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lessons and rapid reform for vaccine procurement system
THE ALLIANCE must
adopt a more efficient and transparent process for buying vaccines, its Board
has agreed. The decision follows a review(1) of the first
round of procurement and introduction of new vaccines which identified significant
shortfalls in the system and recommended immediate changes.
In large part, the problems with the first round of buying vaccines, which took
place during 2000 and 2001, resulted from the ambitious timetable that GAVI set
itself. Immediately after its launch, the Alliance set out to enable low-income
countries to introduce new vaccines against two important diseases hepatitis
B and Haemophilus influenzae type b (Hib). In the process, it sought to
demonstrate to a sceptical industry that there is a real market for newer vaccines
in developing countries.
Whitehead: the world has changed
while the review found that the Alliance had made remarkable progress in getting
new vaccines to more children at reasonable prices, it found a lack of credible
and predictable demand for vaccines, mixed messages to suppliers, and muddled
aggregate performance of a group of partners with "unclear overlapping roles",
none of whom was ultimately accountable for the process. In these respects, the
review concluded, the first round was "a missed opportunity".
serious was the gap between the awards to manufacturers to supply vaccine and
the amounts actually bought. For 2001, UNICEF indicated that it would want 98
million doses of vaccine but bought only 18 million. For hepatitis B monovalent
vaccine, only 11% of the volume that was requested was actually bought.
Management Consulting, a firm that has previously analysed vaccine supply issues
for UNICEF, was commissioned by GAVIs Financing Task Force and the Vaccine
Fund to produce the review. The goal was to learn lessons for the immediate future,
not to assign blame for the past. Piers Whitehead, a co-author of the report and
vice-president in the firms San Francisco office, told Immunization Focus
that the first procurement round had been a steep learning curve for all involved.
"Its important not to ignore the fact
that until now, no new antigens have been introduced into the Expanded Programme
on Immunization since it was set up in the early 1970s," said Whitehead. In the
past, he added, the public sector had been able to get the vaccines it has needed,
and so had not needed to invest as much time and energy in accurate forecasting
of demand as it does today. "But the world has changed," said Whitehead.
To ensure the lessons of the first round of procurement are learnt before the
second begins, immediate action is needed. The tendering process for the second
round is due to start just weeks from now, in September. At its meeting in Paris
on 19 June, the Board approved the reviews recommendation that a single
project manager will coordinate the procurement of vaccines and the roles of each
partner in the process. The project manager will be accountable to a small oversight
body to be appointed by the GAVI Board.
as assessing the first procurement round, the Mercer review also made an assessment
of the global vaccine market and the implications of the market structure for
GAVIs procurement strategy. The review confirmed that, although the market
has grown sharply, more than doubling since 1992, the growth is primarily in vaccines
for the industrialized countries. GAVI is a small player with relatively little
leverage in determining the activities of the major pharmaceutical companies,
although it is a major player for emerging suppliers in middle-income and low-income
Mercer reviews key recommendations:
a project management approach to planning and implementing key Alliance initiatives,
such as procurement of vaccines
- Pilot the project
management approach with the upcoming procurement round for 2004-6
Create or instruct an oversight body to monitor progress and hold the project
manager and relevant individuals and institutions accountable for performance
Ensure that information on demand, product preference and future needs is shared
with industry, unless there is a well-defined reason not to do so
Dr Tore Godal, executive secretary of GAVI, said the review had highlighted the
complexity of vaccine procurement and the importance of understanding a market
where supplies had once been abundant but are now more closely balanced against
demand. "Another lesson is that we need longterm strategic direction," he said.
"The industry needs credible multi-year plans from the public sector before it
can invest in producing vaccines. Donor commitments need to take account of this."
The review did note some clear positive outcomes
of the first round of procurement. First, the Alliance had achieved a "unique
accomplishment" in successfully increasing childrens access to under-used
vaccines in an unprecedentedly short period of 14 months from start to finish:
in total 41 million doses of DTP-HepB and DTP-HepB-Hib are available for delivery
during 2002-2003. Second, and equally important, the orders for the vaccines have
created a new "pull" on the industry, stimulating manufacturers to increase their
capacity to make these vaccines and to compete with each other. In the longer
term this will mean more plentiful and affordable vaccines.
Third, the prices negotiated for the vaccines were also reasonable, the review
found. For example, the DTP-HepB-Hib combination was bought for almost half the
average price at which monovalent Hib vaccine is sold in industrialised countries.
These prices benefited the public sector, but also gave manufacturers an appropriate
return for their products, breaking the tradition that vaccines for the Expanded
Programme on Immunization should be sold at near-cost price. While Mercer acknowledged
that this break with tradition is "controversial to some", its review advised
that vaccine producers will need appropriate returns if the supply of vaccines
for low-income countries is to be sustainable.
reviews analysis of the problems with the first round showed that several
factors were responsible for the severe mismatch in forecasted and actual demand.
One key reason was that GAVI had promoted the use of combination vaccines before
the supply situation was made clear by industry partners. When it emerged that
supplies of these products would fall well short of demand, the Alliance was forced
to "ration" them and some countries were offered only the option of using the
plentiful supplies of monovalent hepatitis B vaccine instead. As a result, two
big countries that had initially indicated that they would want hepatitis B vaccine,
but in combination, decided to delay its introduction. This was "a significant
source of error" in the forecast, said Whitehead. The review says that, although
the gap between the awards and the amount of vaccines bought will narrow as these
countries come online, "from the supplier perspective, this delayed volume should
probably be considered permanently lost."
factor was that awards to manufacturers were based on the most optimistic of three
demand scenarios. Further, the award process added an extra 17 million doses to
that high figure. Several possible explanations for this decision are suggested
by the review. The process of awarding tenders appeared to have been required
to serve two contradictory purposes: first, ensuring adequate supplies for countries,
which UNICEF has traditionally done effectively, and second, establishing from
the industry how much vaccine was available.
The extra 17 million doses may have
been added because companies had made bids for certain quantities that UNICEF
had to accept or reject in their entirety. "Regardless of explanation, the gap
between award and offtake does not support the objective of credible and predictable
demand," the review concludes.
was so short, vaccine orders had to be placed before demand requirements were
clearly known. "Obviously, given the pressure of time and the new ground being
broken, some inaccuracy was unavoidable," says the review.
Three "semi-independent" processes had been used by the Alliance to establish
countries vaccine requirements, the review found. These were the countries
own proposals for awards, a forecast developed for the Financing Task Force, and
UNICEFs own consultations with countries. "In aggregate, from a procurement
and forecasting perspective, these yielded the disappointing outcome for 2001,"
the review concludes. According to Steve Jarrett, Deputy Director of the UNICEF
Supply Division, "The start-up was slower than expected due to delays in the availability
of vaccines as well as countries decisions to change the timing, quantity,
and in some cases, types of vaccine demanded."
the standpoint of the vaccine industry, the problems were centred around a lack
of openness and collaboration. Although the forecasting of immunization demand
was shared with the industry for the first time by GAVI, the information was in
the form of the number of children to be immunized with given antigens, rather
than guidance about the actual products such as combination or monovalent
vaccines that countries wanted. "Further, country level demand data was
not shared with suppliers as it became available," says the review.
One reason for this, says Whitehead, is because the public
sector is traditionally wary of providing the private sector with data that might,
in theory, be misused by companies to exert inappropriate influence on countries
to buy their own particular products. However, says Whitehead, a well functioning
Interagency Coordinating Committee in countries should be able to detect any such
Of course, the Alliance
must ward against conflict of interest such as giving "insider" information
to one company in favour of another. But, says Whitehead, the old tradition in
which the public sector saw industry almost as an adversary has to end.
The Mercer review also examined the way the various Alliance partners worked together.
It praised the fact that "an incredible amount of work" has been done in a short
time. But it highlighted the difficulties faced by a loose alliance in implementing
policy as distinct from developing it. The roles and responsibilities of
GAVIs different players were not clear. "On a self-reported basis, no partner
claims lead responsibility for forecast development, or advising countries on
vaccine choices," says the review, while two partners claim lead responsibility
for procurement strategy and development.
GAVI can add value to the multidisciplinary process of forecasting and procurement
by bringing different partners with the relevant disciplines and skills together,
says the review. But to deliver efficiently, there must be a clear chain of command
and a single coordinator to carry responsibility the model followed by
project managers in the private sector.
1. Lessons Learned:
new procurement strategies for vaccines: Report to the GAVI Board (in press).
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