The diligent fight against HIV and AIDS has made tremendous progress: thanks to advances in antiretroviral treatment, increased funding, and reduced costs—people can survive and even thrive despite the illness. Unfortunately, for the two-thirds of people still in need of treatment, HIV/AIDS remains a death sentence.Increased funding is necessary to expand access to treatment, but it is not the only solution. Access can also be expanded by improving the efficiency and effectiveness of the global ARV supply chains, which has many moving parts and many bottlenecks. Unfortunately, these bottlenecks often persist because influential actors have no incentives to address them. According to a new background paper commissioned by the HIV/AIDS Monitor—Increasing Patient Access to Antiretrovirals: Recommended Actions for a More Efficient Global Supply Chain—the efficiency and effectiveness of global ARV supply chains is limited by a host of incentive misalignments among financing organizations, manufacturers, national AIDS control programs and other key supply chain actors.Over the past five years, AIDS donors have succeeded in reducing ARV costs. For example, a May 2008 report to the U.S. Congress by PEPFAR details how shifting to generic drugs and pooling procurement allowed PEPFAR to increase the number of people on treatment by 235 percent between 2005 and 2007, while funding for ARV drugs increased by only 140 percent. In the Global Fund’s 2010 Progress Report, they show that the “median price for all first-line regimens has fallen by an average of 12 percent per year [in 103 Global Fund supported countries] between January 2007 and May 2009”. While these cost reductions are a welcome development, the current economic climate and the growing need for treatment create an urgent need to address bottlenecks across the many different moving parts of the supply chain.Based on interviews with experts and on secondary literature, the paper uncovers a host of unmet needs that create challenges for key actors in the supply chain, from manufacturers to distributers in-country. For example, it is not uncommon for the procurement office of a national HIV/AIDS program to procure 100-200 different products from 25-50 different suppliers on annual procurement cycles. Different procurement protocols across different products, suppliers, and financing programs further complicate already complex and lengthy processes. Currently, a single procurement cycle can take from 16 to 18 months. Multiyear procurement arrangements, among other changes, could help reduce administrative burdens and their consequent time lags and costs.The paper also examines situations where incentives are misaligned; i.e. where potentially influential actors have weak incentives to address bottlenecks. Continuing the example above, manufacturers, suppliers, national AIDS control programs, and procurement offices would all greatly benefit from the less cumbersome procurement processes that would result from multiyear framework contracts. However, financing organizations often prefer strict annual procurement contracts to make procurement as transparent and controllable as possible. We hope the paper’s attention to these issues will be an important first step toward developing solutions.Though the paper does not attempt to solve the dozens of incentive misalignments identified, the authors offer one illustrative solution that they believe would help to realign many of the problematic incentives: an electronic marketplace for ARVs. For more on this innovative idea, you will have to read the paper!
