For a period of three years from 1 October 2005 to 30 September 2008
Proposal/grant title: / Overcoming the HIV/AIDS epidemic in Ukraine
Principal Recipient: / The International HIV/AIDS Alliance
Country: / Ukraine
Component: / Treatment, care and support
Round: / 1
Phase 1 or Phase 2: / Phase 2
Grant number: / UKR-102-G04-H-00
Product category[1] / Year 3 (US$) / Year 4[2](US$)
(optional) / Year 5 (US$) / Total 3 years
(US$)
1 / Pharmaceuticals / 5,667,789[3] / 8,088,431 / 8,430,762 / 22,186,982
2 / Health products & commodities
(excluding pharmaceuticals) / 924,081.7[4] / 541,550 / 541,550 / 2,007,182
3 / Health equipment (X-rays, laboratory equipment, etc.) / 17,391.68[5] / - / 637,375 / 654,767
4 / Services (related to PSM e.g., QA, MIS, RUD, etc.) / 613,017.9[6] / 586,480 / 359,001 / 1,558,499
5 / Non-health products and services (e.g., vehicles, computers, construction, financier consultants, etc.) / - / - / - / -
Total / 7,222,280[7] / 9,216,461 / 9,968,688 / 26,407,430
Total grant size (US $) / 21,298,959 / 22,806,471 / 23,086,679 / 67,192,109
Total procurement as % of grant / 34% / 40% / 43% / 39%
Person (name, title, department) with overall
responsibility for this grant. Provide name and contact
details (tel., e-mail, etc.). / Julie Saunders
Director: Finance and Administration
Tel: +44 1273 718910
Person (name, title, department) with overall
responsibility for all PSM activities. Provide name and
contact details (tel., e-mail, etc.). / Serhiy Filippovych
Head of Team: Treatment, Procurement & Supply Management
Date of submission(s): / 25th July2006
Introduction
[Provide a brief introduction of no more than one page [we’ve got 2 pages but I guess that does not matter], including key objectives of this Global Fund financed project, and a brief overview of key implementing partners and their respective roles and responsibilities.] – delete before submission
On 15th March, 2004 the International HIV/AIDS Alliance (the Alliance) entered into a Stewardship Agreement with the Global Fund to Fight AIDS, Tuberculosis and Malaria (GF) to implement and manage the program “Overcoming the HIV/AIDS epidemic in Ukraine” (the Program). Initially this agreement was to cover an interim twelve-month period but was later extended until 30th September 2005 (the end of Phase I of the Grant) following a request by the Global Fund for the Alliance to continue its role as PR. The Grant renewal decision regarding the Phase II was communicated to the Alliance on 13th July, 2005. On September 29 2005, the Stewardship Agreement was extended for three years to 30 September 2008 (Phase II) with the Alliance as the PR.
The overall goal of the Program is to reduce HIV prevalence, HIV-infection morbidity, and AIDS mortality in Ukraine. The Program consists of 4 interrelated and complex directions namely:
- improving quality and significantly increasing availability and accessibility of antiretroviral treatment for people living with HIV/AIDS;
- further developing and scaling up of prevention services aimed at communities significant to the epidemic in Ukraine;
- supporting the development of improved care and support services for people and communities affected by the epidemic, including increased care and support for the terminally ill; and
- significantly improving the national system of monitoring and evaluating the development of the epidemic as well as the national response to it.
This document presents a Procurement and Supply Management (PSM) Plan required by the Global Fund for Years 3 to 5 of Phase II of the Program. The purpose of this plan is to outline the intended approach with regards to procurement and supply management of health products including pharmaceuticals (ARVs, drugs for opportunistic infections (DOIs) and side effects, drugs for substitution therapy), infant formula for PMTCT, laboratory equipment consumables as well as prevention commodities such as condoms and syringes.
During the period of the Stewardship Agreement and pursuant to Annex A section (C) paragraph (2) of the Stewardship agreement the Alliance directly contracted the International Dispensary Association (IDA) for the procurement of ARV’s. To manage the procurement process of non-ARVs, medical equipment for diagnostics and relevant supplies the Alliance contracted Program for Appropriate Technology in Health (PATH). In parallel, the Procurement and Supply Management (PSM) Unit was established at the Alliance to oversee, co-ordinate and monitor all procurement and supply chain related activities.
In summary we plan to broadly follow this approach for Year 3 of the program. However, following an organisational review of the Alliance in 2005, a number of measures are being put into place to strengthen this component of the program. This includes merging of the Treatment team and Procurement and Supply Management team into one team called Treatment, Procurement and Supply Management (TPSM), the aim of which is to further strengthen the management structure and to increase co-ordination between procurement and treatment. The team’s role will be to continue to co-ordinate and monitor all procurement and supply chain management activities including co-ordination of activities of third parties including procurement agent(s) (e.g. IDA, PATH and individual consultants). The new structure has been implemented and is fully functional since October 2005. Update this section – is it now functional?
In Year 3 PATH will continue to manage procurement contracts for non-ARVs, medical equipment for diagnostics and supplies in addition to providing technical support to the TPSM team. Initially it was envisaged that a 2nd PR would be selected to take on the management responsibility of the procurement component. However, as this is no longer the case, it is now envisaged that in Year 4 the management of non-ARVs will be transferred from PATH to the TPSM team in Ukraine. In order to ensure a successful and smooth transition, this will be accompanied by technical support and mentoring from PATH until approximately the end of December 2006. The support requirements and progress will be reviewed periodically.
For the first procurement round of ARVs in October 2005, we continued to contract IDA and this approach has been reflected in the Amendment to the Stewardship Agreement dated 29 September 2005. For the second round in 2006 a Limited International Competitive Bidding (LICB) procedure was undertaken to select a procurement agent.
Prevention related commodities (including condoms for IDUs, needles, and syringes) distributed by local non-governmental organisations will continue to be procured directly by the sub-recipients (SRs) directly. Decentralisation of procurement of these commodities is aimed to ensure flexibility necessary to satisfy individual needs, support local choice of commodities appropriately tailored to the needs of clients, enable local responsive planning, reduce the risk of stock-outs, promote the development of local relations and social capital of implementing partners, facilitate capacity building of local organisations, lessen associated storage, administration and distribution costs as well as financial risks. The Alliance facilitates sharing of information across the region in order to ensure procurement at lower prices. The potential loss of economies of scale and exemption from taxes are offset by the benefits described above.
- Provide an organizational chart of the PSM unit and indicate how it fits into the overall structure of the PR, NDRA, MOF, MOH (indicate all relevant dependencies). – delete before submission
Treatment, Procurement and Supply Management team structure:
The TPSM team sits within the Finance and Administrative Department of the Alliance Ukraine which is co-ordinated by the Deputy Director. Necessary inputs of international expertise are coordinated by a responsible specialist at the International HIV/AIDS Alliance Secretariat, who also ensures access of the team to ongoing managerial and technical support. In addition to this local experts will be also be sourced to provided additional support as required.
Please see Annex 3 for the job descriptions for each of the positions outlined above. In addition to this Annex 4 provides a brief outline of the key areas of expertise for key members of staff of this structure.
As mentioned compliance of the procurement of de-centralised commodities are monitored by the Field Support Finance. The team sits within the Finance and Administration Department and reports to the Director of Finance. The team composition is outlined above. The HoT: FSF ensures proper management of the Field Support function of the Alliance. This includes enabling and co-ordinating technical support to partner organisations (sub-recipients) in all areas of financial management, ensuring that donor restrictions are passed onto partner organisations and are complied with and that funds disbursed to sub-recipients are properly accounted for. Each of the officers are responsible for a Region and work closely with Field Programmes to deliver the required technical supportto sub-recipients and ensure that grants are effectively monitored.
Address any other relevant issues. – delete before submission
1. PRs’ capacity to conduct Procurement and Supply Management – PSM
1.1 Management capacity
This section is intended to assess the PR’s capacity to manage and implement various activities. – delete before submission
Activity / Which organizationand/or department is
responsible for this
function? If this function is being outsourced, then
indicate this in the table
(if more than one, include all organizations). / What type of organization is
responsible for this
function?
(PR, SR,
Procurement Agent or Other) / Indicate if there is need for additional staff or technical
assistance[8]
(Yes/No)
Procurement policies &
systems / The Alliance, TPSM team
PATH / International non-governmental organizations
PR and contracted partner / Yes:
ITA is required for support in:
LICB tender processes and
Single sources procurement
No cost added
Quality assurance and quality control of pharmaceuticals / Outside Ukraine:
WHO QSM project & GMP compliant manufacturers;
IDA’s or other contracted laboratory;
In Ukraine:
State Inspection for Quality Control of Pharmaceuticals / Contracted party outside Ukraine;
NDRA in Ukraine / Yes:
TA required for developing QC SOP;
Cost – up to $3000 (PATH & US Pharmacopeia)
Additional costs (TBD) for testing in country
International and national laws (patents) / The Alliance / PR / No
Coordination / The Alliance, TPSM team / PR / No
Management Information Systems (MIS) / Alliance TPSM team,
National AIDS Centre (NAC) / PR & SR / No
Product selection / National AIDS Centre (NAC); working groups of national & WHO experts / SR, working groups / No
Forecasting / National AIDS Centre (NAC); TPSM team / SR / Yes:
ITA required for forecasting laboratory needs (obtained from CHAI, WHO, etc)
Procurement and planning / ARVs : The Alliance, TPSM team, IDA or other contracted procurement agent
Non-ARVs: PATH / Procurement agent, contracted partner / Yes:
ITA required for LICB procedures, direct procurement of single source products
Provider – PATH Cost - $26 576
Inventory management / Ukrainian State Enterprises “Ukrmedpostach”, “Liky UKrainy”, regional AIDS Centres and narcological dispensaries / Contracted parties, SR / No
Distribution to other stores and end-users / NAC, “Sociotherapy”, Alliance TPSM team (responsible for the planning of distribution);
Ukrainian State Enterprises “Ukrmedpostach”, “Liky UKrainy” (responsible for the execution of the distribution), / PR,SR, contracted parties / No
Ensuring rational use / NAC, Alliance TPSM team / PR & SR / No
1.2 Procurement policies, systems and capacity
Does the organization that will conduct the procurement have written and detailed regulations and manuals that emphasize the need for transparency and competitiveness? If not, indicate how and when this gap will be addressed. Ensure the manual is available for LFA to review. – delete before submission
With technical assistance from PATH the Alliance modified guidelines and policies and procedures developed by PATH for the Program to make them universal and appropriate for the Alliance’s procurement of goods and services. The guidelines and additional annexes are attached in Annex 6. (Zip file)
Guidelines for ‘de-centralised procurement of commodities is undertaken through the ‘Prime Vendor’ method. Details of the process and of the companies used is outlined in section ‘2.3 Procurement and planning, Procurement Strategy and approach’. These are consistent with the Global Fund recommendations and are included in every grant agreement with the NGOs. As per letter sent circulated to the sub-grantees NGOs can purchase the commodities either at the established ceiling price or at lower prices by means of competitive procurement. The translated exert from the letter explaining the procedure of such procurement is attached in Annex 7.
Indicate the estimated total value of procurement conducted by this department during the past 12 months (include all products and all sources of funding). – delete before submission
The total value of procurement and supply management costs under Phase I of the Global Fund grant was $8,874,116 (15th March 2004 – 30th September 2005). This included, ARVs, DOIs, drugs for substitution therapy, infant formula and equipment and diagnostics and related supply management costs.
The costs for condoms and needles and syringes are covered by the on-ward grants to the Alliance’s grantees. The estimated total value for the period March 2004 – September 2005 was$696,695.06.
Indicate the estimated value of total procurement to be conducted over the next 12 months including all new sources of funding (including procurement to be financed by the Global Fund). Express the numbers in US$ and as a percentage of current procurement capacity. Explain how the PR will manage this increase in procurement efficiently. – delete before submission
The value of the procurement and supply management costs for Year 3is $6,665,898 (for central procurement), decentralised goods $541,550 and other health equipment[9] (procured directly by one AIDS Centre and charged to line 2.2) $14,832. The total value of procurement in year 3 of is $7,222,280[10]. During the second procurement round in March/April 2006, in addition to procuring ARVs for July to December 2006 the programme also procured 3 months bufferstock (for people on treatment as of December 2006).
In terms of substitution therapy, please note, in Year 4 and 5 it is planned that the programme will procure methadone. However, the prices initially indicated for methadone for Years 4 and 5 were estimates and through recent research it has been indicated that the price of Methadone may increase and therefore may have an impact on the budget and targets. However the exact cost has not been confirmed and once the tender review process and price negotiations are underway the PR will provide further information to the Global Fund and LFA.
This is fully funded by Global Fund and is 100% of current procurement capacity as the procurement is implemented specifically for the Program in Ukraine by the dedicated project implementation unit. Specific measures will be taken in order to facilitate the scaling up of this component. For example the treatment team and the procurement and supply management team has been merged to further strengthen the management structure and to increase co-ordination between procurement and treatment. The number of service providers trained will also increase in order to facilitate the scale up.
Please provide any additional comments or information. – delete before submission
Amounts for Years 4 and 5 are indicative and are subject to change in the course of implementation. The LFA and Global Fund will be appropriately informed of such changes and necessary approvals will be sought.
1.3 Quality assurance systems and capacity
Functioning National Drug Regulatory Authorities are present in Ukraine. The State Pharmaceutical Committee is responsible for drug registration and GMP inspections. Most of the pharmaceuticals procured under the program are imported. As per GF guidelines they are registered for use in Ukraine and sourced from GMP compliant manufacturers.
The State Inspection for Quality Control of Pharmaceuticals is responsible for quality control of pharmaceuticals entering Ukraine, those produced in the country and used in treatment facilities. It is responsible for QC regulations, laboratory testing of the products and investigating product failures or products of substandard quality which are reported by treatment facilities or pharmacies.
According to Ukrainian state regulations no health products can enter the custom territory of Ukraine or be accepted for use by treatment institutions without appropriate certificates of analysis specific to every batch and proving the product’s compliance with quality standards.
The Alliance PSM sub-team receives and reviewsshipping documents for every batch of products to make sure that there are appropriate certificates of analysis and certificates of origin. Only with appropriate package of documents goods can then be cleared from customs (for imported goods) and posted up for storage at the warehouse and use at treatment facilities.
For the procurement of goods, the contracting policy of the Alliance and PATH is such that a certain percent (usually 30 to 50%) of the purchase contract value is retained until the full delivery takes place and the product quality is proven.
Single and limited source pharmaceuticals
Most single and limited source pharmaceuticals planned for procurement under the program are prequalified by WHO or registered in ICH/PIC countries as per Global Fund procurement guidelines and Article 18 of the Stewardship Agreement. The exception is:
- generic NVP oral suspension.
These products will be procured under option C of Article 18. Availability of eligible generic forms of costly Nelfinavir and Lopinavir/ritonavir is and will be regularly investigated.
The Alliance puts continuous effort to reduce prices paid for ARVs and other health products through the competitive procurement and negotiations with suppliers of the sole source products.The lowest prices allowed under Clinton Foundation agreements and other global access initiatives are always sought. Every following order comes at lower or equal prices than the previous order of the same or analogous products.
If drugs are being purchased, are there adequately equipped and staffed laboratory facilities available for testing products being purchased under this grant? What is the highest level of laboratory rating in the country (from levels 1-3, as per WHO). If adequate laboratory facilities are not available, will this activity be outsourced? Where? – delete before submission
Testing of products
Appropriate QA/QC procedures are, and will be, required from the procurement agent selected for drug procurement under this program.
IDA will be contracted to procure the first round of ARVs. IDA provides QA/QC through their reputable and long established laboratory control systems, the details of which can be seen in Annex 5. In the second round for procurement an LICB will take place in order to select a procurement agent for ARVs and the required QA/QC procedures will be set out in the tender requirements. Standard operating procedures for such testing will be developed with assistance of US Pharmacopeia. Testing will be performed by WHO prequalified or ISO 9000 certified laboratories.