Increasing Access to Essential Medicines and Commodities: A Conversation with Gordon Comstock of SCMS
For more than eight years, the Supply Chain Management System (SCMS) has been saving lives through stronger supply chains. Funded by the US President’s Emergency Plan for AIDS Relief (PEPFAR), SCMS is supporting rapid scale-up of HIV/AIDS programs, creating a reliable global supply chain where none existed, leveraging economies of scale to reduce costs, and serving as an emergency provider of choice for AIDS programs. SCMS is managed by the non-profit Partnership for Supply Chain Management (PFSCM)—a partnership of John Snow, Inc. (JSI), and Management Sciences for Health (MSH).
MSH spoke with SCMS Deputy Director Gordon Comstock, MBA, about how SCMS is supporting the establishment and sustainability of supply chains to increase access to essential medicines among the hardest-to-reach populations.
MSH: Please tell us about the mandate of SCMS—why is it needed? How does SCMS expand access to essential medicines and commodities?
Gordon: SCMS was established in 2005 in response to the global AIDS crisis. Just 10 years ago, only a fraction of the people that needed treatment received it. In response, President Bush launched the US President’s Emergency Plan for AIDS Relief (PEPFAR) with a goal, among others, of providing treatment for 3 million people in 3 years. The White House knew that, in this scale-up of treatment, supply chain constraints made medicine virtually inaccessible to whole populations, even if it was available.
PEPFAR tasked SCMS with removing these barriers in the supply chain and providing a safe, reliable and secure supply of anti-retroviral medicines (ARVs) and other critical commodities.
SCMS has approached the challenge to expand treatment from a number of angles.
When SCMS was launched, an independent study showed that 80 percent of development aid moved by air. We established an unprecedented procurement operation, pooling orders from 22 PEPFAR-supported countries to leverage lower prices and efficiencies in freight and shipping. By pooling orders we are able to use refrigerated ocean containers for 60 to 70 percent of our AIDS medicines--reducing costs dramatically from air freight.
We established regional distribution centers (RDCs) in Ghana, Kenya and South Africa to supply and deliver products quickly to meet client needs. We ensure 80 percent overall on-time delivery, and 95 percent or more on-time delivery from RDCs for products that require a long procurement lead time of 3 to 9 months in advance. More importantly, in a market where stock outs are endemic, our RDCs have enabled SCMS to virtually eliminate stockouts at the central level in PEPFAR-supported countries.
This is critically important to patients who require constant access to life-saving medicines, or face resistance to a whole class of medicines, putting their life at risk.
MSH: You mention pooling procurement orders from 22 PEPFAR-supported countries. Where is SCMS supporting supply chain management?
Gordon: Yes, we work in over 22 PEPFAR-supported countries, those where people are most impacted by HIV/AIDS.
MSH manages SCMS country offices in: Burma, Burundi, Côte d’Ivoire, Democratic Republic of the Congo, Ethiopia, Guyana, Haiti, Namibia, Uganda, and Vietnam. JSI manages country offices in Zambia, Zimbabwe, El Salvador, Guatemala, Honduras, Mozambique, Nigeria, Panama, Rwanda, South Africa, and Tanzania; Botswana is managed by Crown Agents.
Today, SCMS averages over $25 million in commodity procurements and orchestrates 260 deliveries each month.
Simultaneously, SCMS has improved the capacity of our local partners to quantify and plan their needs for HIV/AIDS medicines. We’ve built the local capacity that will sustain these gains over the long term.
MSH: How do you orchestrate that high volume of on-time delivery of commodities, and build local capacity for supply chain management?
Gordon: One way is through the Field Office Managed Procurement (FOMP) model. FOMP is a simple concept but is very exciting in its potential to increase the sustainability of many of the supply chain improvements we’ve seen during SCMS. Traditionally, commodities are procured from a central Project Management Office (PMO) directly from international suppliers that produce them. To bring the point of procurement services closer to the client and to local vendors, and to enhance responsibility, flexibility and accountability, we implemented a policy to have procurement operations conducted and managed by field offices--to the extent feasible for ensuring quality of product and process, and economies of scale.
Two examples of local procurement of essential medicines, excluding anti-retroviral drugs for which USG requires FDA approval, are Tanzania and Ethiopia. In Ethiopia our local procurement team procures medicines from several local wholesalers and manufacturers, as well as our international suppliers.
In Tanzania, we established a “prime vendor” which procures SCMS-approved drugs from SCMS-approved wholesalers at SCMS-approved prices. PEPFAR implementing partners place orders directly with the prime vendor and not SCMS. By using this prime vendor model, our role is to establish the essential drug supply chain and hold it accountable, not process orders.
Our FOMP procurement units in 13 countries now leverage local and regional solutions rather than depending as heavily on international suppliers. When we launched local sourcing through FOMP we focused primarily on non-pharmaceuticals such as lab supplies and equipment and the myriad of commodities that HIV/AIDS programs require. However, we discovered that in many of the countries where SCMS works, there are growing numbers of quality pharmaceutical suppliers and wholesalers. They are capable of complying with international standards and providing commodities of the same quality as you’d get on the international market.
This was very important because we procure based on best value not lowest price.
MSH: What do you mean that SCMS procures commodities based on best value, not lowest price?
Gordon: Best value includes registration, labeling, packaging, lead time, vendor performance, and other variables—in addition to price. For example, when we launched SCMS we had to get “waivers” to import pharmaceuticals because they were not registered by the local drug regulatory authority. Since then, country after country has refused waivers, with some, like Nigeria, banning import of some medicines made locally. We have changed our essential medicines strategy to develop a core list of products for countries, and then work backwards from registration, through wholesalers to manufacturers to source quality medicines.
This means considerable effort to raise the standards of local wholesalers and distributors and qualify them as SCMS partners. It also entails site inspections of manufacturers in India and China. We have seen dramatic improvement in the quality of this supply chain, which benefits all customers in-country, not just SCMS.
MSH: SCMS recently won the World Bank Science of Delivery Award for medicines procurement in complex situations. One of the key innovations SCMS is known for is increasing access to medicines by decreasing costs. How does local procurement through FOMP support this core SCMS innovation?
Gordon: FOMP is a local approach that compounds the cost savings and efficiency we’ve realized. It reduces the distance between supplier and patient and it increases efficiency. In Ethiopia, we’ve seen the shift to local suppliers result in further price reductions. In Tanzania, it increased the organizational capacity of local pharmaceutical suppliers because they upgraded warehousing standards to comply with SCMS requirements and win the contract.
Subcontracting with local, private sector service providers for procurement, storage and distribution of essential medicines increases sustainability and improves our chances of advancing the fight against HIV/AIDS.
In 2010, PFSCM also won two prestigious awards for groundbreaking work on SCMS. The European Supply Chain Summit in Prague awarded PFSCM their Supply Chain Innovation Award and Best Value Supply Chain Provider Award-competitors included P&G, Pfizer and Pitney Bowes. In 2013, PFSCM was a finalist for the Global Supply Chain Innovation Award from the Council of Supply Chain Management Professionals-finalists included Cardinal, Dow, Pfizer, and Whirlpool.
MSH: What are you most proud of at SCMS?
Gordon: Over the past 10 years, we’ve witnessed a massive expansion in the number of people receiving comprehensive treatment for HIV/AIDS.
In a meeting I attended recently, WHO indicated that 12 to 13 million people are on treatment. Independent research estimates PFSCM has a 33 percent market share of the medicines keeping these patients alive, or close to 4 million people. I’m proud of what a central role SCMS has played in making that possible.
We also worked closely with USAID to recognize WHO [World Health Organization] pre-qualification and to procure pharmaceuticals from the GMP [good manufacturing practices] approved manufacturing line. Now there are more WHO-approved facilities in Africa.
Also, in the countries where we work, the yearly cost of ARVs has fallen from $1,500 per patient to between $100 and $200. That’s allowed for a corresponding expansion in treatments; for many, it has made the difference between receiving life-saving care, and not.
MSH: Anything else you want to say about SCMS?
Gordon: I am very proud of the leadership MSH has brought to the strategic direction of PFSCM and the outstanding work of our staff throughout the organization.
Our work has been recognized in many ways. Ambassador Dr. Eric Goosby has called SCMS, “the backbone of PEPFAR.”
USAID Administrator Dr. Rajiv Shah said:
Public health supply chains were characterized by frequent stockouts, overstocks, expiry and wastage. Indeed, there was no precedent for what SCMS was tasked with achieving. Six years after the creation of SCMS, what seemed impossible has been accomplished through innovative solutions and the application of industry best practices.
Funded by PEPFAR, SCMS is managed by the non-profit Partnership for Supply Chain Management (PFSCM)—a partnership of John Snow, Inc. (JSI), and Management Sciences for Health (MSH)—which is also a contract holder for the Global Fund's Pooled Procurement Mechanism (formerly Voluntary Pooled Procurement).