulated countries
Less well-regulated countries
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Select reliable suppliers of high
quality products

What is the advantage of pre-qualifying
suppliers?

Elimination of sub-standard suppliers
 More efficient adjudication process

What should be considered in a prequalification?

Production standard (GMP)
 Business viability
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Select reliable suppliers of high
quality products
Who and how to pre-qualify?
 Ask for references
 Inspection of manufacturers
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Supplier Registration Process
Company Data
Financial Data
References
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Supplier Evaluation

Suppliers are evaluated on their
financial soundness, capacity, quality
performance, technical capability, ability to
service their products in the destination
countries.

Preference is to purchase directly from
manufacturers and not from dealers.
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Request information about
manufacturer






What is the link between the supplier and the product?
Marketing authorisation holder? Manufacturer?
Distributor?
What is the regulatory situation in the country of manufacture?
Product currently registered and marketed?
Registered but not
marketed?
Product registered for export only? No registration?
Regulatory situation in other countries? EU/USA
Request certificates:
Certificate of Pharmaceutical Product according to WHO Certification
Scheme
Statement of Licensing status of Pharmaceutical Product according to
WHO certification Scheme
Marketing license
Export license
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First things to consider
 Large/small
quantities required?
 Acceptable lead time?
 National procurement capacity?
 Financial resources available?
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Procure the most cost-effective drugs in
the right quantities
Questions to ask:
 Drug selection Is there a national list of essential drugs?
Are drugs requested on this list?
If not, why are drugs requested - relevance to
the pattern of prevalent diseases?
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Procure the most cost-effective drugs
in the right quantities, cont.

Quantification of drug requirements How many patients can be treated with
requested quantities?
Does this tally with morbidity data or past drug
consumption figures?
Can the quantity be used before expiry?
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Procure the most cost-effective drugs
in the right quantities, cont.
Questions to be asked:
 Product specification - Is it a generic or a proprietary
drug?
Patent situation?
Is drug registration requested?
If it is a generics drug - what quality of product are we
aiming at supplying? Consider finished product
specifications and quality of active ingredient, product
stability, therapeutic equivalence.
Product specifications must be clear and detailed
in the ITB
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Example of contents of product
specification
Name (INN)
 Dosage form
 Strength per dosage unit
 Route of administration
 Number of units/volume/weight per container
 Type of container, in certain cases specification
 Acceptable pharmacopoeias references/ standards
Request the following information
 Finished product specification
 Active pharmaceutical ingredient specification (DMF/CEP)
 Stability: what testing has the product been subject to?
 Label and insert information
 Therapeutic equivalence

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Procurement Cycle
Determine
Quantities
Needed
Review
Drug
Selection
Collect
Consumption
Data
Reconcile
Needs and
Funds
Choose
Procurement
Method
Distribute
Drugs
Locate and
Select
Suppliers
Make
Payment
Receive
and
Check drugs
Monitor
Order
Status
Specify
Contract
Terms
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Procurement Methods
 Open
tender
 Restricted tender
 Competitive negotiation
 Direct procurement
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Special procurement types

Direct Ordering

“Contract set up by SD allowing Country Offices to
buy internationally”

Long Term Agreement

“Not binding frame agreement setting the terms and
limits for contracts”
Typically 24 month agreements +

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Organization of the national
procurement process
Who decide on standards
for product and
production, quantities
etc.
Who will take care of delivery
and distribution and monitor
supplier performance
Who will prepare invitation to bid
(ITB) and handle the commercial
aspects
Who will adjudicate the bid
and take care of quality
assurance
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Organization of the national
procurement process, cont.

Clear definition (and division) of responsibilities,
authorities, procedures for
 procuring
 selection of drugs
 pre-selection of suppliers
 quantification of needs
 standard-setting
 technical adjudication
 quality assurance
 distribution
to ensure transparent process
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Supply Division
Organisation
Bidding
RFQ/RFP
Contracts
- DO/LTA
Sourcing
Technical
specifications
Web catalogue
Supplier registration
Supplier evaluation
Inspections
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INVITATION TO BID
Depending on the circumstances,
qualified suppliers are either invited
to bid or to submit a quotation.
Bid Opening. Bids are opened
publicly and suppliers are welcome
to attend.
VALUE FOR MONEY
Bids or Requests for Proposals are
adjudicated based on total cost,
which includes:



Successful bidders are then notified.
Quality assessment of supplier’s
capability takes place before final
award.


Product - quality
Technical
compliance
Cost of product
Cost of freight and
delivery
Timeliness of
delivery
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Monitor and maintain quality
Pre- and post shipment inspection
 Analytical drug testing
 Appropriate storage, distribution, dispensing
 Reporting system for complaints

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Supply
Drug supply systems need to achieve three
main objectives:
 a high level of service, as measured by low
rates of shortages and stockouts;
 efficiency, as measured by having low total
costs for a given level of service;
 quality, in terms of delivering drugs of
satisfactory quality.
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Market mechanisms in public drug
supply

Can market mechanisms help to ensure access to
essential drugs in the public sector? Market
mechanisms have been used to strengthen public
drug supply systems. These mechanisms include:
 autonomous drug supply agencies;
 direct delivery contracts;
 primary distributor systems.
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Organization of the supply system

At least five different methods exist for supplying
drugs to governmental and nongovernmental
health services:
 Central medical stores (CMS): This is a
conventional drug supply system, in which drugs
are procured and distributed by a centralized
government unit. It is possible to decentralize
this system by having medical stores at
provincial or state level.
 Autonomous supply agency: This is an
alternative to the CMS system in that drug
supply is managed by an autonomous or semiautonomous drug supply agency.
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Organization of the supply system
(cont’d)


Direct delivery system: This is a decentralized, non-CMS
approach in which drugs are delivered directly by suppliers to
districts and major facilities. The government drug
procurement office tenders to establish the supplier and price
for each item, but the government does not store or distribute
the drugs.
Primary distributor (“prime vendor”) system: Another nonCMS system, in which the government drug procurement
office establishes a contract with a single primary distributor
("prime vendor"), as well as separate contracts with drug
suppliers. The prime vendor is contracted to manage drug
distribution by receiving from suppliers, storing and
distributing all drugs to districts and major facilities.
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Organization of the supply system
(cont’d)

Fully private supply: In some countries, drugs are
provided by private pharmacies in or near
government health facilities.
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Different supply systems
Central medical
store
Autonomous
supply agency
Direct delivery
system
Prime vendor
system
Fully private
supply
Contracting
suppliers
X
X
Government
body
Government
body
X
Storage +
delivery
X
X
Suppliers
X
X
Monitoring drug
quality
X
X and
Government
body
Government
body
X and
Government
body
Government
body
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The UNICEF Supply Chain can be
Where do the Potential Bottlenecks occur
short
as one month, as long as one year
along theas
Supply
Chain?
(excluding emergency responses)
Incomplete specifications
Rushed orders
Unrealistic TADs
What does the
programme want?
PPO/PPA
SRQ
SUPPLIER
Missed consolidations
Synchronising the arrival
of components
Supply evaluation
Inventory/History
RECEIVED
BY FINAL
BENEFICIARY
PO/DEL
Long order processing
time
Order changes
WAREHOUSING
DISTRIBUTING
CLEARING
RECEIVING
SHIPPING
Lack of Distribution Plan
Appropriate structure
Clear responsibility & procedures
Inventory system & reporting
-Early clearance process
-Control
Shipping status
Shipping docs
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Distribution Cycle
Port
Clearing
Receipt
and
Inspection
Drug
Procurement
Inventory
Control
Consumption
Reporting
Storage
Dispensing
to
Patients
Delivery
Requisition
of
Supplies
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Distribution systems
Public distribution includes wholesale
distribution and retail dispensing by
government-managed drug supply and health
services as well as distribution through stateowned enterprises (state corporations).
 Private distribution includes private for-profit
wholesalers and retailers, and not-for-profit
essential drugs supply services.

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Distribution

Dispensing clinicians
 Doctors, clinical officers and nurses in private practice both
prescribe and dispense drugs to their patients in many parts
of the world
 Clinicians dispense to their patients partly as a service, but
also because they have learned that patients are often much
more willing to pay for drugs than simply for consultation
 In some countries, general practitioners derive 60% of their
income from the drugs they dispense. This creates an
obvious and measurable incentive to overprescribe
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Warehouse & Logistics Center
UNICEF
Supply Division
Inventory
Management
/
Purchasing
Delivery
Processing
Receiving
Packing
Production
Shipping
40 Staff Members
Systems/
Process
Support
Customer Service Center
All Centers
Sales Orders/Deliveries
Picking/Packing/Shipping
Technical Center
Goods receipt
Material Master
Maintenance
Goods Issue of stock
Finance
Warehouse
& Logistics
Center
Contracting Center
Purchase Orders
Issue of Purchase Req.
Cycle Counting
Goods Receipts /
Settlement of Kits Production
Stock Placement into WH
Inspection of shipments
Procedures Management
Quality Assurance Center
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MRP
Purchase
order
-----------------
Warehouse Processing
Delivery Creation
G/R
Warehouse
UNICEF
Supply Division
Sales Order Creation
Order processing time: 65 days
Picking
2001 target: 45 days
Packing
Booking of
Transportation
Printing & sending Issuing goods
shipping docs
UNICEF Warehouse
Medical
Area
Haz.Mat.
Area
NonMedical
Area
Bulk Area
GR area
Locked
Area
Productio
n
GI area
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Consignment Stock (UNHCR / IFRC)
UNHCR
UNHCR
UNICEF
Plant 1100
IFRC
WHO
IFRC
Storage of technical files and documents
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Group discussion
You receive a request from the Ministry of Health for purchase of
drugs for the national malaria and HIV/AIDS control
programmes. You are given a list of 100 drugs requested.

What do you do with this list?

How do you decide what to purchase and where?

How do you ensure that the drugs will imported and distributed
smoothly?
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