Session on Leveraging donor procurement and commodity donations for market development. L- R. Lenias Hwenda- Chairperson, Mariatou (Tala) Jallow Head of sourcing and procurement of health products - The Global Fund, Edwin de Voodg- Managing Director IDA; Jantine Jacobi - UNAIDS Representative and Country Director for Kenya; Atieno Ojoo - UNICEF Supply Division President of Leadership Development Programme; René Berger USAID Kenya.
Nairobi, Kenya (2016) Lenias is passionate about improving access to quality affordable treatments.
Reflecting back on some of our discussions in Nairobi at the Africa Pharmaceutical Summit in 2016, Dr Muraguri, the Kenyan Principal Secretary of Health in the Ministry of Health highlighted medicines as the biggest driver of healthcare costs in Kenya. Unless Kenya addressed the spiraling cost of accessing medicines by its population, achieving affordable healthcare would be impossible. I have heard different versions of this statement from many African Ministry of Health officials.
We had all gathered to swap ideas on how to mitigate against the high prices of medicines and the poor sustainability of many solutions today. The CEO of Kemsa, Dr John Munyu, outlined a host of challenges facing medicines procurement across the continent, not just in Kenya. They included lack of data, lack of professional experts and weak infrastructure.
The old approaches were not producing the good results that we all sought. The ultimate solution eluded us, but we agreed on one thing. Our current paradigm needed to change. The problem, everyone agreed, was too large for any individual organization to solve alone. We discussed the merits of many solutions. From health systems leap-frogging development to avoid the lengthy path to salvation, to local production and effective market development.
The panelist on the session that I chaired included Mariatou (Tala) Jallow from the Global Fund, Atieno Ojoo from UNICEF, René Berger from USAID and Edwin de Voogd from IDA. These organizations worried about the shrinking supply base, supply security and sustainability of medicines supply in a global environment increasingly facing production constraints. Tala and René saw local production offering a good solution to the shrinking supply base. This gave rise to the question that Dr Kipkerich Koskei, the Registrar of Kenya’s Pharmacy and Poisons Board thought needed a convincing answer: how to sustain local production with imports of more than 70% of raw materials for local production from Bangladesh, Pakistan, China and India. The high cost of active pharmaceutical ingredients were amongst his chief
concerns that impacted the sustainability of the local industry. Sustainable industry development requires a sustainable source of pharmaceutical ingredients.
Stricter international standards such as European Medicines Agency, United States Pharmacopoeia and the British Pharmacopoeia, reduced the ability of local producers to export to countries that use such standard as a reference. Multinational companies were increasingly using contract manufacturing to meet the growing demand for stricter standards, but local producers would struggle to do the same. Kenya had introduced a number of measures to support local producers. For example, when the government purchases medicines locally, there are no quality considerations because locally made products that are registered are considered as meeting national standards. There is no VAT on pharmaceutical raw materials and Kenya’s Pharmaceutical Procurement Act 2016 requires that 40% of procurement should be done from local sources. There was a dilemma for local producers, however, from the fact that when the Ministry of Health buys medicines locally, it wishes to buy them at a price that is competitive relative to other options available to them. The price of locally produced medicines would need to be competitive with their Indian and Chinese counterparts, many of whom are vertically integrated companies with a fraction of the cost for pharmaceutical ingredients and can therefore sell their products at low cost and still break even.
These policy dilemmas are facing many African governments that seek to promote the local industry as a solution towards the spiraling cost of medicines. Countries need national policies that are coherent and seamless on trade, investment, procurement and taxation if they are to be effective and achieve the desired outcomes. Achieving the needed policy coherence is clearly a work in progress for many governments. Leveraging collaboration across partners from different sectors could provide an immediate path towards progress and better performance in areas where countries face bottlenecks including in procurement and supply chain management of medicines. Countries need supply chain strategies that incorporate rigorous risk management, benchmarking and performance management. No doubt, this is a conversation that needs to continue, and we need to be open to iterating solutions, both innovative and from precedence, to find what works best in each unique context. There can be no one size fit all solutions.