Update on P4i and Market Shaping
IPC Meeting
19 June, 2015
Recall: Since 2013, the Global Fund has stepped up its sourcing
strategy through the Procurement 4 Impact (P4i) transformation
One Sourcing team dedicated to fundamentally change the way we
work across the supply chain to increase access to products
Earlier
involvement
and closer
collaboration
with
manufacturers
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Improving our
purchasing
capability and
changing our
contracting
models
Optimising the
international
supply chain to
reduce cost and
improve quality
and efficiency
Better planning
and
scheduling to
support
continuity of
supply
Delivering more
products at the
right time and
place to more
people
2
Viral load tender: Objectives
1. To select a panel of manufacturers to enter into Framework
Agreements to supply PRs both through the Pooled Procurement
Mechanism and through other procurement channels of Global
Fund grant recipients.
2. Whilst the choice of specific technologies will ultimately remain a
country-led choice based on the needs of the programme, the
responses on key elements of this RFP will provide inputs into a
defined process to guide the competitive transparent selection of
viral load technologies by PRs.
3. The commercial arrangements may include options for allocated or
committed volumes based on aggregated forecast demand across
Global Fund PRs. The term and level of any commitment will follow
the Global Fund evaluation of submitted proposals and subsequent
second stage review.
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Process
Only bidders who were manufacturers of products in compliance with the Global
Fund’s Quality Assurance Policy on Diagnostics were eligible to participate
Stage 1
Stage 2
> Preparation, submission, preliminary
examination, screening and evaluation of
proposals
> Opportunity to discuss more detailed
information and seek clarifications
through dialogue and meetings
> Invitation of selected bidders to
participate in Stage 2
> Review of assumptions for total cost of
ownership model
> Submission of Best and Final Offer
(BAFO)
The same 2-stage process will be followed to consider new entrants
for inclusion on the panel of suppliers after they have met the Global
Fund’s QA policy
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Summary of key outcomes (I / II)
A range of credible, cost-effective, competitive options now available with more transparent
pricing, costs and contracting for viral load and early infant diagnosis
Leverage
volumes
 Enables volumes to be leveraged and promotes maximum up-time and testing
throughput
Transparent
contracting
 Guide new selection and establish contracting modalities and templates
 Benchmark existing arrangements with probable forward-applicability in many cases
 Deliver Framework contracts and transaction agreements agreed in principle with no
major issues remaining or have been flagged
Transparent
costing
 Provide standardized costing applicable for most recipient countries enabling easier
and more transparent decision-making
 Provide clear cost build-up to Total Cost of Ownership available for first time enabling
a more meaningful and fair comparison
Additional
acquisition
models
 Provide options of different acquisition models: purchase / lease and reagent rental
– “Reagent rental” option now available from majority of suppliers that is comparable
with the equivalent “all in” bottom up price – indicating no “premium”
 Identify various value-added solutions available
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Summary of key outcomes, continued (II / II)
A range of credible, cost-effective, competitive options now available with more transparent
pricing, costs and contracting for viral load and early infant diagnosis
Broader
supplier base
 Include two recent new entrants into the low-and-middle income market for lab-based
systems
 Include two further suppliers recently QA-eligible with attractive offerings for lower
throughput/near-Point-of-Care offerings with clear pricing and costs (but limited scaleup capacity/coverage plans)
 Establish process for new entrants, with a clear target for pricing and contracting
Global visibility
 Enable better global visibility and performance management (rather than fragmented
country-level) and sustained delivery
 Include agreement to make key elements of this RFP “available” in the public domain
including TCO calculations
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RFP outcomes will reduce prices paid and contractual variability
• Historically little visibility with
arrangements country-bycountry or even user/
machine-by-machine
• 2 main suppliers dominating
• Large range of prices paid,
varying by country and over
time
• New prices will reduce
variability and be lower than
average, resulting in savings
Assuming increased transparency and more consistent pricing across suppliers,
savings could be up to 33% or USD 30 million over 3 years
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http://www.theglobalfund.org/en/procurement/viral-load-early-infant-diagnostics/
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Agenda
Market Shaping Strategy
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Global Fund’s market shaping strategy builds on past efforts and
will be integrated with the 2017 – 2021 strategy
• Global Fund worked with WHO to facilitate countries to rapidly switch funding
from suboptimal therapies to ACTs
2004
ACT
transition
2007
Initial market
shaping
strategy
2007
- 2009
Creation of
VPP and PQR
2011
Latest market
shaping
strategy
• Board approved strategy “acknowledging the critical role of the Global Fund in
shaping markets to maximize global access to health products…and further
[emphasizing] its desire for the Global Fund to more actively shape markets…”
2013
Procurement
for Impact
• P4i transforms the way the Global Fund works across the supply chain,
especially through the transition from VPP to PPM and the implementation of new
long-term supplier agreements
2015
- 2016
2017 – 2021
strategy
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• Board decides that the Global Fund should play a “deliberate and strategic role in
improving the impact of grants by influencing market dynamics” and endorses the
creation of PQR and VPP
• Based on the Board’s 2007 decision, VPP became operational in mid-2009 with
40 countries and 74 grants by end 2010
• PQR implemented to collect transaction-level procurement data
• Global Fund currently developing its next organizational strategy, to be reviewed
by the Board in March 2016
10
The Sourcing Department is leading a refresh of the Global Fund’s
2011 market shaping strategy for the November Board meeting
Strategy development
Lay out approach
Assess markets, role, key questions
Develop and test strategies
Today
Socialize and iterate
Consult stakeholders
Key milestones
Apr
May
Jun
Board
review
Jul
Sept
Sourcing Board
strategic review
review
Draft report of
external evaluation
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Aug
Oct
Board
review
Nov
Board
meeting
Final report of
external evaluation
11
Phased approach to revise strategy
1: Plan
Define
approach and
scope of
market
shaping
strategy
Lay out
process,
including
consultations
2: Frame & diagnose
Document past efforts
Assess current health of
each market, identify
market shortcomings
Assess enablers vs. ideal
state, identify gaps
3: Define strategy
Summarize and
pressure-test existing
strategies
Integrate market shaping
lens in TB, RDT
strategies
Define Global Fund role
in partner landscape
Identify and prioritize
initiatives to strengthen
enablers
Develop strategic
objectives
Address key strategic
questions
4: Plan
implementation
Lay out high level
implementation plan
Define dashboard to
monitor strategy
Identify key strategic
questions to address
Consult internal & external stakeholders; align with other Global Fund efforts
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Definition of “market shaping” for the Global Fund
Market shaping supports health outcomes by ...
Implies proactive
approach
Leveraging the Global Fund’s position to facilitate
healthier global markets for health products, today
and in the future
Focused on global
market outcomes, not
limited to outcomes for
the Global Fund
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Market shaping
extends to future
possibilities, not limited
to current market
conditions
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Six dimensions of market health, building on 2011 Market Shaping
Strategy and partner frameworks
Dimension
Design /
Innovation
Availability
Description of healthy market
• There is a robust pipeline of new products or regimens intended to improve
clinical efficacy, reduce cost, or better meet the needs of patients, providers or
supply chain managers
• New and/or superior products are rapidly introduced and made available to PRs
• Adequate and sustainable supply exists to meet global needs
Adoption
• Countries, PRs and patients / providers rapidly introduce and adopt the most
cost effective products (in their local context)
Quality
• Products are consistently safe and effective according to Global Fund-defined
quality standards
Affordability
Long-Term
Viability
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• Products are available at the lowest possible sustainable price
• Market health is sustainable with limited intervention from public actors
• Ongoing interventions in one dimension of market health do not have negative
long-term consequences on other dimensions
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Next steps are to develop strategic objectives, Global Fund role
and guiding principles – based on analyses and consultation
2011 strategy
implementation
Updated market
opportunities
Strategic
objectives
Other market shaping
initiatives (P4i)
Market shaping
enablers
Global Fund role
Strategic initiatives by market
Assessment of key
strategic questions
Partner landscape
This
phase
Guiding principles
Initiatives to strengthen
enablers
Next
phases
Implementation plan
(sequencing, timeline)
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M&E plan
(metrics, dashboard)
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