Strategic Fund Brochure (1.55 MB)What is the Strategic Fund?
The PAHO Strategic Fund has been developed by the Secretariat of the Pan American Health Organization at the request of PAHO Member States, and for the benefit of Member States.
The PAHO Strategic Fund is a mechanism created to promote access to quality essential public health supplies in the Americas. The Strategic Fund links the acquisition of medicines and essential public health supplies with technical processes in planning and programming. Through the Strategic Fund the procurement of essential medicines and basic public health products takes on a new perspective as it is accompanied by technical support from PAHO in supply systems management and acquisition of low cost products that meet international quality standards.
The Strategic Fund is an important initiative for PAHO Member States as it provides support to overcome obstacles that countries tend to face in the acquisition of essential public health supplies:
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In the area of demand forecasting for pharmaceutical products, the Strategic Fund offers technical support in planning, programming, and forecasting of supplies to ensure continuous availability.
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The Strategic Fund offers the possibility to acquire products that meet international quality standards.
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For expensive products and supplies of limited availability, the Strategic Fund aims to negotiate competitive prices by consolidating demand and achieving economies of scale.
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In price referencing, the Strategic Fund provides information to the Member States.
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In relation to pharmaceutical products available through other global initiatives, the Strategic Fund will serve as a link with suppliers prequalified at international level.
The Strategic Fund is also known as the Regional Revolving Fund for Strategic Public Health Supplies.
The following presentation presents an overview of the Strategic Funds:
Background and Objectives
The Challenges facing Member States in Access
The challenges facing Member States of the Pan America Health Organization, regional office of the World Health Organization in the region of the Americas, in improving access to essential public health supplies lie principally in important areas of selection of quality products, financing and procurement, cost containment and intellectual property regulation, and supply management.
The selection of essential public health supplies is often not based on rational criteria resulting in the selection and use of inappropriate commodities.
Sources of commodities are often selected based on price alone, and without appropriate consideration of product quality and quality assessment of manufacturers and suppliers. Price information is often not readily available to facilitate referencing in procurement, and there is insufficient information on pricing policies and methodologies being applied.
Too often essential drugs are inaccessible to the poor because of high price: differential pricing policies are not necessarily equity-based. Due consideration has not been afforded to the importance of supply management systems, forecasting, programming and planning in ensuring the continued availability of public health supplies.
The adoption of national health and medicines policies throughout the Americas is not resulting in the development of integrated supply systems at the national level. It is not uncommon to find isolated and disconnected procurement processes, parallel supply systems in operation, and duplication of functions with poor coordination between authorities at the district and national level. The supply of products is often ensured through isolated procurement systems designed and operated without consideration of the importance of managing and monitoring system processes as a whole: this ultimately leads to stock shortages, cost increases, and missed opportunities to utilize available funding.
Background
To achieve equitable delivery of health care services, access to affordable quality medicines and medical supplies is required. Access to quality medicines and health supplies can be facilitated if the selection process takes into consideration factors of quality, efficacy and cost, if transparent price information is available, if procurement mechanisms promote competition, and if planning systems ensure sustainable delivery.
To assist Member States in the acquisition of quality essential public health supplies at affordable prices, the Director of the Pan American Health Organization (PAHO) established the Regional Revolving Fund for Strategic Public Health Supplies (the Strategic Fund) during the 42nd Directing Council of the Pan American Health Organization, Washington DC, 25th - 29th September 2000.
The Strategic Fund aims to build capacity in drug supply management and procurement programming and planning at the national level.
The Fund is capitalized through the allocation of a portion of the 3% procurement service charge to the Fund's capital account. As countries purchase through the Fund, the purchasing power of the Fund will increase resulting in lower product prices for participating countries.
In September 2004, the 45th Directing Council of PAHO adopted a resolution CD.45.R7 to promote access to medicines and public health supplies in the Region. As a key element of the strategy Member States endorsed the proposal to strengthen regional procurement mechanisms, including the PAHO Strategic Fund. The Directing Council noted that “the Strategic fund’s development will strengthen Member States capacity in programming, planning and purchasing; it will facilitate the achievement of economies of scale by consolidating product demand and will promote continuity in supply through the development of a cyclical purchasing system”.
Since 2004, the Strategic Fund continues to grow with activities in more than nineteen countries (19) within the Region.
Objectives
The Strategic Fund builds on the principle of 'Pan-Americanism' where countries in the Americas address together common issues, and provide support to one another, in this case, in procurement and supply management of quality essential public health products. The Fund provides a means of ensuring the constant flow of pharmaceuticals and supplies at reduced cost to priority public health programs through a procurement process that links demand forecasting, procurement and supply.
The Strategic Fund aims to improve access to Strategic Public Health Products. It aims to provide added value to participating countries in four important ways, namely by:
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Focusing technical support to countries in procurement planning, distribution, and product forecasting
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Ensuring the supply of quality product through the application of quality assurance norms in pharmaceutical procurement and quality control
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Facilitating communication and coordination between suppliers and participating countries to improve product availability and affordability
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Delivering of technical cooperation through PAHO and collaborating partners to National Authorities and/or Global Fund Principal Recipients, in order to strengthen national capacity in procurement and supply management, as well as in the application of norms in procurement quality assurance.
The Fund's objectives are:
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To facilitate the acquisition of strategic public health supplies by PAHO member states at reduced cost by taking advantage of the potential savings offered by economies of scale;
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To further the continuous availability of public health supplies within PAHO Member States;
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To encourage member states to improve planning capabilities and use of public health supplies;
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To strengthen member states' public health programs and the application of pertinent PAHO/WHO normative mandates.
The Contribution of the Strategic Fund to PAHO Technical Cooperation
PAHO technical programs have recognized the importance of promoting the continuous availability and affordability of key medical products to achieve reductions in disease mortality and morbidity within PAHO Member States. This work is not new to PAHO but has been developed and integrated within the technical work program for some time.
Examples of activities supported by PAHO Technical Programs promoting the continuous availability and affordability of Strategic Public Health Supplies
Technical support provided through the Strategic Fund
Procurement and Supply Management
Quality Assurance and Procurement
In addition, the Fund is used by countries as a reference for product pricing. It facilitates the acquisition of stocks in cases of emergency, and improves coordination between PAHO Member States and global procurement initiatives such as the Global Drug Facility, The Green Light Committee, The Aids Medicines and Diagnostics Services (AMDS).By using the Strategic Fund participating Member States are expected to achieve cost savings, and benefit from available Fund capital to purchase product in advance of payment. The Strategic Fund will strengthen administrative and managerial capacity of program managers in pharmaceutical supply management. It stimulates the acquisition of essential public health supplies at the national level as it heightens awareness in important areas of commodity planning and management.
Benefits
PAHO works with participating Member States through the Strategic Fund to overcome barriers that countries face in the procurement and supply management of strategic public health supplies.
| Barriers | Strategic Fund Solutions |
| Inadequate planning | Improve national capacity in planning processes |
| Limited knowledge of pharmaceutical markets | Extensive experience in the acquisition of pharmaceutical products at the global level |
| Untrustworthy suppliers | Prequalified suppliers |
| Expensive strategic public health supplies | Competitive prices |
| Lack of reference prices | Current reference prices |
The principal benefit of participation in the Strategic Fund is the technical support provided in procurement planning and programming to ensure continuous availability of essential public health supplies.
The Strategic Fund also guarantees the acquisition of quality essential public health supplies through a transparent process. In addition, the Strategic Fund uses prequalified suppliers who meet PAHO/WHO quality standards.
Member States also benefit from the PAHO Strategic Fund by purchasing essential public health supplies at low cost. The Strategic Fund negotiates with different international suppliers and offers supply alternatives when possible to Member States. Likewise, the Strategic Fund offers price estimates for products based on the average price of purchase orders executed or quotes offered by suppliers. As a result, Member States can avail of a price reference list, which can be used in consultation during the procurement decision-making process.
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