Costing the supply chain for delivery of ACT and RDTs in the public sector in Benin and Kenya

Rima Shretta,Prashant Yadav,Brittany Johnson,Ravi Anupindi,Lisa Smith,Don De Savigny,Seydou Doumbia

doi:10.1186/s12936-014-0530-1

Abstract

BackgroundStudies have shown that supply chain costs are a significant proportion of total programme costs. Nevertheless, the costs of delivering specific products are poorly understood and ballpark estimates are often used to inadequately plan for the budgetary implications of supply chain expenses. The purpose of this research was to estimate the country level costs of the public sector supply chain for artemisinin-based combination therapy (ACT) and rapid diagnostic tests (RDTs) from the central to the peripheral levels in Benin and Kenya.MethodsA micro-costing approach was used and primary data on the various cost components of the supply chain was collected at the central, intermediate, and facility levels between September and November 2013. Information sources included central warehouse databases, health facility records, transport schedules, and expenditure reports. Data from document reviews and semi-structured interviews were used to identify cost inputs and estimate actual costs. Sampling was purposive to isolate key variables of interest. Survey guides were developed and administered electronically. Data were extracted into Microsoft Excel®, and the supply chain cost per unit of ACT and RDT distributed by function and level of system was calculated.ResultsIn Benin, supply chain costs added USD 0.2011 to the initial acquisition cost of ACT and USD 0.3375 to RDTs (normalized to USD 1). In Kenya, they added USD 0.2443 to the acquisition cost of ACT and USD 0.1895 to RDTs (normalized to USD 1). Total supply chain costs accounted for more than 30% of the initial acquisition cost of the products in some cases and these costs were highly sensitive to product volumes. The major cost drivers were found to be labour, transport, and utilities with health facilities carrying the majority of the cost per unit of product.ConclusionsAccurate cost estimates are needed to ensure adequate resources are available for supply chain activities. Product volumes should be considered when costing supply chain functions rather than dollar value. Further work is needed to develop extrapolative costing models that can be applied at country level without extensive micro-costing exercises. This will allow other countries to generate more accurate estimates in the future.Electronic supplementary materialThe online version of this article (doi:10.1186/s12936-014-0530-1) contains supplementary material, which is available to authorized users.

Highlights

Studies have shown that supply chain costs are a significant proportion of total programme costs
Annual throughput In Kenya, Kenya Medical Supplies Agency (KEMSA) delivered a total volume of 18,441 cubic metres of artemisinin-based combination therapy (ACT) and Rapid diagnostic test (RDT) from July 2012 to June 2013 including 14,979,359 treatments of AL and 7,277,960 individual RDT tests
A median of 1,827 treatment courses of ACT was distributed to each facility, which made up 9% of total volume distributed by KEMSA

Summary

Introduction

Studies have shown that supply chain costs are a significant proportion of total programme costs. The costs of delivering specific products are poorly understood and ballpark estimates are often used to inadequately plan for the budgetary implications of supply chain expenses. Shretta et al Malaria Journal (2015) 14:57 bed nets in Liberia [9] Such “ballpark” estimates frequently determine the budget presented to donors [10] and are often insufficient for delivering the products to health facilities. Author analysis of Global Fund proposals during Rounds 8–10 found that between 3 and 14% of total procurement costs are earmarked for procurement and supply chain management (PSM) functions in Africa [11]. Estimating the supply chain costs of a public health system is complex for several reasons. Anti-malarial medicines are often distributed using a combination of malaria-specific supply chains and integrated systems, which further complicates estimates. Chain costs in each country depend on the typology of the system, number of levels in the distribution system, and the types of fixed and variable costs inherent in the structure [14]

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