New Procurement Framework Expected to Produce Savings of $140 million over Two Years for Bed Nets Alone
The Global Fund and its partners have established a new “framework to systematically organize the purchase of massive amounts of mosquito nets, anti-HIV drugs and other products that will improve delivery and make significant savings.”
According to a news release issued by the Fund on 5 November, the first step in the new framework involves signing contracts with seven manufacturers for the largest-ever bulk purchase of mosquito nets treated with insecticide. The Fund said that this will generate projected savings of $140 million over two years, including immediate savings of $51 million.
The contracts involve an initial purchase of 90 million mosquito nets; by the end of 2014, 190 million nets will have been purchased. The news release said that the new framework reduces prices across the board, for all partners, and also reduces bottlenecks and shortages in countries where malaria threatens the lives of millions of children under the age of five.
“We can defeat malaria, if we all work together,” said Mark Dybul, Executive Director of the Global Fund. “This kind of collaboration across sectors, between partners and manufacturers, is essential to controlling malaria and sharply reducing the number of children who die from it each year. And it’s good business, too.”
The new framework emerged from a special partnership launched in May 2013 between the Global Fund, the UK’s Department for International Development, the US President’s Malaria Initiative and UNICEF, which collectively represent about 87% of the purchases of insecticide-treated nets. Other partners also participated, including the Clinton Health Access Initiative, the Roll Back Malaria Partnership and the office of Raymond G. Chambers, the UN Secretary-General’s Special Envoy for Financing the Health Millennium Development Goals and for Malaria.
According to the news release, this is part of a more proactive approach to sourcing and procurement, which accounted for approximately $2 billion of the $3 billion in grant expenditures by the Global Fund last year. Christopher Game, Chief Procurement Officer of the Fund, said that “the transparency and single voice that we presented as a coalition facing the manufacturers was very powerful. The locus of control has shifted from seller to buyer. It enables us to invest more strategically, and concentrate in areas with high impact.”
Mr Game said the Global Fund is currently in similar negotiations with the (US) President’s Emergency Response to AIDS Relief (PEPFAR) and the government of South Africa – both major purchasers of antiretroviral drugs (ARVs) – and with ARV manufacturers; and has initiated similar processes to leverage its purchasing power for diagnostics and male circumcision devices.
Under the new framework, orders will be spread evenly among a number of suppliers, which will help to ensure a sustainable supply of bed nets.
The Global Fund said that the framework will also support growing domestic production in countries with high demand for mosquito nets – and that this has many benefits, including lower transportation costs and advice from local experts. The seven selected suppliers include four domestic companies – including AtoZ Textile Mills, which produces Olyset Nets in Tanzania – and three multi-nationals. All production sites are in countries with high demand for mosquito nets.
According to the news release, there are approximately 200 million cases of malaria each year, of which 80% occur in sub-Saharan Africa. Malaria causes 660,000 deaths each year, the majority of which are children under five. In countries where malaria is prevalent, average life span can be as low as 30. Huge progress has been made against malaria over the past decade, driven by scientific advances like mosquito nets treated with insecticide. Since its inception, the Global Fund has supported partners in distributing more than 340 million nets.