4

Innovative Suggestions and Potential Solutions

As part of the final session of the workshop, several speakers, including session chairs, and workshop participants individually provided reflections on what they had heard during the 2-day meeting. They were encouraged to identify innovative suggestions and options offered by individual participants during workshop presentations and discussions. This chapter provides an integrated summary of the remarks and panel discussions during that session, organized thematically into three sections: mechanisms of purchase and supply; logistics, supply, and demand; and innovative financing. It should not be construed as reflecting consensus or endorsement by the workshop participants, the planning committee, the Forum, or the National Academies.

MECHANISMS OF PURCHASE AND SUPPLY1

Structural Reorganization and Accountability: Who Will Get It Done?

Analogizing to Other Supply Chains

A recurring topic throughout the workshop was the question of what structural and governance systems should be in place at the global level

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1 This section is based on reflections offered by Peter Cegielski, Team Leader for Drug-Resistant TB, International Research and Programs Branch, Division of Tuberculosis Elimination, CDC, and comments offered by individual workshop participants during an open discussion session moderated by Cegielski and Barry Bloom, Harvard University Distinguished Service Professor and Joan L. and Julius H. Jacobson Professor of Public Health, Department of Immunology and Infectious Diseases, Harvard School of Public Health.



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4 Innovative Suggestions and Potential Solutions As part of the final session of the workshop, several speakers, including session chairs, and workshop participants individually provided reflections on what they had heard during the 2-day meeting. They were encour- aged to identify innovative suggestions and options offered by individual participants during workshop presentations and discussions. This chapter provides an integrated summary of the remarks and panel discussions dur- ing that session, organized thematically into three sections: mechanisms of purchase and supply; logistics, supply, and demand; and innovative financ- ing. It should not be construed as reflecting consensus or endorsement by the workshop participants, the planning committee, the Forum, or the National Academies. MECHANISMS OF PURCHASE AND SUPPLY1 Structural Reorganization and Accountability: Who Will Get It Done? Analogizing to Other Supply Chains A recurring topic throughout the workshop was the question of what structural and governance systems should be in place at the global level 1 This section is based on reflections offered by Peter Cegielski, Team Leader for Drug- Resistant TB, International Research and Programs Branch, Division of Tuberculosis Elimi- nation, CDC, and comments offered by individual workshop participants during an open discussion session moderated by Cegielski and Barry Bloom, Harvard University Distinguished Service Professor and Joan L. and Julius H. Jacobson Professor of Public Health, Department of Immunology and Infectious Diseases, Harvard School of Public Health. 93

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94 GLOBAL SUPPLY CHAIN FOR SECOND-LINE DRUGS FOR MDR TB to facilitate effective operation of the MDR TB SLD supply chain. The question of structure and governance to oversee this particular supply chain was, in turn, informed by a discussion among workshop participants about the extent to which the SLD supply chain shares characteristics of other supply chains. This discussion was framed by Salmaan Keshavjee, Harvard Medical School, who remarked that notwithstanding similar chal- lenges (e.g., manufacturing complexity, limited market size, supply chain and access problems), strategies applied to other markets to improve their systems do not seem to work in the MDR TB context. Olusoji Adeyi, World Bank, and several others expressed skepticism that the MDR TB market is in fact unique, arguing instead that more pre- cise definition of the specific problems in the market could aid development of effective solutions. Other participants offered thoughts on ways that the MDR TB SLD supply chain could be viewed as unique. David Ripin, CHAI, noted that the MDR TB market faces a unique type of fragmenta- tion among customers because the middle-income countries that represent large portions of demand are more difficult to aggregate effectively than, for example, the pediatric HIV market. Nina Schwalbe, GAVI, suggested that the crux of the difference between MDR TB and other markets is its organizational and institutional establish- ment, which, she argued, needs significant restructuring. She cautioned that internal politics among the key players in the existing supply chain could impede effective reform and exhorted workshop participants to address and resolve those issues. Keshavjee added that complications and barriers that arise out of the present structural configuration of the supply chain justify the need for restructuring. He maintained that effective restructur- ing needs to be prefaced by properly examining and aligning the interests of all parties involved in the current system of SLD procurement. Amy Bloom, Acting Chief, Infectious Diseases Division, USAID, suggested that an evidence-based analysis of the hosting arrangements among GDF, the Stop-TB partnership, and WHO be conducted, noting that USAID is cur- rently supporting such an analysis. The remainder of this section reports individual participants’ sugges- tions about the issue of the responsibility and accountability for a potential restructuring. Consideration of WHO/GDF Hosting Arrangements Participants considered the implications of GDF being hosted by WHO and the potential consequences of GDF’s removal from WHO. In this dis- cussion, individual perspectives were offered on the structural advantages and disadvantages of having a centralized supply chain mechanism like GDF, successes achieved by GDF, and needs for improvement if the cen-

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INNOVATIVE SUGGESTIONS AND POTENTIAL SOLUTIONS 95 tralized GDF-like structure is retained. The discussion was grounded in a general understanding among workshop participants that approximately 20 percent of SLDs procured worldwide are donor-funded and purchased through GDF, while the remaining 80 percent are procured independent of donor-funding mechanisms and GDF, typically by the governments of middle-income countries to serve their patients. Some participants cited the importance of GDF or another centralized purchasing mechanism. For example, Andre Zagorski, Principal Technical Advisor for TB, Center for Pharmaceutical Management, MSH, suggested that the 20 percent of countries whose drug procurement is donor-funded and facilitated by GDF would not be able to acquire enough funding to develop sufficient procurement capacities to procure drugs autonomously (and not through a centralized purchasing mechanism) within the near term. Several participants noted that the housing of GDF within the WHO structure—and bound by WHO procurement and hiring policies—has led to certain inefficiencies in procurement processes. On the other hand, some participants noted that the hosting of GDF within the WHO infrastruc- ture might not be the principal impediment. Prashant Yadav, University of Michigan, commented, for example, that UNITAID is an example of a WHO-hosted partnership that has been successful at adopting innovative financing, procurement, and hiring practices. Robert Matiru, UNITAID, also noted that the GDF mechanism has seen success in the area of deliv- ery of FLDs notwithstanding its being hosted by WHO, citing the benefits, networks, connections, and access to beneficiary governments that WHO provides GDF. Matiru further urged the participants not to focus solely on concerns about whether the hosting mechanism is optimal or not, because GDF’s functions are only one segment in the supply chain; both he and Zagorski suggested that pooled procurement and other innovative financing tactics could address the fundamental inefficiencies without requiring struc- tural reform. Similarly, Myriam Henkens, MSF, commented that the ques- tion of whether a centralized procurement mechanism is used, whether it is housed within or outside WHO, is not alone sufficient to address the many needs in improving the supply chain, as there are multiple other activities and responsibilities that must be allocated to other entities (e.g., countries), including product registration and development of treatment protocols. Participants also discussed considerations arising due to the fact that the market is segmented into the 20 percent that are donor-dependent and the 80 percent that are not. Tracy Sims, Vice President, Eli Lilly & Co. Foundation, suggested that perceptions of these different populations have implications for decisions about issues such as logistics and forecasting. He offered three options for moving forward:

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96 GLOBAL SUPPLY CHAIN FOR SECOND-LINE DRUGS FOR MDR TB 1. evolving the current structure to appropriately treat the population as it is currently segmented; 2. developing a parallel process that may or may not supplant the existing approaches; or 3. starting over with a new consolidated structural system. Several participants noted that any redesign of the SLD supply chain should take the two systems into account in parallel rather than focusing solely on the donor-funded, GDF-routed sector. Yadav stated that unless the segment of the market currently served by the global donor-funded mechanism is directly interfering with efforts to provide QA drugs to the remaining approximately 80 percent of the market, the architecture of the market does not need to be addressed as a whole. That is, efforts should still be made to improve the donor-funded segment while simultaneously assessing how to address the larger segment. Along these lines, it was sug- gested that the 80 percent of the market that is not donor-funded could benefit from a separate mechanism by which to coordinate the currently independent approaches to procurement. Gail Cassell, Harvard Medical School, suggested that the donor-funded segment requires more urgent focus in the short term due to probable underestimates of actual burden and vast numbers of unserved populations in those countries. Capacity Building and Accountability In considering allocation of responsibilities, participants discussed the importance of clearly defining and assigning supply chain roles to appro- priate entities and supply chain participants. For example, Henkens noted that manufacturers should be responsible for drug availability; a “GDF- like” structure should be responsible for supply; and countries should take responsibility for registration, scale-up, and monitoring of treatment pro- grams in the public and private sectors. Some participants noted the need to strengthen capacity, including the leadership and technical capacities of NTPs to support and incentivize the creation, manufacture, and standard- ization of QA SLDs and the development of training methods for supply chain managers. It was suggested that directing funds toward crosscutting initiatives could strengthen existing infrastructural, QA, procurement, and SCM systems. Once responsibilities are allocated, establishment of accountability is a next step. To facilitate accountability, some participants observed a need for alignment of performance incentives of organizational and program leaders with desired outcomes for countries and patients.

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INNOVATIVE SUGGESTIONS AND POTENTIAL SOLUTIONS 97 Mobilizing Public–Private Advocacy for MDR TB Mobilizing public and private advocacy for MDR TB was identified as a means of accelerating progress through a more visible presence. MDR TB may not currently have the profile necessary to effect change; for example, it is not considered as one of the “big three” in Millennium Development Goal 6.2 Schwalbe advocated garnering more public and high-level political commitment for MDR TB and overcoming political constraints impeding the establishment of new partnerships and models. She suggested, for exam- ple, that leadership of World Bank could be enlisted as a potential public ally. It was further suggested that a TB advocate within WHO could serve to encourage the leadership to more publicly highlight the growing MDR TB epidemic, particularly within high-burden countries. Another suggested strategy was the engagement of ministers of health and other appropriate leadership in high-burden countries and other BRICS countries. Manufacture of SLDs During the workshop, participants provided individual observations about key barriers regarding the manufacture and pricing of SLDs. This sec- tion provides an overview of the innovative suggestions and options offered by individual participants for overcoming those challenges. Some participants discussed engagement of the SLD manufactur- ing industry, including both current and potential producers, in order to encourage competition, discuss and engage with demand forecasts, and resolve batch-sizing problems. Schwalbe suggested that GAVI’s experiences convening manufacturers could serve as a model of productive engage- ment with manufacturers. Barry Bloom, Harvard University Distinguished Service Professor and Joan L. and Julius H. Jacobson Professor of Pub- lic Health, Department of Immunology and Infectious Diseases, Harvard School of Public Health, suggested that one way manufacturers could help drive progress is by sharing their supply chains to “piggyback” SLDs on chains that currently exist or by sharing their knowledge of SCM in specific countries. Iain Richardson, Eli Lilly and Company, commented that there is will and interest on the part of manufacturers to contribute certain aspects of their experience as appropriate, adding that manufacturers need clearer guidance as to what the needs are and how they can most effectively deploy their resources and capabilities. He described by way of example how Eli Lilly has made continuing investments in supportive efforts to improve 2  Millennium Development Goal 6 seeks to combat HIV/AIDS, malaria, and other diseases. The description of this goal includes tuberculosis but not MDR TB. For more information, see http://www.un.org/millenniumgoals/pdf/MDG_FS_6_EN.pdf (accessed November 14, 2012).

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98 GLOBAL SUPPLY CHAIN FOR SECOND-LINE DRUGS FOR MDR TB SLD supply, including deployment of subject-matter experts to contribute to SLDAII. Richardson also characterized Eli Lilly’s technology transfer effort as a way of stimulating and sustaining the supplier market in the longer term. Similarly, in considering the entry of new suppliers to the market (beyond provision of technical support or technology transfer), Sana Mostaghim, CHAI, noted that potential new suppliers would need clearer guidance to facilitate their entry into the market. Michael Kimerling, BMGF, described the mandates of a new strategic task force at WHO, which is funded by BMGF, on the issue of new drugs: to create an information sheet for drug manufacturers and people who produce regimens about what types of information materials WHO needs to provide guidance and guidelines; to provide information to countries about the process of adoption and introduction of new drugs and new drug regimens; to open a discussion with regulators about how this process can be facilitated; and to compile all of the above into a strategic framework and time line. Subsequent stages will involve separate meetings with the individual companies to understand their pricing strategies. Procurement Strategies Pooled Procurement Many workshop participants noted that there is a need for develop- ment of a pooled procurement mechanism as a key priority. There was discussion about where the barriers to adoption of a pooled procurement system reside. Matiru stated that GDF’s success with pooled procurement for FLDs was backed by consolidated, controlled financing and facilitated by an approval and review mechanism designed to survey and address the quantities of treatment required, which enabled demand aggregation. By contrast, MDR TB financing in the donor-funded market is channeled through GDF in a non-pooled, uncoordinated way, without the benefit of centralized fund management. This prevents effective up-front order planning, forecast-driven orders, and pooled procurement. Procurement quantities are limited by non-scaled, inadequate technical review and treat- ment distribution mechanisms. Keshavjee suggested the creation of a proper financing pool to be used by the procuring body. He also remarked that bundling SLD procurement with the well-established supply chains for other drugs, such as those for HIV and malaria, could drive prices down. Mostaghim and Ripin suggested that tender splitting is another mechanism to address procurement problems as well as to maximize the number of eligible participants in a tender to stimulate competition and reduce prices in the SLD market. To address the emerging gap of middle-tier countries that lack access to

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INNOVATIVE SUGGESTIONS AND POTENTIAL SOLUTIONS 99 vaccines, GAVI and UNICEF are exploring the option of demand pooling in non-donor-funded markets in which the country is the buyer. A key need for such strategies to be effective is that the aggregated demand be backed by adequate financing to support the value proposition for manufacturers. GAVI and UNICEF are also working with the major BRICS-country buy- ers to establish pricing and volume commitments to resolve the problem of variable, unbacked marginal demand. Schwalbe suggested that such strategies might have potential to be implemented in the MDR TB market. Tiered Pricing Pricing is also an important issue that will help or hinder the procure- ment and distribution of SLDs, particularly with respect to novel drugs coming into the market. GAVI’s use of a tiered pricing strategy was sug- gested as a possible model for the SLD pricing according to a country’s ability to pay. According to Andreas Seiter, World Bank, a key problem is differentiation within countries; middle-income countries often have both a high-income population and large proportions of poor populations. He maintained that the high-income population in those countries should pay the same prices as high-income people in developed countries. A key task would therefore be finding a way to use access strategies like market segmentation and appropriate price differentiation that prioritize reaching those lower-income markets. Yadav noted that while tiered pricing can be a good tool for improv- ing access, it can be more challenging when there is a limited number of manufacturers because there are cases in which a generic entrant was paid a higher price than the incumbent manufacturer’s tiered price (in order to encourage market entry). On the basis of his experience with ACT manu- facturers through AMFm, Adeyi stated that downward negotiation of tiered prices for SLDs in developing countries is feasible, as is the potential for subsidizing purchases at the buyer level at reduced prices. LOGISTICS, SUPPLY, AND DEMAND Incentivizing and Regulating QA3 A number of participants emphasized the importance of QA for MDR TB drugs, particularly in light of the number of therapeutic regimens 3  This subsection is based on reflections offered by Amy Bloom, Acting Chief, Infectious Diseases Division, USAID, and comments offered by workshop participants during an open discussion session moderated by A. Bloom and Barry Bloom, Harvard University Distinguished Service Professor and Joan L. and Julius H. Jacobson Professor of Public Health, Department of Immunology and Infectious Diseases, Harvard School of Public Health.

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100 GLOBAL SUPPLY CHAIN FOR SECOND-LINE DRUGS FOR MDR TB involved, the length of treatment, and the emergence of potentially untreat- able TB. Establishing and maintaining such standards is a complex under- taking that affects manufacturing, supply, and national and international regulatory pathways. Incentivizing Production of QA SLDs Some workshop participants discussed approaches to implement incen- tives for manufacturers to produce SLDs according to specified quality standards (and removal of incentives to produce low-quality products). With respect to the BRICS countries in particular, Lisa Hedman, WHO, noted that encouraging the use of QA SLDs would require “supporting local production of QA SLDs, supporting regulatory and other procurement processes, and saturating the market at competitive prices.” Christophe Perrin, The Union, suggested that international donors should not allow the use of non-QA drugs to be purchased with their funding. Regulation of QA SLDs The QA qualification process can also introduce backlogs and disin- centives to producers. Particularly in light of the leading roles of China and India in API production, Patrick Lukulay, USP, suggested adjusting the stance of the WHO PQ process toward partnership. This approach could increase the number of API manufacturers willing to invest in the process of qualification. To deal with backlogs in the WHO PQ assessment and inspections processes, Lukulay suggested the possibility of establishing a secretariat at WHO that would accredit other agencies to grant PQ status. Brazil’s national SLD QA system was highlighted by A. Bloom. In Brazil, the national government takes an active role to procure local SLDs when possible, but avails itself of the GDF/GLC mechanism as required. Unlike many countries, Brazil employs a comprehensive, in-country QA process that includes registration and documentation, site inspections, drug sampling, postmarketing surveillance, and monitoring systems. It also includes an extensive lab network responsible for drug quality testing. Stakeholders are actively involved in a working group that monitors the process and is empowered to make necessary changes, and the development of the e-TB Manager tool has integrated information management about TB patients and SLDs. Andrew Gray, University of KwaZulu-Natal, expressed concern about accepting SRAs and WHO PQ as the only arbiters of quality. He noted that SRAs must by definition be ICH members, which is “a closed shop.” He suggested establishing a process by which national- or regional-level regulators could gain access to SRA status. Vincent Ahonkhai, BMGF, com-

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INNOVATIVE SUGGESTIONS AND POTENTIAL SOLUTIONS 101 mented that a fully functional regulatory system should have independence and complete oversight in the value chain of regulation, responsibilities that few countries can bear. He called for a shift of focus from a system that relies on formal designations to a system that assesses factors such as technical functionality, independence, and systems of governance needed to facilitate satisfactory oversight, checks and balances, and the elimination of poor-quality drugs. Noting the generally inverse relationship between a country’s income and the strength of the regulatory barriers to procuring QA SLDs, Ahonkhai emphasized that accelerating adoption of harmonized regulations could have a large impact on working through these barriers, citing the success of recent regional harmonization efforts in Africa. The African Medicines Regulatory Harmonization (AMRH) effort is a joint collaboration that aims to improve and streamline the product registration system for both regulators and manufacturers in each region of the continent.4 Ahonkhai described recent efforts to engage the African Union to expedite regulatory harmonization efforts, which have been in progress for the past 3 years at the national, ministerial, and regional levels. He reported that the initiative is promising, though some regions are more aligned for collaboration than others. Improved Demand Forecasting5 Throughout the workshop, multiple participants cited improved accu- racy and credibility of demand forecasting as a crucial strategy for moving forward and strengthening various components of the SLD supply chain by improving transparency and predictability. The accuracy of demand forecasting has ramifications for various components in the MDR TB sup- ply chain. In explaining how to improve demand-forecasting methodol- ogy, Meg O’Brien, American Cancer Society, described the importance of forecasters being more transparent and precise in their methodology. Ripin stated that the MDR TB market is not necessarily different fundamentally 4  The AMRH initiative is a joint effort formalized in 2009 to improve the fragmented system of product registration in Africa by focusing on regions within the continent, thereby creat- ing a platform on which to build African regulatory capacity. AMRH is focusing initially on generic drugs for infectious diseases and will extend to other product categories and regula- tory functions over time. For more information, see http://amrh.org (accessed November 14, 2012) and http://www.who.int/medicines/areas/quality_safety/regulation_legislation/PL2_3. pdf (accessed November 14, 2012). 5  This subsection is based on reflections offered by Owen Robinson, Program Manager, Partners In Health, and comments offered by workshop participants during an open discussion session moderated by Robinson and Barry Bloom, Harvard University Distinguished Service Professor and Joan L. and Julius H. Jacobson Professor of Public Health, Department of Im- munology and Infectious Diseases, Harvard School of Public Health.

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102 GLOBAL SUPPLY CHAIN FOR SECOND-LINE DRUGS FOR MDR TB from other markets, but one of its unique challenges is the need to instill confidence among suppliers by reducing discrepancies between actual and projected procurement and increasing predictability of procurement. He suggested that doing this will require the development of smooth, reliable, and accurate forecasting techniques that suppliers view as realistic and credible. Yadav suggested that developing more accurate demand-forecasting techniques is necessary for manipulating the push-pull boundary in SCM in order to shift a proportion of component processes from those that are order driven to those that are forecast driven. He noted that improved demand forecasting is essential to resolve the crucial disparity between the number of patients who need treatment and the number of patients who are actually diagnosed and treated. Schwalbe suggested that improved interaction with manufacturers around that forecasting data would be productive and that it is important to forecast the “whole picture” (i.e., to not forecast the donor-driven and non-donor-driven markets in isolation). Relatedly, some participants discussed the concept of a buffer inventory or stockpile to address SLD stock-outs and shortages. The buffer would shorten delivery times and increase predictability. Such a mechanism could assist manufacturers by smoothing demand and could help ensure that an uninterrupted supply of SLDs can be delivered where and when needed. Information Management Systems6 Some participants discussed feasibility and opportunities for improved information management through Web- and mobile-based technology for managing patient care and drug supply. Hamish Fraser, Partners In Health, identified low-hanging fruit in the area of information management, sug- gesting adoption of universal bar coding in the short term. As a required first step, funders and international agencies would need to agree on stan- dard naming, formatting, and coding conventions. Scanners or mobile phones that would be used to read the bar codes are already widely avail- able, so Fraser suggested that the process would be relatively straight- forward. Yadav commented, however, that although the technology for standardizing bar codes is simple, the standardization process itself would be complicated and lengthy, which could pose a serious barrier to the quick 6  This subsection is based on reflections offered by Owen Robinson, Program Manager, Partners In Health, and comments offered by workshop participants during an open discussion session moderated by Robinson and Barry Bloom, Harvard University Distinguished Service Professor and Joan L. and Julius H. Jacobson Professor of Public Health, Department of Im- munology and Infectious Diseases, Harvard School of Public Health.

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INNOVATIVE SUGGESTIONS AND POTENTIAL SOLUTIONS 103 establishment of such a system for SLDs entering developing country mar- kets. Richardson remarked that although serialization of individual units may not be feasible in the short term, the option of printing established G10 numbers (containing either manufacturing or expiry date and batch number) could be adopted in the short term. INNOVATIVE FINANCING7 Flexible Financing Issues regarding how best to finance procurement of SLDs resonated throughout the workshop. From a practical standpoint, participants dis- cussed expansion of the funding pool and improvement of its predictability and flexibility. Increased predictability of financing and funding could serve to facilitate program implementation and improve market health, while more flexible financing mechanisms could reduce the amount of funding lost to use. Vincent added that shifting the financing burden for FLDs to countries could free up funding from external donors for SLDs. In addition to the possibility of pooling procurement processes (dis- cussed earlier), participants also explored the possibility of pooling financ- ing. A. Bloom suggested that under a pooled financing system, purchaser countries could withdraw funding from the broader pool at an appropriate time for purposes of making payment, rather than having to access funds far in advance, when needs may be uncertain due to less accurate forecast- ing. Several participants discussed the potential for a mechanism incorpo- rating WHO data to monitor pooled financing, procurement, pricing, and drug distribution on a global level to ensure that drugs are being used at the appropriate time in the appropriate place. A. Bloom suggested, given that the Global Fund represents 85 percent of the funding in non-BRICS coun- tries, coordinating with the Global Fund to try to obtain data about how it distributes those funds and how funds flow in and out of those countries, with the view to establishing a more pooled source of funds that could be better matched with the countries’ needs. 7  Thissection is based on reflections offered by Prashant Yadav, Director, Healthcare Re- search Initiative, William Davidson Institute, University of Michigan, and comments offered by workshop participants during an open discussion session moderated by Yadav and Barry Bloom, Harvard University Distinguished Service Professor and Joan L. and Julius H. Jacobson Professor of Public Health, Department of Immunology and Infectious Diseases, Harvard School of Public Health.

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104 GLOBAL SUPPLY CHAIN FOR SECOND-LINE DRUGS FOR MDR TB Innovative Financing Strategies and Mechanisms “Push” and “pull” mechanisms were presented as potential novel financing strategies designed to strengthen the SLD market over the long term. Push mechanisms create incentives for new suppliers to enter the market. Rifat Atun, Imperial College London, suggested the following push strategies: • reengaging public–private partnerships; • providing R&D credits for investments in small markets; and • accelerating regulatory approval. Pull mechanisms create demand and signal a market both for new entrants and for current players to stay in the market. Atun commented that market signaling is as important as funding because potential suppliers prepared to undertake a 10- to 15-year commitment to invest in R&D and manufacture drugs need assurance that they will be able to recoup their investment. He suggested the following long-term pull strategies for the MDR TB market: • long-term instruments such as a TB bond to provide 10- to 15-year funding; • at the domestic level, expanded health insurance or catastrophic risk insurance to cover MDR TB; • venture capital impact funds for development of new SLDs; • value-based pricing; and • outcome-based financing to reward successful novel approaches. Yadav suggested two specific types of new contracting structures that could be employed to shift the push-pull boundary, leading to expansion of forecast-driven orders, as follows: 1. long-term contracting agreements with quantity flexibility that allow quantities to be adjusted, subject to specified restrictions, if actual demand turns out to be slightly different from forecasted demand; and 2. a volume increase–price decrease trajectory contract that can guar- antee a supplier a 10 percent volume increase for each of the next 3 years in return for a reciprocal 10 percent yearly price decrease over the same period.

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INNOVATIVE SUGGESTIONS AND POTENTIAL SOLUTIONS 105 During the workshop, several participants suggested a number of specific innovative mechanisms that could potentially apply to MDR TB financing. • Net and Pledge Guarantees: Brad Herbert, Managing Director, Brad Herbert Associates, emphasized the need to integrate public and private financing in innovative ways such as those imple- mented by UNITAID, GAVI, and BMGF. He suggested the use of net and pledge guarantees as mechanisms to guarantee advance payments to manufacturers. This could, for example, potentially address delays in procurement that occur during the 12–15 months required to sign a Global Fund grant agreement. • IFFim: GAVI’s IFFIm is characterized by both extreme predictabil- ity and flexibility. The vehicle raises funds by issuing bonds backed by long-term pledges ($20 million to $3 billion) from donor coun- tries. It has the advantages of enabling both market shaping and long-range, multiyear planning in beneficiary countries; increasing financial efficiency; and generating better public health outcomes. • AMC: AMCs can incentivize manufacturers and stimulate inno- vation by offering a long-term secure contract via donor-funded purchase commitment and price guarantee. • GAVI Matching Fund: A matching fund can be used to raise financ- ing and leverage non-cash assets as well as to increase public awareness. • Buyer Subsidy: AMFm successfully used price negotiations with manufacturers, coupled with a buyer subsidy, to generate a price reduction of around 90 percent. • Balance Sheet Demand Guarantee: Under GAVI’s balance sheet demand guarantee, vaccine purchases are guaranteed using GAVI’s balance sheet (in lieu of an up-front commitment) as the financial backing, which eliminates the need for new funding. It functions like a bank guarantee except that it does not accrue interest. • Working Capital Fund: According to Gordon Comstock, Partner- ship for Supply Chain Management, a working capital fund like SCMS’s could facilitate better up-front planning, less restrictive funding policies, and pooled procurement plans for liaising with manufacturers. • PRIs: Kimerling suggested that PRIs could be used as a variety of SLD market interventions to address problems of limited drug availability and high prices.

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106 GLOBAL SUPPLY CHAIN FOR SECOND-LINE DRUGS FOR MDR TB REFLECTING ON THE WAY FORWARD This final section is based on concluding remarks offered by the final panel of experts, who provided individual reflections on the ways forward to strengthen the SLD supply chain. An integrated summary of the key themes and suggestions that these individuals presented (as well as top- ics that arose in the subsequent discussion) is presented thematically in this section, covering approaches/methods, strategic messages, and new structures. The section concludes with Box 4-1, which compiles individual concrete suggestions and low-hanging fruit offered at the workshop. This summary should not be construed as reflecting consensus or endorsement by the workshop participants, the planning committee, the Forum, or the National Academies. Approaches and Methodologies Leadership Herbert addressed the need for boldness, particularly within the new global GLC, in strategizing, tactical planning, and acquiring funding for MDR TB. He identified as key issues the need for improved decision mak- ing and stronger leadership to enact a paradigm shift toward producing good business plans. Strengthened leadership could support construction of a new strategy to achieve concrete results and to reach established goals. Strengthened in-country leadership is also important for capacity building. Execution B. Bloom stated that the key problem in the improving overall treat- ment of MDR TB is not a lack of ideas, but a lack of execution, that is, translating those ideas into action. He suggested that while collecting data and evaluating evidence are necessary before taking some risks, there is a worry that requiring an evidential basis for everything could preclude the type of risk taking that adopting an innovative new approach requires. Adeyi concurred, citing AMFm as an example in suggesting that the MDR TB program should be willing to explore new pathways and structures, with the appropriate checks and balances in place in execution and man- agement, without being constrained by the need for certainty about the outcome at every step. Adeyi also urged application to MDR TB of lessons of successful aspects of other programs. Trish Stroman, Principal, The Boston Consulting Group, suggested that a powerful strategy moving forward would be to quantify the impact of no

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INNOVATIVE SUGGESTIONS AND POTENTIAL SOLUTIONS 107 action on patients, HCPs, and the entire health care system—that is, “what happened while we were waiting for a drug.” Keshavjee observed that pooled funding mechanisms have been essen- tial to support systems such as GAVI, AMFm, and SCMS to effectively procure drugs. He suggested applying these mechanisms to MDR TB, developing an available pool of money coupled with an efficient purchas- ing mechanism. Jose Gomez-Marquez, Director, MIT Little Devices Lab, suggested that decentralizing the ways that patient-needs data are collected and shared to make information more freely available would improve transparency about the actual MDR TB burden and thus facilitate better demand signaling. Engagement with Private Sector, Patients, and HCPs Keshavjee proposed that engaging and penetrating the private market should be a primary approach for effecting change because it is in that mar- ket that the bulk of TB care is being provided and TB drugs are being sold. He suggested that many years spent focusing on the donor-driven market have eclipsed focus on private-sector engagement. Gomez-Marquez maintained that there is a need to more systemati- cally and deeply engage the perspectives and experiences of patients and HCPs, which could help to foster accountability about the tangible effect of issues like procurement delays. Similarly, he suggested encouraging greater input from both large- and small-scale manufacturers about their specific technical needs in terms of financing, forecasting instruments, and supply production. Strategic Messages Many workshop participants identified the importance of mobilizing influential advocates to take advantage of political leverage and effect change. Advocates could be enlisted from WHO, World Bank, and other high-level political leadership. Adeyi cited the need for clarity about both strategic goals and the specific means of achieving those goals, noting that any structure adopted must make practical sense. A. Bloom also suggested that finding the right solution requires clarifying the problem to be addressed. She maintained that thinking broadly about a longer-term strategic vision should be accom- panied by immediate concrete steps toward improvement and innovative changes in the short term.

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108 GLOBAL SUPPLY CHAIN FOR SECOND-LINE DRUGS FOR MDR TB New Structures Several participants discussed the idea of forming an “Affordable Medi- cines Facility for TB” (AMFtb). Herbert suggested a move toward struc- tural integration that could involve taking “everything of high value from the GDF and all the wonderful work they have done and moving it out of WHO into a better, more functional Global Fund,” maintaining that the Global Fund is no longer functioning as the innovative financing mecha- nism that it was set up to be. Herbert recommended that the Global Fund serve as an implementing body, but suggested that alternative mechanisms be considered to design the new model. Seiter remarked that such a new mechanism might be beneficial in selectively identifying the buyers that are qualified to purchase the subsidized product. Furthermore, implementing a stringently controlled treatment program in the private sector could help prevent patients from purchasing uncontrolled SLDs. In his concluding remarks, B. Bloom stated that an underlying tension throughout the workshop was the need to reinvent a system to do what the present one is not doing. He suggested three alternatives for moving forward. The first option is to reinvent the current way of thinking about matters such as supply chains and details of drugs for TB in general and MDR TB specifically. The second is to create a mechanism for renewing existing agencies that currently have such responsibilities. The third option is to establish the partnerships required to coalesce the multiple groups involved in different parts of the system. He stated that the success of part- nerships, including their capacity to generate business plans, would be aided by the institution of external, transparent review processes by all partners within the MDR TB program. Individual workshop participants offered concrete suggestions and potential low-hanging fruit, compiled in Box 4-1. Some participants noted that there is a further need for prioritization and identification of specific next steps by various stakeholders in the SLD supply chain.

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INNOVATIVE SUGGESTIONS AND POTENTIAL SOLUTIONS 109 BOX 4-1 Suggestions and Low-Hanging Fruita Suggestions •  rioritize development of an operational strategy to improve de- P mand forecasting. •  evelop a mechanism for pooled procurement to increase predict- D ability and volume of demand. •  aintain a buffer inventory of SLDs with optimal size, scope, and M design to improve production efficiencies by smoothing demand, thereby reducing product costs and delivery lead times. •  se innovative mechanisms to facilitate long-term financing com- U mitments and improve contracting structures. •  undle SLDs with other well-established drug supply chains to B lower costs and expedite delivery. • mprove flexibility and predictability of funding; facilitate reallocation I of unused funds to avoid loss to use. •  evelop in-country capacity and support system strengthening D through training programs. •  acilitate regulatory harmonization to reduce delays in drug quali- F fications and approvals. •  ncrease level of engagement with private sector and governments I in countries. • Mobilize public and private advocacy for MDR TB. Low-Hanging Fruit •  evelop a system of universal, standardized bar coding for prod- D ucts coupled with mobile information technology to track drug supply and prevent stock-outs. •  mplement an EMR system for MDR TB programs. I •  implify regulatory dossiers and priority sequencing; consolidate S and harmonize NTPs’ technical product specifications. •  acilitate regular interaction with manufacturers around demand F forecasting. a Identified by individual workshop participants.

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