Procurement Supply Chain in Ghana

Charles Allotey

Health Access Network 16th April 2009

MeTA Ghana: CSO & Media Orientation

2

Introduction

• Problems of Medicines and their prices

• Med. Supply chain and issues affecting prices

• Identify points of transparency

• What CSO and Media can do

Problems of medicines and their prices• Medicines have variable prices, often high and unrelated to countries’

income levels;

• Medicines are often unaffordable for individuals and are a major burden on government budgets;

• The availability of medicines is often poor, especially in public sector facilities;

• Trade agreements may severely affect the price and availability of medicines;

• Many developing countries have no medicine pricing policies or regulation;

• But: little is known about the actual prices people pay and how these prices are set, from the manufacturers’ selling price to the patient price.

• Prices of medicines are well above their production costs, and that there is great scope for reductions to improve access..

Source Of Funds

Procurement Agent/Body

Point of first warehousing

Point of 2nd warehousing

Point of 3th warehousing

GOVERNMENT WBGLOBAL

FUND USAID

CENTRAL MEDICAL STORE

Medicines supply systems in GHANA 2007

GAVI

ESSENTIAL MEDICINES

ARVs MALARIA TB OIARVs

Ped

REAGENT Blood safety(+ test HIV)

VACCINES CONDOMS ContraceptivesMEDICALSUPPLIES

Government

Multilateral Donor

Bilateral Donor

Category of

Products color code

MOH UNICEF USAID

GOVTOf

JAPAN

UNFPA

REGIONAL MEDICAL STORE

DISTRICT MEDICAL STORE

UN AGENCY

Republic of Ghana

ITNs

DFID

GOVTOf

JAPAN

FAITH-BASEDORGs

POP/RDF

HEALTHFACILITY

HEALTHFACILITY

FAITH-BASEDORGs

FAITH-BASED ORGs

DESIGNATED TREATMENT CENTRE

UNFPA

WHO GDF

International manufacturers

Local manufacturers

Importers

CMS Wholesalers Accra NGO distribution

RMS

Private hospitalsand clinics

Public hospitalsand clinics

Mission hospitalsand clinics

Wholesalers Regions

Privatepharmacies

Licensed chemical

shops

Supply chain:Price component

stages

Stage 1: Manufacturer’s selling

price or cost, insurance and freight

Stage 2: Landed price (importation)

Stage 3: Wholesale selling price

Stage 4: Retail selling price

Stage 5: Dispensed medicine price

6

Factors affecting Medicine Prices along the supply chain

R&D and clinical trials

Patent

Taxes and Tariffs

Registration

Pricing policy

Drug supply Management

Manufacturing

Drug discovery

costs

17-24 Feb 2008 MeTA CSO Capacity Building 8

Supply Chain - Impact on Patient Price:

Patient price increases by multiple of ex-factory price

Add-on Imported Locally produced

Insurance and freight 10-17%

NDA 2%

Clearance & finance/banking charges 2%

Importer (higher for single source products) 20-70%

Wholesaler 2-30% 15%

Retailer – typically Pharmacy 125% 105%

Drug Shop 85% 115%

Clinic 250% 145%

TOTAL Pharmacy 150 - 250% 120%

Drug Shop 120 - 200% 130%

Clinic 280 - 375% 160%

Supply Chain - Impact on Patient Price

Pharma Procurement

Wholesaler Distributor Retail / health unit

Patient

• Excessive mark-ups• Corruption• Poor forecasting• Short term procurement• Lack of capacity• Leakage/diversion• Poor quality/counterfeit drugs

Markup composition ciprofloxacin

What can MeTA, CSO and Media do?

Pharma Procurement

Wholesaler Distributor Retail / health unit

Patient

• Disclose information at each point along the supply chain

• Identify discrepancies• Assess prices and make

recommendations for future action

• Use information put into the public domain for advocacy to increase AEM

Transparency can help…• Scrutiny of process• Identify real problems• Empower patients / consumers• Reduce Medicine prices and Improve

AEM

16th April 2009 MeTA Ghana- CSO & Media Orientation 13

Thank you!

Charles Allotey

Email: kallotey@gmail.com

Mr. Samuel Boateng