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PSM - Procurement

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An effective procurement process seeks to ensure the availability of the right health products in the right quantities, at the most affordable prices while ensuring recognized standards of quality.

Strategic objectives for good pharmaceutical procurement include:
  • selection of reliable suppliers of quality products;
  • procurement of the most cost-effective pharmaceutical products in the right quantities and meeting the quality standards;
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  • mitigating possible risks;
  • timely delivery;
  • achievement of the lowest possible total cost (which includes but is not limited to the price, cost of analysis, and transportation).
  • Source: WHO Model Quality Assurance System for Procurement Agencies (MQAS), 2014
To be effective, a procurement agency should ensure that the following principles are applied:
  • prequalified products are purchased from approved manufacturers or suppliers;
  • procurement and purchasing procedures are transparent;
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  • activities follow formal written procedures throughout the process, including explicit criteria for awarding contracts;
  • independent contract review;
  • purchasing is based on the defined procurement policy of the procurement agency;
  • purchasing and tender documents list all pharmaceutical products by their INN or national generic names;
  • suppliers are selected and monitored through a process that takes into account product quality, service reliability and performance, delivery time, ethics, legal status, financial viability and minimum order quantities;
  • intellectual property rights are respected in accordance with best practice and national law.
  • Source: WHO Model Quality Assurance System for Procurement Agencies (MQAS), 2014
Ukraine reception of medicines with dataloggers

UNDP's support

UNDP has used health procurement as an entry point for developing capacity in different areas of the Procurement and Supply Chain Management (PSM) cycle, including on the procurement function. This is currently done across 19 Global Fund supported countries and 3 regional grants.
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As an example, in Sudan capacity building on procurement was provided through formal trainings of staff from the national procurement department as well as on-job-training through out-posting of UNDP staff to the Ministry of Health. In Angola and Bolivia UNDP provided technical assistance on procurement planning processes.

UNDP jointly with the of Chartered Institute of Purchasing and Supply (CIPS) has established a training and certification curricula tailored to UNDP staff and staff from the procurement units of Ministries of Health, national medical stores and non-governmental organizations.

Support for strengthening national procurement systems has also been provided to countries in Eastern Europe and Central Asia, which have signed service level agreements for health procurement with UNDP. In Ukraine, procurement operations with state funds have been linked with a four-year plan to establish and develop the capacity of the national procurement agency within the Ministry of Health. The ultimate objective is to reform and build a cost-efficient, transparent procurement system, building the structural and human resource capacity and to progressively hand over procurement activities.

Total Procurement by Health Category 2017
$310 Million USD
Total Procurement by Country 2017
Top 14 Countries in Million USD

UNDP’s procurement architecture and volumes

In over 15 years of operations to support Global Fund recipient countries, UNDP has set up a consolidated international procurement architecture comprising several partnerships and sourcing agreements with other UN Agencies, manufacturers and other commercial entities.
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UNDP’s total health procurement volume in 2017 was $310 million USD, of which $266 million USD directly procured by UNDP and the remaining by partners with established procurement architecture for specific categories of products such as for drug resistant TB and reproductive health.

UNDP has managed primarily procurement of medicines and diagnostics for infectious diseases, including TB and HIV, as well as a broad range of laboratory and hospital equipment under donor funded grants. UNDP’s Long-term agreements with suppliers of medicines for HIV and TB have resulted in significant economies of scale. As an example, in 2017 UNDP achieved a landmark cost for first line antiretroviral drugs - the fixed-dose combination of Tenofovir, Lamivudine and Efavirenz (TLE) of $75 USD per patient per year (FCA incoterm price). Pooled procurement for the antiretroviral fixed-dose combination of TLE, which accounted for a volume of $55 million USD in 2017, allowed UNDP to pilot successfully measures for environmentally sustainable procurement.

In the last two years, UNDP started procuring other health products including medicines for Non Communicable Diseases (NCDs) including medicines for cancer, cardiovascular diseases, diabetes, chronic respiratory diseases, and other non-infectious diseases. Of $201.5 million USD of medicines procured in 2017, 51% was for NCDs mainly with government state funds. In 2017, over 30% of total health procurement was operated with country government state funds, this figure is estimated to increase further in 2018.

Procurement operations for the Solar for health Initiative have also resulted in the establishment of the first health sector Long Term Agreements with suppliers for solar technologies and equipment.

UNDP's offer

Service level agreements between UNDP and countries can either relate exclusively to procurement operations or include capacity development in selected PSM areas such as the strengthening of quantification processes, the establishment of a national procurement agency, infrastructural and functional improvement of central and peripheral warehouses, etc.
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Training and certification curricula for the staff of procurement units from Ministries of Health and governmental agencies are also included in the offer.

Support to countries for health procurement can be provided by UNDP for several categories of medicines for infectious diseases such as HIV, TB (first-line) and for Non-Communicable Diseases (NCDs) such as cancer medicines. UNDP has established a Quality Assurance policy for health products to ensure the provision of quality-assured medicines, diagnostics and medical devices. Furthermore, UNDP’s offer can include procurement for a broad range of laboratory and hospital equipment as well as solar panels and related equipment.

Guidance

WHO has established guidance on principles for Good Pharmaceutical Procurement for health products, assessment tools and principles for promoting and ensuring that all procurement agencies follow the same standard. More recently, WHO has developed guidance specifically for procurement of diagnostics, laboratory items and equipment.

For additional reading on procurement systems and principles, the selected practical guidance is proposed:

Global Fund principles and standards related to quality assurance of health products are summarized in the following booklet:

UNDP staff managing health procurement for Global Fund supported countries shall also refer to the instructions and procedures described under the UNDP-Global Fund Health Implementation Guidance Manual.