Does global procurement and price negotiation through the Global Fund reduce HIV commodity costs?

Trends in procurement costs for HIV commodities: a seven-year retrospective analysis of Global Fund data across 125 countries. 

Wafula F, Agweyu A, Macintyre K. J Acquir Immune Defic Syndr. 2013 Nov 20. [Epub ahead of print]

Background: Nearly 40% of Global Fund money goes towards procurement. However, no analyses have been published to show how costs vary across regions and time, despite the availability of procurement data collected through the Global Fund's price and quality reporting (PQR) system.

Methodology: We analyzed data for the three most widely procured commodities for the prevention, diagnosis and treatment of HIV. These were male condoms, HIV rapid tests, and the ARV combination of lamivudine/nevirapine/zidovudine. The compared costs, first across time (2005-2012), then across regions, and finally, between individual procurement reported through the PQR and pooled procurement reported through the Global Fund's voluntary pooled procurement (VPP) system. All costs were adjusted for inflation and reported in US dollars.

Key findings: There were 2 337 entries from 578 grants in 125 countries. The procurement cost for the ARV dropped substantially over the period, whereas those for condoms and HIV tests remained relatively stable. None of the commodity prices increased. Regional variations were pronounced for HIV tests, but minimal for condoms and the ARV. The unit cost for the three-table ARV combination, for instance, varied between US$0.15 and US$0.23 in South Asia and the Eastern Europe/Central Asia regions respectively, compared to a range of $0.23 (South Asia) - $1.50 (Eastern Europe/Central Asia) for a single diagnostic test. Pooled procurement lowered costs for condoms, but not the other commodities.

Conclusion: We showed how global procurement costs vary by region and time. Such analyses should be done more often to identify and correct market insufficiencies.

Abstract access 

Editor’s notes: With the flatlining of HIV resources, it is important that HIV investments are optimally used, and achieve good value for money. The Global Fund has played a major role in financing HIV programmes, with over a half of the US$23 billion given since 2002 going to HIV. A large proportion of Global Fund grants go towards the procurement of pharmaceuticals and other health products. The global fund uses its (and partners, such as PEPFAR and Clinton Health Access Initiative) bulk purchasing power to negotiate lower commodity prices for countries.  It has also set up systems to support countries to negotiate costs and identify cheap suppliers. This paper uses information from the Global Fund across time and recipient countries, to explore how costs of 3 HIV related commodities have changed over time, and/or vary regionally. The trends observed reflect a variety of market factors, and the increasingly global nature of commodity markets. The reduction in antiretroviral therapy (ART) costs are likely to result from increased competition across suppliers, the move to generic drug use, and the joint negotiation in cost reductions, and there may be scope for further price reductions. In contrast, the limited variation in costs for HIV tests and male condoms suggest that markets for these commodities have stabilized, leaving limited room for negotiation. 

Africa, Asia, Europe, Latin America, Oceania
South Africa
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