The Weakest link: The supply chain in developing countries

1
The Weakest link The supply chain in developing
countries

• Jonathan Mwiindi
• Programme Officer
• Ecumenical Pharmaceutical Network

2
Where does the middleman meddle with the supply
chain?

• The Supply chain as we know it
• Raw Material
• Manufacturer/Agent/
• Government
• Retailer
• Patient/consumer

• The real supply chain
• Raw material
• Manufacturer
• Middleman
• Manufacturer/agent/
• government
• Middleman
• Retailer
• Middleman
• Consumer/patient

3
How does the middleman play a role in high costs
of drugs?

• They acquire Tendering advice from procurement
  official some kickback when tender goes
  through.
• Prescription audits in Pharmacies knowledge of
  doctors prescription habits pressure on the
  clinician to prescribe the company product.
• Relationship and payment based discounts
• If you ensure that a cheque from you institution
  is ready by time x you will get y. This
  discount is never passed to the institution or
  patient
• Some communities pass special discounts to each
  other. This enriches the communities as the
  discount is never passed to the patient.
• Retailers receive incentives for purchase of
  certain products.
• 2000 packs and get a free TV etc.
• Major shift from Medical Representative to Sales
  Representatives
• Focus is not offering information on the best use
  of a drug but how much volume has the sales rep
  generated from the Prescriber.
• Incentive based pay for the sales representatives

4
What is the mission sector doing?

• Establishment of Drug Supply Organizations
  (DSOs)
• Procurement pooling through DSOs.
• Advisory formulary committees used to guide
  inventory at DSO level (mainly focusing on
  essential drugs)
• Transparent tendering systems at the DSO level
• Pre and Post sale quality analysis MEDS (K)
• Cascading of Capacity building.
• EPN to DSOs, DSOs to in-country lower level
  institutions

5
Some Drug Supply Organisations.

• There are over 16 major (Church Owned) drug
  supply agencies/units serving over 110million in
  SS Africa as at 2005

5
6
Cost recovery at the mission hospitals.

• Patient fees The biggest chunk of mission
  Hospital Operation budget is from patient fees.
• Missionaries
• In-kind donation e.g. of their time
• Paying for some of the patients
• Governments sometimes.
• Some drugs. If or when available
• Personnel secondement in some countries
• Hospital is stuck with the cost Majority of the
  mission hospitals have significant bad debt
  resulting from lack of cost recovery

7
Some characteristics of mission hospitals

• The mission of the mission hospital is to the
  very poor.
• Payment is often demanded after service provision
• Majority of the patients cant pay thus, wont pay
• Of those who can pay. A significant number cant
  pay for non-tangible services e.g. consultation,
  diagnostics etc.
• They can only pay for tangibles i.e. drugs
• The cheapest drugs attract the highest margins

8
Summary Questions

• How can we ensure transparency in the supply
  chain in developing countries? Considering
• It touches on unethical behavior/lack of
  integrity
• Most of it is invisible
• Where/How do we find this information?
• How should this information if collected be
  disseminated?
• Should Comparison alone be the standard or should
  other variables be included?
• Compare Apples to apples i.e. govt to govt ,
  mission to mission
• How do we link transparency to access of
  medicines? Should we link the two?