Maureen Mackintosh, Open University, UK

BEYOND SCALING UPPathways to Universal Access

IDS, Sussex 24th – 25th May 2010

Acknowledgements: Meri Koivusalo, Sudip Chaudhuri, Phares G.M. Muinja; ESRC grant funding .

Assessing supply chain innovations in essential medicines

Supply chain innovation in essential medicines for low income Africa

1. A contested field of recent health system innovation, and also

2. A contested metaphor for what is needed in health systems innovation.

This talk briefly discusses: • Context• Competing/interacting supply chain

innovations• Evaluation and policy issues

A contested field of health system innovation: a Tanzanian example

Two axes of recent supply chain innovations:

• Local vs. international • Commercial vs. NGO trading

intermediaries vs. public sector

Local vs. International

• Increased local production of essential medicines, including first line ARVs

vs.• Large scale aid-funded external supply of

ARVs and TB drugs

Commercial vs. NGO trading intermediaries vs. public sector

• Rising local production for local market (private and public)

• International subsidy for market prices of ACTs for malaria (AMFm)

• Social enterprise wholesalers in essential medicines in international and local markets

• Public wholesalers of local and international medicines for public and NGO providers

• Internationally supplied aid-funded medicines free at point of use : HIV and TB

Key contextual features in Tanzania• Predominant commercialisation of

essential medicines access: fee-for-service, out-of-pocket payment; low availability; poor access to treatment; widespread exclusion for inability to pay.

• Retreat of first tier Indian exporters from the low price African generics markets in favour of higher margin exports; less reputable firms important suppliers.

‘On the shelves’ availability of medicines remains poor

WHO/HAI Medicines Surveys: Median availability 2004 and 2006, selected countries (%)

Sector Tanzania Kenya Ghana Nigeria

2004 2006 2004 2007 2004 2004

Public 23 47 38 57 21 3Mission / NGO 42 47 46 50 39 n/a

Private shops 48 56 72 83 79 34

In Tanzania little improvement 2004-6 except first line ARVs

Availability of selected medicines: Tanzania Medicines Surveys, Oct.-Dec.

Public Private NGO2004 2006 2004 2006 2004 2006

Aciclovir tab 200 mg 19% 19% 50% 47% 39% 41%

Amoxicillin tab 250mg 86% 84% 85% 78% 89% 75%

Arthemether +Lumefantrine tab 20+ 120 mg 0% 47% 31%

Atenolol tab 50 mg 24% 19% 41% 44% 43% 47%

Ceftriaxone inj 1 g powder 19% 53% 44% 50% 43% 59%

Ciprofloxacin tab 500 mg 57% 78% 73% 69% 75% 84%

Erythromycin tab 250mg 81% 72% 81% 75% 82% 63%

Fluconazole cap / tab 150mg 0% 19% 6% 69% 0% 34%

Gentamycin inj 80mg/ml 62% 47% 48% 53% 79% 53%

Niverapine tab 200mg 0% 0% 4%

Niverapine/Lamivudine/Stavudine 40 53% 3% 28%

Omeprazole caps 20 mg 19% 16% 56% 66% 43% 44%

Sulfadoxine + Pyramethamine tab 500+25 mg 91% 88% 98% 97% 75% 81%

Payment at time of need is a source of exclusion

• Except in a few rural public dispensaries, medicines are largely purchased for cash.

• Payment a major source of exclusion and impoverishment

• 2000/1 : 33% of those ill sought no care– Of whom 58% saw a need to seek care– Of whom 56% found care seeking too expensive

• 2006 : 95% of those interviewed while seeking care had paid for own medicines;

– 8% on exit had not been able to afford medicines sought and available; 15% had bought part-dose

Under-dosing is dangerously normal

Dispensing part-doses is the norm in private sector (90% of dispensers) and very common in NGO sector (66% of dispensers interviewed)

Very few patients can afford to buy the whole dose. ….It is usual for us to sell part of the dose. [drug shop seller, Manyoni]

We sell them part of the dose and advise them to come back and complete the dose but very few come back. This could mean … they have stopped the medication [drug shop seller, Singida Rural]

We give our customers half of the doses or we sometimes give them the whole dose and write on their hospital cards so that they pay during next visit. However this is done for few patients whom we know. [NGO dispensary Manyoni]

Supplies from Tanzanian manufacturers important to access

• 3 dominant suppliers: Tanzania, India, Kenya; • 46% of tracer medicines observed in rural areas

were of Tanzanian manufacture• Of permitted medicines in drug shops, 66% on

average from Tanzania (18% Kenya 11% India)• Tanzanian supply dominant for many basic

medicines; only injectables, some chronic illness medicines only available as imports

• Tanzanian medicines cheaper but not significantly: price competitive with imports

• Reliable Indian manufacturers losing interest in African markets

Intersecting supply chain innovations: no coherent view of health system direction • Local production: providing a high proportion

of local private market and local public/NGO sales of basic medicines;

• Externally funded and purchased ARV/TB medicines, mainly Indian, no Tanzanian qualified suppliers; free at point of use.

• Subsidised ACTs for malaria to reduce private market and public sector prices

• NGO and public wholesaling focused on quality assurance of local and international supply.

A contested underlying metaphor (1)‘Supply chain’ originates in industrial

contracting: implies management of process of supply to manufacturing.

The metaphor has ‘got out’ into wider discussion of supply of medicines to individual consumers/ users/ patients.

Associated with a related metaphor – ‘delivery’ – invoking top-down control.

Sits oddly in a context where most people struggle to buy medicines and most private sector sales off-prescription.

A contested underlying metaphor (2)‘Supply chains’ to local market :• ~50% public wholesaling: managed

chain: quality control of procured medicines, around 30% from local production, rest mainly Indian imports

• ~50% competitive private wholesaling into private market, little quality control at wholesale level, also around 30% local production

National regulatory body accredits Indian and Tanzanian suppliers.

A contested underlying metaphor (3)‘Supply chains’ of ARVs and TB drugs: • Managed chains from accredited

international – mainly Indian – exporters;• Almost entirely on-prescription – through

facilities – and free at point of use• Local producers excluded: have yet to

reach WHO pre-qualification standard• Contested wholesale stage: new actors vs.

public wholesaler• Emphasis on delivery : counting heads.

A contested underlying metaphor (4)‘Supply chain’ for new malaria drugs different:• Aim to reduce market prices : subsidy to

suppliers of combination therapies• No shift to free at point of use, or

prescription-only :pushing new drugs into private market

• Widespread under-dosing and over-use (for other fevers) implicitly accepted

So what’s the strategy for expanding access?

Comparing ‘supply chain’ innovations : 1. International supply of HIV/AIDS and TB drugs to

free-at-point of use greatly increased access to free, prescription-based treatment.

2. Public sector facilities middle range accessible: treatment based, lower prices, quality control, exclusionary (stock-outs and payment)

3. Private market supplied locally and internationally: payment-based, not treatment-based, not quality controlled, market subsidy to reduce exclusion.

All three together is a mess?

Issues for contrasting approaches

1. ‘Supply chain management’ of HIV/AIDS and TB medicines expensive, highly subsidised, not sustainable?

2. Public sector ‘supply chain’ relies on payment; hard to shift to broader provision free at point of use?

3. Private market ‘supply chain’ displays serious problems of quality, exclusion and chronic under-dosing.

Supply chains and industrial innovation

International managed chains largely exclude local suppliers : subsidy and market exclusivity for international suppliers; negotiated in public-private funding deals

Public and NGO wholesaler purchase encourages local suppliers, links to upgrading of local industrial capabilities and employment in basic medicine.

Should health policy be concerned with industrial linkages?

Assessing supply chains: propositions for debate

1. A ‘supply chain’ for essential medicines supplying for market exchange cannot deliver universal access.Therefore supply chain innovations should be judged on the proportion of paid-at-point-of-purchase medicines : the smaller, the better.

Assessing supply chains: propositions for debate

2. If supply chain technology relies on external expertise and funding, then there is a problem of sustainability as part of the local health system.Managed supply chain innovations should be judged on cost per patient, and the local capability for sustaining delivery.

Assessing supply chains: propositions for debate

3. The health system effects of supply chain subsidy depend on the recipient of the subsidy and the efficient use of subsidy. Is the malaria medicines subsidy the minimum required to elicit supply?Supply chain innovations should be assessed to ensure they are not sustaining monopoly pricing at producer level.

Assessing supply chains: propositions for debate

4. The WHO prequalification system’s ‘gatekeeper’ role targets market access on large firms winning very large tenders. The initial effect in driving down HIV medicines prices relied on Indian generic competitors. The system creates a high hurdle for newer local competitors. Supply chain innovations should be judged on the medium term impact on monopoly power in the supply chain.