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About improving health in the world and saving lives with more effective supply chains
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Improving Health in the World and Saving Lives with More Effective Supply Chains
Sustainability GalaNetherlands, June 2, 2010
Prashant Yadav
Yadav . Global Health Supply Chains
2
Clinton Foundation HIV/AIDS Initiative
AcknowledgementsBill and Melinda Gates Foundation
Center for Global Development
UK Department for International Dev.
MIT and MIT-Zaragoza Logistics Program
World Health Organization
Healthcare Redesign Group
Medicines for Malaria Venture
Resources for the Future
Dalberg Global Development Advisors
INSEAD
US Agency for International Development
Government of Zambia
Government of Uganda
Government of Ghana
Government of Kyrgyzstan
Government of South Africa
Government of Tanzania
World Bank
Government of Nigeria
UN Global Fund to fight HIV/AIDS, TB and Malaria
Harvard Medical SchoolZaragoza Logistics Center
UNFPA
John Snow Inc.
Yadav . Global Health Supply Chains
3
The supply chain for health and happiness
Health care workers
Drug Supplies
Equipment (Lab+Other)
Facility Infrastructure
Health care production
process
Patient
Health care
Clinical outcome
Health production process
Environment, Sanitation, Nutrition
Patient’s ability to willingness to manage their health
Income and Wealth
Quality of Life production
process
Goods and services
Health
Quality of Life
Material Inputs
Goods and services
production process
Key focus of supply chain innovation
Yadav . Global Health Supply Chains
4
Health: The World is Not Flat
Yadav . Global Health Supply Chains
5
Does increased wealth result in better health?
Yadav . Global Health Supply Chains
6
Unprecedented increases in financing for global health
0
5000
10000
15000
20000
25000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Mill
ion
$
Australia Austria Belgium
Canada Denmark Finland
France Germany Greece
Ireland Italy Japan
Luxembourg Netherlands New Zealand
Norway Portugal Spain
Sweden Switzerland United Kingdom
United States Bill & Melinda Gates Foundation Corporate Donations
Debt Repayments (IBRD) Other
Yadav . Global Health Supply Chains
7
End patients
Drug Manufacturers
PrivateChannel Buyers
PublicChannel Buyers
NGOChannel Buyers
NGOs
International Financing
Public Sector
Private Sector
International financing flows for health products (1)
Slide template borrowed from Dalberg Global Development Advisors- AMFm RBM Task Force Presentation
Yadav . Global Health Supply Chains
8
End patients
Drug Manufacturers
PrivateChannel Buyers
PublicChannel Buyers
NGOChannel Buyers
NGOs
International Financing
Public Sector
Private Sector
Slide template borrowed from Dalberg Global Development Advisors- AMFm RBM Task Force Presentation
International financing flows for health products (2)
Yadav . Global Health Supply Chains
9
Most diseases are treatable with existing medicines
Yadav . Global Health Supply Chains
10
Many of these medicines are however not available
Average availability was only 34.9% in the public sector and 63.2% in the private sectorSource: WHO, Health Action International, United Nations MDG8 Report
Yadav . Global Health Supply Chains
Why do people seek treatment in the private sector?Travel distances are large to reach public facilities
Yadav . Global Health Supply Chains
Waiting lines are long at public facilities
Yadav . Global Health Supply Chains
Drug availability is low at public facilities
Yadav . Global Health Supply Chains
14
Private sector supply chains for medicines
Yadav . Global Health Supply Chains
15
Points of access for medicines in the private sector
Yadav . Global Health Supply Chains
16
Points of access for medicines in the private sector
Yadav . Global Health Supply Chains
17
Points of access for medicines in the private sector
Yadav . Global Health Supply Chains
18
18
Points of access for medicines in the private sector
Non fixed structure retail store
Fixed structure retail storeDrug storeLicensed pharmacy
Drug hawker
Source: MMV
Structurally different supply chains serve each of these end retail points
Yadav . Global Health Supply Chains
19
Source: Joint study with CHAI and UNZA in Zambia
Yadav . Global Health Supply Chains
20
Source: Joint study with CHAI and UNZA in Zambia
Yadav . Global Health Supply Chains
21
Source: Joint study with CHAI and UNZA in Zambia
Yadav . Global Health Supply Chains
22
-
2,000
4,000
6,000
8,000
10,000
12,000
- 1 2 3 4 5 6
Pric
e ch
arge
d fo
r a fu
ll co
urse
of a
ntim
alar
ial i
n
Zam
bian
Kw
acha
Competition Index= # of sources for anti-malarials in 1 km radius
How retail competition impacts price
P value = 0.0854
Study of over 100 outlets in 4 districts in Zambia
Yadav . Global Health Supply Chains
23
CR-n ratios and Herfindahl index for wholesalers in Uganda
Ratio
CR-1 27.7%
CR-2 43.3%
CR-3 55.8%
CR-4 63.8%
CR-5 71.8%
CR-6 77.6%
CR-7 83.3%
CR-8 87.2%
CR-9 90.5%
CR-10 92.3%
Under-5 Adult Total
HHI 4398 1323 1398
Usually a market with HHI less than 1,000 is considered to be a competitive marketplace
1,000-1,800 to be a moderately concentrated marketplace
1,800 or greater to be a highly concentrated marketplace
Yadav . Global Health Supply Chains
24
Piggy-backing on other supply chains
Yadav . Global Health Supply Chains
25
Public sector supply chains for medicines
Yadav . Global Health Supply Chains
26
Public health clinics remain stocked out
Yadav . Global Health Supply Chains
27
Rudimentary order and stock management
Yadav . Global Health Supply Chains
28
Drivers of poor availability at health facility level
Suppliers Ministry of Health Distribution
Financiers
Clinics
Uncertainties in timing of grant disbursement
Long lead times (up to 36 weeks)
Delays in procurement due to archaic procurement processes and poor quantification and planning
Weak distribution infrastructure and
skeletal MIS
No capacity to manage inventory or consumption tracking
Typical structure. May not hold for all countries and programs
Poor bargaining power and price
transparency
Yadav . Global Health Supply Chains
29
Supply Chain Redesign Options
Yadav . Global Health Supply Chains
30
Creative Bridge Financing Solutions
Pledge Guarantee (PG) mechanism
Donor CountryManufacturers1
Donor makes pledge
2Country request
mechanism to cover product cost
3
PG verifies pledge with donor and establishes
MOU
4 Country procures through existing process
5Mechanism pays manufacturer or
procurement agent
6Manufacturer ships product to country
7
Donor pays the mechanism
(1) Could also be accessed by NGO or UNFPASource: Existing McKinsey and JSI Deliver analysis; Dalberg analysis
Source: Work with Dalberg Global Development Advisor for RHSC
Yadav . Global Health Supply Chains
Forecast Driven
Drug Substance Manufacturing
Current Push-Pull Boundary in Global Health Supply Chains
Co-formulating and Packaging
Pre-delivery Inspection
Shipping and Transport
Drug SubstanceInventory
Final ProductInventory
Order Driven
Inventory /Order Interface
Source : Yadav, Sekhri and Curtis (2006)
Yadav . Global Health Supply Chains
32
Risk Sharing shifts the Push-Pull Boundary
Source: Existing McKinsey and JSI Deliver analysis; Dalberg analysis
Minimum VolumeGuarantee Institution
Country ManufacturersDonor
1
Donors and countries estimate annual purchasing volume for
specified products
2
MVG decides on volume of product and amount of
risk to assume
Establishes master contractswith manufacturer based on
volume / risk tolerance
3Countries and/or donors each place individual orders under
master contract
4
Manufacturer ships products directly to
countries
5
Manufacturer informs MVG of unused volume
Secondary Markets?
6
Sale or storage of unused product; potentially waste
Joint work with Dalberg Global Development Advisors
Yadav . Global Health Supply Chains
Forecast Driven
Drug Substance Manufacturing
Shifted Push-Pull Boundary in Global Health Supply Chains
Co-formulating and Packaging
Pre-delivery Inspection
Shipping and Transport
Drug SubstanceInventory
Final ProductInventory
Order Driven
Inventory /Order Interface
Source : Yadav, Sekhri and Curtis (2006)
Yadav . Global Health Supply Chains
34
Regional Health Commodity Supply Hubs
Source : Yadav, Sekhri and Curtis (2006)
Reduced lead-timeReduced stock-outsReduced logistics cost
Yadav . Global Health Supply Chains
35
Regional Health Commodity Supply Hubs
Source: Partnership for Supply Chain Management
Yadav . Global Health Supply Chains
36
NationalDistribution Center
(1)
DistrictStores
72
Health Centers~1450
Source: Tom Brown, MSL, Zambia)
Current distribution structure in Zambia
Yadav . Global Health Supply Chains
37
Distribution Redesign : Cross-docking
Source: Tom Brown, MSL, Zambia)
Yadav . Global Health Supply Chains
38
Distribution Redesign : Regional distribution centers
HC HC HC HC HC HC HC HC HC HC HC HC
RDC - Lusaka RDC – TBC RDC - TBC RDC - TBC
Key: Information / Order Flow
Dispatches
HQ MSLLusaka
Option 2a – Regional Distribution Centres
Source: Tom Brown, MSL, Zambia)
Yadav . Global Health Supply Chains
39
A quasi randomized experiment to determine optimal supply chain structure for the public sector clinics
National Distribution Center
District Stores72
Health Clinics~1500
Option BOption A
• 24 districts selected• Three subsets based on similarity, propensity matching• Option A, B or control randomly assigned to each district• Service Level and Inventory of 25 tracer drugs monitored at each clinic for 12 months
Control group
Yadav . Global Health Supply Chains
40
The CSCMP Global Health
Distribution System Challenge
Courtesy: Blair Sachs Hanewall, Bill and Melinda Gates Foundation
Yadav . Global Health Supply Chains
41
The Federated States of Micronesia
Yadav . Global Health Supply Chains
42
Immunization program staff at work
Yadav . Global Health Supply Chains
43
Immunization out-reach trip
Low population density on each island
Cost per drop is very high
No storage capacity on islands requiring more frequent deliveries