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ARC ENGAGEMENT STORIES: LOCAL PHARMA DELIVERS

NIGERIAN PHARMACEUTICAL COMPANIES ARE PARTNERING WITH GOVERNMENT TO SUPPORT ITS PROVISON OF NIGERIA’S BASIC MINIMUM PACKAGE OF HEALTH SERVICES.

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“ARC plays a key role in rebuilding trust between the organised local pharma manufacturing sector and the public sector with a view to help strengthen supply chain systems that will guarantee last-mile delivery of life-saving health commodities to facilities that are underserved. This unconventional model sure aligns with our group’s vision towards achieving medicine security in Nigeria and beyond.” Executive Secretary, PMG-MAN

Primary health care has been the cornerstone of Nigeria’s health system for decades, but delivering these services has been difficult. Misaligned or outdated legal frameworks resulted in conflicting roles and responsibilities among the federal, state, and local governments, insufficient funding, and inadequate human resources, leading to poor quality services[1]. In 2014, the Federal Government passed the National Health Act, a major health sector reform measure that sought to address these problems.

Among the many important provisions, the act defines a Basic Minimum Package of Health Services to which every Nigerian has a right and integrates all primary health services under the authority of State Primary Health Care Development Agencies (SPHCDA). It also established the Basic Health Care Provision Fund (BHCPF) with guaranteed annual funding of one per cent of the national consolidated revenue fund as well as other funding supports such as grants by international donor partners and/or funds from other sources. Through BHCPF, Nigeria aims to achieve its universal health coverage target. The Basic Minimum Package of Health Services focuses on nine key areas, determined by the national health indices, with a priority on disease burden, cost-effectiveness, and equity.

Funding gateways

There are three gateways for disbursement of funds under the BHCPF project – the National Health Insurance Scheme, the National Primary Healthcare Development Agency (NPHCDA), and the Federal Ministry of Health (FMOH). The funds from the NPHCDA gateway will be sent directly to health facilities for upgrading their infrastructure, procurement processes and human resources for health. Roughly 50 medicines will be provided free to primary health care clients. In 2017, Abia, Niger, and Osun states were selected by the FMOH to pilot the BHCPF to test and refine implementation policies, processes, and structures.

A major gap that needed to be addressed in the BHCPF project was the supply chain for health commodities, including how the medicines would be procured and distributed to primary health clinics, the flow of funds to the suppliers, and the flow of information, including stock levels and consumption data, to aid the quantification and forecasting process.

Supply chains for health commodities in Nigeria make up a complex web of multiple vertical supply chains for each product category. A 2010 analysis of public health supply chains in Kano and Edo states found that state agencies typically manage over a thousand different health commodities[2]. Most essential medicines are procured at the state level using drug revolving funds. However, public health programme commodities that focus on HIV, TB, leprosy, malaria, immunisation, and family planning are often received from donors, either via implementing partners or directly supplied to federal or state ministries or agencies. The distribution intervals, mechanisms, and reporting requirements vary for each product category or health/disease programme. This complexity, along with chronic undercapitalisation of state drug revolving funds for essential medicines, has contributed to poor on-shelf availability of many life-saving medicines. To address this challenge, in 2016 the FMOH developed and launched the Nigeria Supply Chain Policy for Pharmaceuticals and Other Healthcare Products.

ARC’s role

In early 2018, the FMOH engaged the Africa Resource Centre’s (ARC) Nigeria office to help design a supply chain that would ensure the availability of quality medicines at every primary health clinic. One of the goals was to design options that could leverage the expertise and resources of the local private sector. ARC brought together a team that included subject matter experts from the private sector to design a supply chain model based on a supply chain landscape analysis conducted in three pilot states. The team also defined key performance indicators to monitor stock out rates, access to quality medicines, good pricing, and data visibility. This process resulted in two models that take advantage of private sector capability in demand and supply planning, procurement, warehousing, and distribution:

  • The first model focused on local community pharmacies, which would buy the commodities from approved suppliers. Clients would fill their prescriptions at the pharmacy, and the pharmacy would be reimbursed by the local health facility from its BHCPF funds. However, this model didn’t address the need to guarantee quality and good pricing.
  • The second model proposed that health facilities have a direct relationship with local manufacturers already distributing in their states and leverage those existing distribution networks. This model would test whether states could procure directly, negotiate prices, assure quality, and move product directly to the health facilities, bypassing state and local government medical stores. It would be based on guaranteed minimum volumes, ensuring exclusivity and guaranteed pricing and quality. The unit price would include the cost of distribution.

Figure 1. The supply chain design (Model 2): The flow of information, commodities, and funds

The second model was the preferred approach for the BHCPF’s National Technical Committee and was adopted as policy. Known as the BHCPF Supply Chain Public-Private Partnership, the model enables health commodities of high quality to get to the facilities where they are needed, at a reasonable price. Health workers are able to focus on attending to and dispensing medicines while private sector companies ensure that medicines and other required commodities get to the health facilities.

Following a reassessment of the supply chain capacity of the pilot states, with support from its South Africa-based Solutions Centre, the approach has been modified to have the pharma companies responsible for the procurement and distribution to the state central medical stores or the designated warehouse for the state. Health facilities will then be encouraged to engage local transporters to deliver their products directly to the health facilities to help reduce the cost of delivery.

Figure 2. Current supply chain design: The flow of information, commodities, and funds

Private sector collaboration

Establishing this public-private partnership depended on bridging a history of distrust between the government and private sector and getting the private sector to recognise the opportunity and benefit. ARC has developed a wide network of private sector partners across Africa, and in Nigeria this includes the Pharmaceutical Manufacturers Group of Manufacturers Association of Nigeria (PMG-MAN). PMG-MAN signed a memorandum of understanding with ARC to serve as a gatekeeper to the local pharmaceutical manufacturers’ group to protect its members. ARC, in collaboration with PMG-MAN and the Pharmacist Council of Nigeria, assessed the supply chain system of nine local pharmaceutical companies for good storage and distribution practices. All nine were found to meet the required standards.

One of the significant innovations in this model is that the nine companies are acting as a consortium for the first time. A maximum of five companies will be selected for each pilot state and one of the companies will be designated as the prime – this organisation will be responsible for all engagements with the group of companies for the state. The prime is responsible for providing cross-docking facilities, distribution of products to the state warehouse and all communications with the state BHCPF team. ARC is facilitating engagement of states/health facility teams with the pharmaceutical consortium.

Logistics data from last-mile primary health clinics are essential for making this new supply chain design successful. Each state will have a focal supply chain manager that will lead the collation and analysis of data from the health facilities. Using reports from the Logistics Management Information Systems, a demand forecast of the resupply requirements of each primary health clinic will be developed in a centralised process managed by each state and supported by the suppliers for each product. The forecast data will then be shared with stakeholders and a purchase order given to the suppliers. The prime for each state will then consolidate the orders, receive supplies from the individual suppliers, and deliver to the state. Suppliers are paid based on proof of delivery. An additional idea being explored is a “basket fund” that would be managed centrally by the BHCPF National Committee and which would guarantee payment in case a facility is unable to make timely payment, as defined in the framework contract.

Looking Ahead

Currently, ARC is supporting the national BHCPF team with preparing Niger state for the rollout of the supply chain model. ARC supported the development and adoption of a roadmap that captures the key next steps prior to procurement.

The operations of the BHCPF Supply Chain Public-Private Partnership are only just beginning, but Nigeria is a dynamic country in which to test new ideas. With 36 autonomous states, there are many opportunities to try new approaches and different models to see which ones work best in order to make life-saving medicines available to all who need them.

The stories in this blog series illustrate the different ways ARC is helping countries engage private sector expertise to strengthen their health supply chains and design innovative new approaches that ensure medicines are available to the people who need them.

Read the overview and the case study about how ARC helped to ease the transition to a new HIV therapy in Kenya and South Africa.

 

[1] Aigbiremolen, A.O. et al. (2014), Primary Health Care in Nigeria: Strategies and Constraints in Implementation. International Journal of Community Research, 3(3): 74 – 79

[2] USAID | DELIVER PROJECT, Task Order 1. 2010. Nigeria: Segmentation of the Supply Chain for Essential Medicines

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