Report to: SuNMaP Commercial Sector Team. RDT Subsidy Feasibility Study in Nigeria. (Assignment code)

Transcription

1 Report to: SuNMaP Commercial Sector Team RDT Subsidy Feasibility Study in Nigeria (Assignment code) Submitted by: Montrose Lead Writer: Melanie NewmanReviewed by: Rubaiyath Sarwar, Helena Vidalic 21 March 2014

2 The Support to National Malaria Programme (SuNMaP) is funded and supported by the UK Department for International Development. It is implemented through a partnership of international and national companies and non-governmental organisations led by Malaria Consortium. GRID Consulting, Nigeria John Hopkins Bloomberg School of Public Health Centre for Communication Programs (Nigeria) (JHU-CCP(N)) Health Reform Foundation of Nigeria (HERFON) Federation of Muslim Women s Associations of Nigeria (FOMWAN) Christian Health Association of Nigeria (CHAN) CHAN-Medi-Pharm Pharmaceutical Manufacturers Group of the Manufacturers Association of Nigeria (PMG- MAN) University of Nigeria, Enugu Campus 2

3 Contents Section Page No. Section 1 Title Page 1 Section 2 Table of Contents 3 Abbreviations and Acronyms 4 Acknowledgements 5 Executive Summary (summary of findings and recommendations) Section Background & Introduction 8 Section Context and Rationale Approach and Methodology Key Findings and Analysis Key Factors for RDT Subsidy, Design, Implementation, and Exit Strategy 4.0 Conclusions Recommendations and Next Steps Other Emerging Issues 28 Annexes: Annex 1 Annex 2 Annex 3 Terms of Reference Work plan and list of persons met Operationalising the RDT Subsidy model

4 Abbreviations and Acronyms ACT AGPMPN AMFm AMLSN BCC DfID LLIN MC MLSCN MSO NAFDAC NMEP POS PPMV PSI SuNMaP QARDT Artemisinin Combined Therapy Association of General and Private Medical Practitioners of Nigeria Affordable Medicine Facility - malaria Association of Medical Laboratory Scientists of Nigeria Behaviour Change Communications Department for International Development (UKAid) Long Lasting Insecticidal Treated Net Malaria Consortium Medical Laboratory Scientist Council of Nigeria Market Support Officer National Agency for Food and Drug Administration and Control National Malaria Elimination Programme Point of Sale Proprietary and Patent Medicine Vendor Population Services International Support to the National Malaria Programme Quality-Assured Rapid Diagnostic Test 4

5 Acknowledgements Montrose would like to acknowledge and extend their appreciation to the SuNMaP project team, its partners and the broader community of stakeholders who all openly agreed to meetings and to share information by way of contribution to this study. The contents of this report are the sole responsibility of its authors and do not necessarily reflect the views of the Partnership managing SuNMaP or the UK Department for International Development. 5

6 SECTION 2 EXECUTIVE SUMMARY The Support to the National Malaria Programme (SuNMaP) is a UKAid-funded project which directly supports the goals of the National Malaria Elimination Programme (NMEP) to strengthen national systems in the prevention, care and treatment of malaria. The project, which was extended in 2013 for two years through to 2015, incorporates an experimental commercial sector component, which focuses on building commercially-driven supply of long-lasting insecticidal nets (LLIN), rapid diagnostic test kits (RDT) and Artemisin combined therapy (ACT) considered the three pillars for effectively controlling malaria. The Commercial Sector Support Strategy embraces the Making Markets Work for the Poor (M4P) approach to carry out targeted interventions to develop and strengthen commercial sector channels for the manufacture, importation, sale and distribution of these commodities. Specific to RDT, the commercial market is hugely underdeveloped, making it difficult for SuNMaP to incentivize the promotion, sale and distribution of RDT through commercial channels. The project is thus considering use of a smart subsidy, which will help bridge the gap between supply and demand by addressing affordability (bringing the price of RDT right down), accessibility (working with suppliers to strengthen their business capacities in the commercial sale and distribution of quality-assured RDT), and knowledge (supporting awareness raising, information and uptake of RDT across end providers and consumers). The purpose of the feasibility study was to determine the best way to introduce a subsidy, which will help drive demand for quality-assured RDTs by reducing the end retail cost of the product, and ensuring it is priced more competitively in relation to the retail price for ACT. The subsidy should also stimulate supplier interest in market-led sale and distribution of quality-assured RDT. The team Making the Market Work for the Poor (M4P) expert led the study and worked with various members of the Commercial Sector team to gather information from the field. This was done primarily through interviews with the Commercial Sector team field staff, and visits to actual and potential partners (as indicated in the work plan in Annex 2). Discussions with potential partners focused on assessing levels of interest for participating in a subsidy scheme, understanding of the concept, and operational capacities. This report presents the findings, conclusions, recommendations and next steps with respect to the project s interests to explore the feasibility of introducing such a subsidy. Findings and Conclusions The project does not have a wide selection of partners to choose from, and strict application of DfID s procurement policy would restrict the project to one partner option only, which is Codixpharma. However, to achieve desired momentum and scale more than one partner is desirable. Furthermore, end provider and end consumer awareness, information and confidence levels in RDT as a diagnostic test for malaria are very low. The project would need to heavily front-load these activities to ensure demand creation is gaining traction as the RDT subsidy is introduced. Whilst an RDT subsidy could potentially address constraints linked with affordability, accessibility and knowledge, it will not directly address current policy and regulatory constraints such as the ban on 6

7 Proprietary and Patent Medicine Vendors (PPMVs) administering RDT; so separate interventions will need to be implemented to address key constraints in the area of policy and regulation. Ultimately, the project (or its supplier partners) will not be able to dictate end provider pricing, but partners can work together to introduce mechanisms that can help prevent supply chain actors profiteering from the subsidy. A subsidy scheme needs to be positioned within a robust strategic framework; the Commercial Sector team will need to urgently address gaps and/or weaknesses in its RDT intervention strategies to ensure adequate support for supply chain strengthening and demand creation. In particular, the project needs to articulate its strategy of bundling RDT with ACT and agreeing with partners how this will work in practice, and how it will work with the PSI/MC UNITAID project, which plans to introduce a manufacturer subsidy. Finally, the project should not underestimate the time and resources needed to effectively manage and monitor the scheme, and to track and account for the use of subsidy funds in collaboration with partners. The project team itself has to be sure it has adequate personnel and resources in place to manage a subsidy scheme, as it will require ramping up of project technical support and field monitoring. The team should also be realistic in what can be achieved in the remaining lifetime of the project with respect to impacting partners capacities, behaviours, and market systems. Recommendations and Next Steps The following recommendations and next steps are proposed for the project team: 1. Define the strategic framework and bolster support for RDT interventions, and a subsidy scheme in particular. Assuming the project opts to launch an RDT subsidy scheme the following recommendations for action are proposed: 2. Map out a critical action plan. 3. Develop comprehensive partnership agreements. 4. Develop detailed budgets and costings for partners and for the overall subsidy scheme. 5. Heavily front-load capacity building and demand creation activities. 6. Link back RDT interventions to M&E requirements. 7

8 SECTION Background & Introduction Though preventable, malaria remains one of the major public health problems in Nigeria. The country bears up to 25 per cent of the malarial disease burden in Africa, and accounted for over 40% of the estimated total of malaria cases and deaths globally in 2010 (WHO, 2012). While everyone is at risk, some categories of people are at the highest risk of infection. These include children aged less than five years, pregnant women, visitors from non-malaria regions, people living with HIV, and those with sickle cell anaemia. Malaria overburdens the already weakened health system and has been reported to contribute to 60 per cent of outpatient visits and 30 per cent of hospitalisations among children under five years old (MIS, 2010). The Support to National Malaria Programme (SuNMaP) is a UKAid Department for International Development (DFID) funded programme in Nigeria, which provides support to the National Malaria Elimination Programme 1 (NMEP) and participating States to deliver quality malaria control services (both prevention and treatment), while putting in place systems to ensure sustainability through a number of initiatives, which include behavioural change communication, net campaigns, as well as sustained advocacy and public enlightenment on measures for malaria prevention and treatment. The focus of SuNMaP s malaria control initiative is supporting both public and private sector to reach the entire population - especially the poor and vulnerable - with different interventions aimed at building capacity and strengthening service delivery to reduce the burden of malaria. Given current high demands on Federal- and State-level health budgets, and on-going reliance on donor support, SuNMaP specifically incorporated an experiential project component, which focuses on the development of the private sector LLIN, ACT and RDT markets. The Commercial Sector Support Strategy embraces the Making Markets Work for the Poor (M4P) approach to carry out targeted interventions to develop and strengthen commercial sector channels for the manufacture, importation, sale and distribution of LLIN, RDT and ACT. Montrose, in partnership with Innovision, has been providing technical and advisory support as the Market Development Partner to SuNMaP Commercial Sector Component since SuNMaP, including the Commercial Sector component, was recently extended through until August The presumptive treatment of suspected symptoms of malaria and consumption of mono-therapies is high among most households in Nigeria. One of the goals of Nigeria s anti-malaria treatment policy is to encourage rational drug use to prevent or delay the development of antimalarial drug resistance. This can only be achieved through confirming all presumed malaria cases through either microscopic examination of blood smear - which remains the gold standard in malaria diagnosis - or use of a qualityassured rapid diagnostic test (QARDT) kit, and treating all confirmed cases of malaria with Artemisinin Combination Therapy (ACT) drugs as opposed to mono-therapies. Access and demand for diagnosis for all suspected malaria cases before treatment will foster proper malaria case management, which will in turn reduce the huge resources wasted on presumptive treatment by households and public sector health facilities in Nigeria, and will pre-empt potential wastage in the private sector. This report presents the findings, recommendations and next steps with respect to SuNMaP Commercial Sector s interests to explore the feasibility of introducing a subsidy on RDTs sold commercially. The Terms of Reference (TOR) for the assignment are contained in Annex 1. The context and rationale for 1 Formally called the National Malaria Control Programme. 8

9 applying an RDT subsidy are presented in section 3.2 below. The key findings and analysis are presented in section 3.4, key factors for consideration in section 3.5, with concluding remarks and recommendations and next steps in sections 3.6 and 3.7 respectively. 3.2 Context and Rationale for an RDT Subsidy The commercial market for RDT is hugely underdeveloped (see section for an overview of the RDT market and commercial sector constraints) and makes it difficult for SuNMaP to incentivise the promotion, sale and distribution of RDT through commercial channels. The project is thus considering use of a smart subsidy, which will kick start demand by driving the commercial sale and distribution of quality-assured RDTs. It is envisaged that positioning of the RDT subsidy would incentivise the supply side so RDT importers and distributors market RDT through commercial channels, and the demand side - so those suspecting malaria make use of RDT before undergoing treatment for malaria. However, positioning the subsidy deciding how much, for whom, for how long, and most critically the exit strategy for withdrawing what should be a time-bound intervention - requires sound understanding of the market dynamics, the players, and the anticipated outcomes. There will also likely to be other related input costs to factor in, including training, product marketing, and promotional incentives. Moreover, operationalizing and managing a discount once it is in the market place, including how results will be monitored, monitoring for and managing unintended outcomes, and ensuring transparency and accurate reconciliation of the funds used, are also key to successful implementation. It will also be important for the Commercial Sector team to have clear strategies for buy-in and engagement of key regulatory authorities, and industry representatives that oversee the use of testing kits, drugs and medical practices. 3.3 Approach and Methodology The purpose of the feasibility study was to determine the best way to introduce a subsidy, which will help drive demand for quality-assured RDTs by reducing the end retail cost of the product, and ensuring it is priced more competitively in relation to the retail price for ACT. The subsidy should also stimulate supplier interest in market-led sale and distribution of quality-assured RDT. The study investigated the capacity of SuNMaP to monitor the distribution and use of subsidised RDT through commercial channels so that potential leaks and misuse of the subsidy fund by commercial sector partner(s) could be averted. The study also produced a preliminary assessment of the capacity of the commercial sector distributors and importers of WHOPES, and/or NAFDAC certified RDT, to operate and comply with a subsidy scheme. Lastly, the study draws conclusions on how the subsidy scheme could address the constraints related affordability, accessibility, knowledge and policy and regulations of RDT supply through commercial channels. In addition, it will provide further situational analysis for SuNMaP as it defines the systemic outcomes in the market once the subsidy is withdrawn. The M4P expert led the study and worked with various members of the Commercial Sector team to gather information from the field. This was done primarily through interviews with the Commercial Sector team field staff, and visits to actual and potential partners (as indicated in the work plan in Annex 2). Discussions with potential partners focused on assessing levels of interest for participating in a subsidy scheme, understanding of the concept, and operational capacities. 9

10 The feasibility study was conducted in three short consecutive phases: 1. Phase One: preparation of a feasibility study plan, and draft work plan; internal review and agreement of plans, including team members participation and support needs (preparing, during and post-study) and logistical movements; internal review of relevant documentation; 2. Phase Two: field visits to discuss and negotiate options with potential commercial sector partners; team sessions to brainstorm the design, operationalization, and exit strategy for the intervention; preparation of draft design and implementation plan, including draft partner contract agreements (.i.e. scope, performance monitoring and enforcement); 3. Phase Three: Production and submission of a draft final report on feasibility of RDT subsidy, including core design elements for review and feedback; production of final report on feasibility of RDT subsidy design document, including core design elements. The detailed work plan for the assignment, including a list of firms and people consulted is contained in Annex Key Findings and Analysis Overview of the RDT Market and Commercial Sector Constraints Several early-stage, as well as more recent market, analyses have highlighted many of the key constraints that undermine RDT market development on both the supply and demand sides. These major constraints are summarised below. Affordability: There are links between affordability and uptake of ACT and RDT: although there is a general willingness among consumers aware of RDT to pay for a test, the wide-scale availability and relatively cheap price of ACT (due to the Affordable Medicine Facility subsidy (AMFm on ACT) may be a hindrance to promoting and encouraging uptake of RDT across consumers, and poor consumers in particular. The most popular ACT brands are being sold in the range of between N 200 and N 300; whereas RDT is currently offered for the price of between N 250 and N 600. This real or perceived high cost of testing before treatment could be prohibitive in wide-scale adoption of RDT; in many cases, given the current price of RDT, the presumptive treatment of malaria is an economic necessity for many poor households. Accessibility: Currently the vast majority of diagnostic tests and treatments are being offered through the public sector and free of cost; this in effect means that both RDT manufacturers (all of whom are located outside of Nigeria) and the lead Nigerian-based importers (who each appear to work exclusively with just one manufacturer) are focused on securing and supplying to public tenders; and whilst RDT distribution networks appear to be in place (e.g. between importer/wholesaler and hospitals, clinics, etc.) these are not used for commercial sales; as a result, importer business models are 10

11 unsophisticated, the bulk of sales are secured through large volume public tenders, which negates the need for traditional marketing (i.e. product, price place, promotion); markets are extremely distorted due to legitimate flows of bulked product through public channels, and a persistent supply of leaked and illegal product, which flows into the market and is predominantly mopped up again by wholesalers/retailers responding to public tenders. Moreover, there are currently only six or seven importers offering quality-assured brands in the market, and of these only one offers World Health Organisation (WHO) pre-qualified brands. This has implications for SuNMaP as DfID current procurement policy only permits partnership contracts with suppliers of WHO pre-qualified products. It also implies that SuNMaP and the PSI/MC RDT private sector development project will be working with the same partners. Knowledge: With some 77 per cent of consumers not having heard about RDT 2, consumer awareness and understanding of RDT as a diagnostic tool is extremely limited. At the same time only 20% of consumers test for malaria before taking medication (despite clear national policy to promote use of testing before treatment); this compounds the gap between demand and supply and only a handful of commercial sector suppliers stock RDT either as it is so slow moving, or they as suppliers are also not familiar with, or authorised to offer RDT; health care providers in general have poor knowledge of RDTs; there is also wide-spread scepticism about the efficacy of RDT (particularly in situations where storage, handling and administration are considered inadequate); in some cases, medical practitioners wrongly perceive RDT as a proposed replacement for microscopy. Policy and Regulation: Whilst current policy supports the use of tests such as RDT, regulations limit those allowed to conduct tests, and small-scale facilities such as a Proprietary and Patent Medicine Vendor (PPMV), which are in many respects ideally located to support in more remote rural areas, are not authorised, and in fact in most cases not qualified, to offer RDT. One new development in this area has been the Society for Family Health pilot project, which has demonstrated that PPMVs can safely handle RDT; the results from this action research could help inform SuNMaP pilot initiatives to increase uptake of RDTs. There is also a plethora of Government bodies, medical industry bodies and health sector associations, which either directly or indirectly govern and/or oversee the administration of RDTs. These include: NAFDAC National Agency for Food and Drug Administration and Control. In theory, RDT products need to be approved and registered by NAFDAC. In reality, there are unregistered RDT products in the market place. NAFDAC lacks the resource capacity to effectively monitor the RDT sub sector, which allows substandard product to infiltrate the market, contributing to lack of confidence in the product. AMLSN Association of Medical Laboratory Scientists of Nigeria. AMLSN membership consists of both public and private sector laboratories. The Association has branches across the different States, and affiliates such as the Medical Laboratory Scientist Council of Nigeria (MLSCN) and Guild(s) of Private Medical Laboratory Directors (GPLMD), which advocate for the needs and interests of their membership. These bodies also closely protect the roles and status of technicians, and as such are potential gate-keepers when it comes to the use of RDTs outside of laboratory facilities. AGPMPN Association of General Private Medical Practitioners of Nigeria. AGPMPN represents the interests of private General Practitioners (GPs), who, through their interaction with actual or suspected 2 ACT RDT Baseline Survey, November

12 malaria sufferers, wholly influence consumer understanding, awareness and behaviour with respect to testing before treatment. The relationship between GPs and laboratories is self-serving, as both benefit financially from whatever testing or treatment they choose to subscribe to. In this context, a well-designed, market-led subsidy could potentially address the constraints described above by stimulating consumer awareness and demand. Also, the subsidy could potentially stimulate the private sector to invest in the non-existent commercial channels, which otherwise might not develop since the private sector is primarily targeting public tenders. However, the subsidy will only go so far in addressing awareness and gaining buy-in amongst the laboratory scientists and medical practitioners, and it will not be able to address the policy and regulatory constraints described above; so areas of relevant policy and regulation will need to be addressed separately. Furthermore, an intervention on subsidy, if not complemented with effective interventions on policy and regulations might limit the effectiveness of the subsidy scheme since we will not be able to target service providers like PPMVs Capacity of Potential Commercial Sector Partners The following paragraphs present the key findings and analysis of potential partner importers/suppliers with respect to their current involvement with RDT sales and distribution, and their capacities in sales and distribution. Meetings with Teta, Codixpharma and the Sustainable Healthcare Initiative (SHI) took place and various informative elements were gathered. Teta, although a potential partner for the subsidy, presents some challenges which are detailed below. Codixpharma and SuNMaP appear to have a good relationship, and the company is well positioned to support a subsidy programme, although various elements (listed below) will need to be reviewed carefully. Finally, SHI may be a new potential partner for the scheme, as the meeting was introductory, further working meetings will be needed to map out the possible partnership. Teta A meeting was held with the senior management of Teta to assess their involvement in the RDT sector overall, and its level of business in the commercial sector; the concept of the RDT subsidy and SuNMaP scoping for potential partners was intentionally not mentioned. As Teta management confirmed, it currently focuses on the institutional sale of RDT through public sector channels. It is the sole importer/supplier of quality-assured RDT brands ICT Malaria and ICT Malaria combo 3, both of which it imports and sells in packs of 25 (Teta sales prices - N3,000 and N5,000 respectively) and it currently has two or three public sector contract with a focus in Lagos, Kano (won a tender in December 2013), and Abuja. It also supplies regularly to Odo State and referred to business with some pharmacies in the East, but with slow, limited uptake and recent actual supply/sales of RDT for Abuja/Odo were given as 6,000 units. Teta plans to continue focusing on public sector tender bids, and to increase its participation in bids. It currently does not offer single pack RDTs, though it is interested in the product concept. In the past, it has approached the manufacturer to supply packs of five RDT, but the price quoted was too high (according to the Manager between two and four times the cost of 25 pack unit). In discussions on commercial sector business development, Teta explained that the costs of market entry, in particular the costs of marketing, were an uphill struggle as was awareness raising. For example, Teta felt that participating in and presenting at industry forums was key to breaking into markets, but it considers the costs too high. 3 Approved by WHO and on the Global Fund Quality Assurance listing dated January

13 In conclusion, there is an underlying element of neediness on the part of Teta that is likely to hold the project back with regard to the RDT subsidy scheme; the firm is not particularly commercially minded, and would most likely struggle with delivering on sales and marketing functions (even if support was accorded), and in operationalizing the subsidy; the door was left open though for Teta to come forward with ideas for partnership with SuNMaP generally; the team provided examples of what types of partnership / support SuNMaP was more likely to consider (in an M4P context of shared risk), as well as examples of what the programme will not do. Codixpharma A first meeting was held with Senior Management to progress on earlier discussions between the Commercial Sector team and Codix on a proposed RDT subsidy scheme. Clearly there has been previous discussion between SuNMaP and Codix, even in so far as what the subsidy scheme should look like. Codix management is very keen to partner, and sees the opportunity to introduce SD Bioline single RDT pack, which it believes is the future of RDT. A second meeting went into more detailed discussions to explore capacities of the company s field representatives, and how Codix will track and report on discounted sales in order to receive reimbursement under the subsidy scheme. Codix 4 is the sole importer/supplier of quality-assured SD Bioline Malaria which it imports in packs of 25 (with single buffer), and in single unit packs (with buffer included). Whilst Codix has a team of field representatives (the bulk of which are salaried employees) and confirmed that it has representatives in the project target States, it did not confirm how many representatives it has on staff, although it emerged that some sales representatives cover more than one state. It is also willing to look at positioning new representatives if the partnership goes well though realistically the volumes of sales would need to be large-scale to cover such cost. Codix considers RDT to be in its words a hard sell for its representatives, furthermore as it is not a prime product pushed by the company, it is low on the priority list for representatives. The company confirmed that its representatives would need strong orientation on the subsidy programme, and training in sales and marketing. Other capacity building needs (such as knowledge of RDT and capacity for product detailing) still need to be verified as it was not possible during the field visits to actually sit and discuss with sales representatives (though this was requested). Although Codix maintains the single pack RDT is the same as the bulk pack product, it will be critical that its representatives are strong in product detailing, marketing and promoting the product and that there is clear messaging to end providers, and end users (issues such as explaining the use of the single measure buffer for accurate testing, quality assurance, waste management, building consumer confidence, etc.). Codix is also willing to go back to the manufacturer and negotiate a better price if it can show volume sales; which is exactly the type of behaviour we want to see the business partners adopting. Codix is also willing to build in other incentives such as commission on sales for its representatives, and end buyer (e.g. for medical professionals, PPMVs etc., selling and/or administering RDT) promotional offers such as order and pay for one pack, and get a free box of surgical gloves, and sell 50 boxes (of 25 units) and receive a free lab coat. In discussion, it came out that Codix is expecting SuNMaP to provide a 4 See 13

14 list of end providers to be targeted by its sales representatives, as well as details of SuNMaP marketing plan. In conclusion, SuNMaP appears to have a good relationship with Codix who is interested and relatively well positioned to support a subsidy programme; however there are important factors to be addressed in the partnership (which, where appropriate, should be spelled out in the partnership agreement). There was a significant amount of discussion with Codix around practicalities of tracking and reconciling sales as it had not fully grasped the implications of this aspect and had underestimated what is involved. Currently the company considers a sale closed once the product is passed/sold to its representatives SuNMaP would want to track sales at end provider level. Codix seems open to ensuring there is a system of allocating batch numbers and tracking of purchase orders, sales, and receipts along the supply chain, and even had its finance person join the meeting to be part of discussions on how this could work in practice. Codix will very likely also be a partner under the PSI/MC RDT private sector development project, which includes plans for a subsidy positioned with manufacturers, in practical terms this means that product will be imported by Codix, which is intended for sale under the PSI/MC project as well as under SuNMaP. The projects in dialogue with Codix will need to ensure an effective means of differentiating between manufactured/imported RDT products intended for the PSI/MC project and that which is agreed for sale under SuNMaP (to assist reconciliations on product subsidies and sales volumes and amounts). Buy-in and capacity of representatives themselves will also be key and the project needs to strike up direct dialogue with Codix representatives to fully gauge levels of commitments and needs for those representatives that will take part in a pilot and scale-up phase. Previous discussions had indicated that RDT would be supplied by piggy-backing on SuNMaP s current ACT network (i.e. along the commercial supply chains SuNMaP has been working to strengthen for ACT sales). However, there are policy and regulatory challenges, which effectively prohibit PPMVs from administering RDT the project will need to develop an intervention that tackles this current blockage. There is also a risk that Codix representatives focus on urban-based end suppliers (i.e. as an easier sales target, due to lack of resources to work rural markets, or due to end supplier capacity issues in rural areas). Therefore, representatives performance targets should include specific targets for rural areas to support SuNMaP goals for inclusiveness. Codix is keen to combine the subsidy with a range of softer incentives, which will also have costs to bear. It will be important for the partnership to include an equitable agreement for cost share on additional inputs attached to the subsidy programme, including softer incentives, keeping in mind that Codix has a vested interest in seeing a growing market for RDT, and stands to benefit in the long-term from its/sunmap short-term inputs. Furthermore, the agreement with Codix will include the cost of the product discount over an agreed timeframe, together with a package of orientation, training, incentives and targets - the costs per representative and overall costs need to be fully developed and agreed. Sustainable Healthcare Initiative (SHI) According to SHI website 5, Sustainable Healthcare Initiative (SHI) is a non-governmental organisation (though in our meeting it stated it was a private firm so further clarification is needed) and is currently a

15 sub-recipient of the Global Fund/NMEP (formally the NMCP), Round 8 Phase 2. It is carrying out Behavioural Change Communication (BCC) activities in 18 states, as well as the supply and distribution of ACTs under the same programme. It indicated it has some 110 staff, including field workers in 36 States, which carry out monitoring and evaluation exercises of primary healthcare centres and support the distribution of ACT in communities. An introductory meeting was held with the Chief Oversight Officer and Director, Supply Chain System as the Commercial Sector team had not met SHI before and it is new on the radar as far as partnership goes. SHI demonstrated high levels of interest for partnering with SuNMaP on a subsidy programme, and it appears to have a strong framework in place to support medical supplies distribution. Supply chain management is one of SHI s core areas of expertise (BBC being another) and the opportunity to bundle ACT and RDT using SHI s existing distribution channels was discussed. This appears to be highly feasible given the organisation s apparent management capacities, current network of field representative and logistical capacities though these capabilities have to be looked into more deeply as part of due diligence and deeper insight into partner suitability. Positive discussion also took place on the opportunity for placing a promotional discount on RDT - though further meetings are required to go into detail on costs and pricing, level of discount, capacities and willingness of SHI to track and report. There was no chance to meet SHI field representatives (though this was requested), therefore the SuNMaP team will need to follow-up to explore SHI field-level capacities for product detailing, sales and marketing, as well as levels of buy-in; as in the case of Codix (or any partner supplier) this will be key to promoting RDT, and managing and monitoring application of the subsidy along the supply chain. In conclusion, as SHI is a new development with respect to partnership on an RDT subsidy programme, there is a need for the project to engage with SHI over several meetings to explore areas such as how and from where SHI would source RDT given that it does not appear to be linked to a sole manufacturer (e.g. as is the case with Teta and Codix), how the application of a subsidy would work if SHI is not a buyer and seller of RDT, and if and how the project could leverage SHI supply chain management network and knowledge to boost efforts to reach rural private providers Meetings and Interviews with Other Supply Chain Actors The following paragraphs present the key findings and analysis following meetings and interviews with other supply chain actors including local wholesalers and retailers in the open market and with executives from the AMLSN. The open market interviews provided useful information on the existing sales, volumes and brands of RDT retailing landscape available at that market level (more details are provided below). The meeting with the AMLSN was building on an on-going relationship SuNMaP has with the organisation and a previous attempt to partner on RDT programme. It would appear that there is a possibility to re-engage AMLSN on RDT scheme if a strong strategic approach is used. Visits to informal market players Visits were made to open markets to hold ad hoc interviews with local wholesalers and retailers in Anambra and Lagos to get a feel for RDT wholesale and retail supply in those markets where market vendors were open and willing to share information on products, pricing, and sales. It emerged that prevalent brands in the market place were Carestart and Micropoint (p.f. / p.v.) in packs of 25 with 15

16 single buffer; prices ranged from N 2500 N 3000 for these brands 6 but went as low as N 800 for product that was nearing its expiry date and volumes on show were relatively small, ranging from four to eight packs in most cases. These interviews highlighted the ad hoc nature of supply with respect to brands, availability, and pricing, as well as quality control and quality assurance issues (since product past, or nearing expiry date, was also readily available at significantly reduced prices). However, also notable was the large scale of business behind the apparent informal façade of open market suppliers as many of these market sellers are also bidding for tenders and supplying bulk orders of drugs to public and private health facilities though they are not dealing in RDT to any noteworthy degree. These traders work informally buying or mopping up local supply of drugs (some of which is leaked product from public sector distribution channels) to respond to purchase orders from public and private health facilities, they differ from the lead suppliers such as Codix and Teta in that they do not deal directly with manufacturers but only other local suppliers. Those interviewed also own and run their own laboratory or pharmacy though not in direct competition with lead suppliers with respect to wholesale of drugs and some suppliers appear to have capacity to bulk orders on request. Meeting with executives and members of AMLSN A meeting was held with a large group of AMLSN executives and representatives that were attending microscopy training. The main outcomes from the meeting were that there is a need for the project to re-visit strategies for buy-in and feasibility of plans for pilot RDT testing hubs. In March 2013, SuNMaP reached out to the Executive Committee of AMLSN with a proposal for partnership to raise awareness, market and promote the uptake of RDT as a complement to microscopy. The partnership focused on working through AMLSN to increase the knowledge base and information flow to its members on the RDTs, in tandem with partnering with RDT distributors to facilitate the supply of quality RDTs to healthcare facilities and laboratories. The set up and management of testing hubs around clusters of PPMVs was proposed as key to activating proper case management and the proposal laid out the mandate/expectations of AMLSN including support to plan and organise awareness raising and training events, members trialling the use of RDT and post-sale surveillance. In June 2013, further to discussions, AMLSN submitted a budget for proposed workshop, testing hubs, and quality assurance activities. However the budget was wholly unrealistic and included coverage of rentals, purchase of generators, water supply tanks and medical equipment such as a microscope, in addition to costs related to ethical review, AMLSN participation in trainings, venue costs, etc. The unrealistic expectations of AMLSN and the start-up of the PSI/MC RDT private sector development project has understandably resulted in SuNMaP taking a step back from initial plans with AMLSN. In conclusion, whilst initial efforts to engage AMLSN may have backfired, further dialogue is required at high-levels within SuNMaP and AMLSN to agree on strategy and way forward for collaboration with AMLSN with respect to policy reform, awareness raising, training, and monitoring use of RDT. Reengaging AMLSN should be at a high-level to ensure strategic objectives and opportunities are well articulated as ultimately the group s buy-in will be a prerequisite for credibility and scale-up of RDT market development initiatives. 6 A comprehensive analysis of available brands, pricing and private sector providers is contained in the MC-UNITAID Value Chain Analysis Final Report, Montrose and Innovision, January

17 3.4.3 The Potential for Synergies or Conflicts with Other Developmental Projects This section will focus on the potential for synergies and conflicts with other RDT developmental projects, in particular with the UNITAID project and its quality-assured RDT programme. Discussions between the SuNMaP and UNITAID teams opened up a space for dialogue on the two projects common goals and where and how these could be aligned. Challenges are also explained in more detail below. The second part of this section further investigates the strategies and capacities that will be required for managing an RDT subsidy scheme for the SuNMaP team. PSI/MC Project Creating a Private Sector Market for QARDTs in Malaria Endemic Countries Referred to by SuNMaP as the UNITAID project, led by Population Services International (PSI), with Malaria Consortium (MC) as its collaborating partner in Nigeria, the UNITAID-funded project has similar goals to SuNMaP with respect to using a market-led approach to shape local markets to improve RDT quality, access, demand, and the regulatory environment to encourage and support appropriate use of RDTs, and the rational use of ACTs ultimately moving good quality case management of malaria closer to the most vulnerable populations. Several meetings and discussion sessions took place with the project coordinators in Abuja (see Annex 2 for work plan and list of persons met). The project plan requires complete control of procurement, direct negotiations with manufacturers to agree on manufacturer subsidy and bundling of products and services, which includes end price negotiations, training, supply chain management, and waste management. The focus is on driving consumer and provider demand for single unit/use RDT, in this regard, plans may extend to umbrella or retrofit branding to drive awareness and uptake of quality assured RDT. The project plan proposes using importers/suppliers existing distribution networks for AMFm ACT, manufacturers and importers/suppliers will be responsible for shipment and stock management respectively, support to apply a recommended retail price (RRP) and close monitoring are proposed as means for ensuring the subsidy is passed down the supply chain to the end retailer. The initial aim is for an end retail RDT price to be below the price of ACT and the project targets three States Anambra, Ogun and Cross River. The initial phase has experienced significant delays whilst tender and recruitment of partner manufacturers is underway, it is not yet confirmed how many partners the project will work with, what the subsidy (and hence end-retail price) will look like, or manufacturers capacities to deliver required bundled products and services and technology solutions for tracking. It is clear that both SuNMaP and the PSI/MC RDT private sector development projects will inevitably be working with the same importer/supplier partners even though geographic focus may be different. In conclusion, on the surface the scope for cross fertilisation between the PSI/MC project and SuNMaP work in RDT market strengthening is self-evident and could be mutually beneficial. However, the prospect of two projects running simultaneously, whereby both focus on introducing and managing pricing subsidies along extremely under developed private sector supply chains, in addition to other demand creation incentives, has huge implication on the incentives, motives and operational requirements of the prospective partners for SuNMaP importers/suppliers (where there is likely to be overlap of both projects), and also partners (sales representatives, local wholesalers, laboratories, PPMVs, etc.) along the supply chain. Even if the two projects propose different approaches for positioning and packaging a subsidy and opt to focus on different locations, the various market players might opt for one project instead of the other because of the terms and conditions that they perceive to be more attractive. Moreover, the commercial market for RDTs is wholly under developed and currently 17

18 not an attractive proposition, early stage market opportunities may not be sufficient for partners to engage with multiple projects at the same time. Lastly, core aspects of the PSI/MC project were still at a formative stage when compiling this report (e.g. the list of partners, agreements on subsidised pricing, and content and partner capacities with respect to bundling services) and SuNMaP also had various strategic areas to follow up on regarding partner due diligence, scope for bundling ACT and RDT, and DfID decision on whether SuNMaP can partner with non- WHO pre-qualified RDT manufacturers/suppliers (current DfID procurement policy restricts SuNMaP to working with Codix only). These factors need to be urgently addressed in the coming weeks in order to make final decisions on a SuNMaP led RDT subsidy scheme, and what synergies can work in practice given the two projects differing timelines, approaches and incentive frameworks. SuNMaP Commercial Sector Strategies and Capacities for Managing an RDT subsidy scheme Several discussions were held throughout the assignment with field-based Market Support Officers (MSOs) and the Commercial Sector project management to assess current thinking, progress and capacities with respect to an RDT subsidy scheme. The team has developed intervention strategies (and a set of intervention logics) for engaging the following professional associations and businesses: AMLSN, the MLSCN, PPMVs, and AGPMPN and their memberships (medical laboratory scientists, medical doctors, PPMVs, and community pharmacists) and to link them with lead suppliers for sale and distribution of RDT. This will take place alongside a generic marketing campaign to raise consumer awareness of RDT. For an RDT subsidy scheme to be effectively framed within this broader set of intervention strategies requires the buy-in of the various professional associations and their membership. However, the project s partnership strategies need to be better articulated and in some cases re-visited (e.g. how SuNMaP will engage and work with AMLSN) to strengthen the dialogue and linkages between the largescale RDT distributors like Teta or Codix and professional association membership, and between RDT and ACT suppliers to progress on plans for bundling ACT and RDT for wholesale and retail. These last points on articulating plans for professional association buy-in and for bundling ACT and RDT are particularly relevant as they will have implications for the RDT subsidy scheme and the type of support SuNMaP provides its partners with respect to orientation, training, and incentive structures and hence what partner agreements and support costs will look like. Once RDT interventions strategies have been re-visited and/or fully articulated, then the CS project team will need to develop or refine its set of RDT intervention logics, as well as its plans for monitoring results. A major consideration for the Commercial Sector team will be synchronising the introduction of a subsidy with supplier and consumer demand creation efforts i.e. awareness raising, gaining professional buy-in, training and capacity building efforts will pave the way for a successful RDT subsidy scheme. Ultimately well-informed end consumers and end providers will drive demand for RDT, therefore the project needs to ensure its interventions to generate understanding, awareness, buy-in and capacities for usage are timely and having positive impact. This in turn links to regularly re-visiting the project s intervention logics and testing the assumptions made. Another critical factor in considering a SuNMaP RDT subsidy scheme is the team s capacities and resources for operationalizing and managing the scheme once it is launched in the market place. The scheme will require a dedicated team that can effectively communicate and sell the subsidy concept, support in operationalizing the subsidy across lead suppliers, representatives, and targeted end 18

19 providers, and monitor results, including how effectively the subsidy is passed on to end consumers, other operational responsibilities include managing unintended outcomes, ensuring transparent use, and accurate reconciliation of the fund. In conclusion, the Commercial Sector team will need to urgently address gaps and/or weaknesses in its RDT intervention strategies to ensure adequate support for supply chain strengthening and demand creation as these are the foundations on which it can launch an RDT subsidy scheme. Whilst the team has the technical capacities and resources to commit to operationalizing the scheme, the project should not under-estimate the time and resources needed to effectively manage and monitor the scheme, and to track and account for the use of subsidy funds. The team should also be realistic about what can be achieved in the remaining lifetime of the project, in particular the project must commit adequate time and resources to raising awareness, gaining buy-in, and ensuring capacities of end providers in promoting and handling RDT correctly, and supporting proper malaria case management. 3.5 Key Factors for RDT Subsidy Design, Implementation and Exit Strategy Based on the findings and analysis presented in section 3.4, the Commercial Sector team should consider key factors with respect to the design, implementation and exit strategy for an RDT subsidy scheme. These are presented in table 1a, 1b and 1c. Figure 1 presents a sketch of the subsidy scheme. Should the subsidy scheme go ahead, please refer to Annex 3 Operationalizing the RDT subsidy model which fleshes out core design elements for an RDT subsidy in partnership with one or more suppliers. Figure 1: Sketch of the subsidy scheme Project support Stakeholder buy-in; demand creation; relationship building; capacity building; material support; problem solving; Wholesalers/End Retailers Sales Representatives Importer/Supplier Project Reconciling/Reimbursing for discount owed based on sales reports Supplier Tracking and reporting on product sales, volumes and amounts KEY Product Flows and Promotional Marketing 19