Operating Principles for the Regional Revolving Fund for Strategic Public Health Supplies. A PAHO Mechanism for Procurement of Strategic Public Health Supplies
(2006; 29 pages)

Abstract

To achieve equitable delivery of health care services, access to affordable quality medicines and medical supplies is required. Access to quality medicines and health supplies can be facilitated if the selection process takes into consideration factors of quality, efficacy and cost, if transparent price information is available, if procurement mechanisms promote competition, and if planning systems ensure sustainable delivery.

To assist Member States in the acquisition of quality essential public health supplies at affordable prices, the Director of the Pan American Health Organization (PAHO) established the Regional Revolving Fund for Strategic Public Health Supplies (the Strategic Fund) during the 42nd Directing Council of the Pan American Health Organization, Washington DC, 25th - 29th September 2000.

The Strategic Fund aims to build capacity in drug supply management and procurement programming and planning at the national level. One-third of PAHO Member States have signed agreements for participation in the Strategic Fund, and even if the use of the Fund as a procurement mechanism has been limited to a few countries to date, the potential of the fund as a regional supply mechanism for priority public health commodities is recognized within the context of PAHO support to Global Fund beneficiaries.

As a procurement mechanism, the Strategic Fund allows participating members to utilize a common fund for payment of authorized purchases of essential public health commodities. Members make reimbursement to the fund for the cost of each purchase within a specified period of time. The Fund is capitalized through the allocation of the 3% procurement service charge to the Fund's capital account. As countries purchase through the Fund, the purchasing power of the Fund will increase resulting in lower product prices for participating countries. As at the end of 2005, countries participating in the fund have used the mechanism to purchase $35 million of essential public health supplies.

In September 2004, the 45th Directing Council of PAHO adopted a resolution to promote access to medicines and public health supplies in the Region. As a key element of the strategy Member States endorsed the proposal to strengthen regional procurement mechanisms, including the PAHO Strategic Fund. The Directing Council noted that "the development of the Fund will strengthen capacity in procurement, programming and planning at the country level, lead to economies of scale through the consolidation of requirements, and promote continuity in supply through the development of the cyclical procurement system".

This document has been developed to present the basic framework of the Strategic Fund to PAHO Member States. It has been elaborated based on the Model Agreement between Member States and the Pan American Health Organization for the participation of a Member State in the Regional Revolving Fund for Strategic Public Health Supplies, and Operating Procedures for the Regional Revolving Fund for Strategic Public Health Supplies. It aims to:

  • present Strategic Fund objectives
  • outline the scope of PAHO technical cooperation through the Fund
  • explain how PAHO Member States and Global Fund Principal Recipients in the Region may participate
  • present the list of Strategic Public Health Supplies that can be purchased by participants
  • detail the Strategic Fund product quality assurance system in procurement
  • present the management structure for the Strategic Fund as well as the mechanism which will guide its future development.
 
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