Financing the Health Commodity Supply Chain. The Role of Service Fees
(2014; 44 pages)

Sanderson, Jeffrey, Chris Wright, and James Rosen. 2014. Financing the Health Commodity Supply Chain: The Role of Service Fees. Arlington, Va.: USAID | DELIVER PROJECT, Task Order 4.


This paper provides health commodity supply chain leaders and managers in low- and middle-income countries (LMICs) with practical information on developing, applying, and justifying evidence-based service fees. The intended audience for this paper are technical and financial personnel in ministries of health (MOHs), or medical stores agencies (MSAs), who are charged with ensuring access to health commodities for the citizens they serve—essential medicines and medical and diagnostic supplies, as well as program commodities for family planning, immunization, HIV, malaria, tuberculosis (TB), and others.

Service fees are charges made by a supply chain organization (public or private) for providing supply chain services; the customer (or an agent) pays these fees after they receive the service. Supply chain services typically include procurement, storage and transportation, and can also include customs clearance or freight forwarding. In the public health context, customers are usually programs, such as family planning and immunization, donors and development partners, and third-party agents representing funders. Customers may also be the clients and patients of the health facilities who pay for their commodities at the service delivery point.

Service fees are an important mechanism for sustaining supply chain operations, and they are the fundamental revenue stream for commercial supply chain service providers.

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