President's Emergency Plan For AIDS Relief:

Drug Supply Chains Are Stronger, but More Steps Are Needed to Reduce Risks

GAO-13-483: Published: Apr 26, 2013. Publicly Released: May 28, 2013.

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What GAO Found

The President's Emergency Plan for AIDS Relief (PEPFAR) has worked with U.S. implementing agencies, international donors, and partner countries to increase the efficiency and reliability of antiretroviral (ARV) drug supply chains. It has done so by improving drug supply planning and procurement as well as incountry distribution of drugs. First, PEPFAR has consolidated supply chains for ARV drug procurement for more than 20 partner countries to enhance efficiency and reduce costs and has begun further consolidation with other U.S. global health programs. Second, PEPFAR has improved coordination among donors by creating an information-sharing network to help detect and resolve supply gaps and other supply chain weaknesses and by developing an emergency drug procurement mechanism. Third, PEPFAR has provided partner countries with technical assistance, such as assessment tools and training, to help them better manage drug supply planning, procurement, and distribution.

Evaluations of partner-country supply chains reflect weaknesses in inventory controls and record keeping, which may increase the risk of drug shortages, waste, and loss. The Department of State's Office of the U.S. Global AIDS Coordinator (OGAC) has issued guidance for PEPFAR emphasizing the importance of effective information management for efficient ARV drug supply chain operations. However, 11 of the 16 supply chain evaluations GAO reviewed cited weaknesses in partner countries' inventory controls; 7 of these 11 evaluations also cited weaknesses in record keeping, including incomplete or inaccurate data on the consumption of ARV drugs. These weaknesses can increase the risks of drug shortages, waste, and loss of inventory. In one country, an evaluation team identified losses valued at about $265,000. Human resource constraints contribute to these weaknesses, and PEPFAR is addressing them through technical assistance and training. However, OGAC does not require PEPFAR interagency teams in each country to develop plans to strengthen inventory controls and record keeping. Nor does OGAC require country teams to track the progress partner countries are making in measuring ARV drug consumption, waste, and loss. Thus, OGAC cannot ascertain the extent of partner-country supply chain weaknesses and take appropriate action to mitigate risks. For PEPFAR and partner countries to continue expanding treatment programs to serve up to 23 million eligible people, further improving drug supply chains is critical, particularly the efficiency of elements managed by partner countries. These improvements will become increasingly important as partner countries assume more responsibility for managing supply chains.

Why GAO Did This Study

PEPFAR, first authorized in 2003, has supported significant advances in HIV/AIDS prevention, treatment, and care in over 30 countries, including directly supporting treatment for about 5.1 million people; however, millions more people still need treatment. PEPFAR has allocated more than half of its funding to care and treatment and has spent over $1.2 billion to purchase ARV drugs. In addition to supplying ARV drugs directly in some countries, PEPFAR also helps partner countries manage their drug supply chains. GAO was asked to review PEPFARsupported ARV drug supply chains. GAO examined (1) actions PEPFAR has taken regarding ARV drug supply chains and (2) partner-country ARV drug supply chain operations. GAO reviewed PEPFAR and the U.S. Agency for International Development (USAID) guidance and supply chain studies; analyzed 16 supply chain evaluations conducted in seven countries and published in 2011 and 2012; interviewed officials from OGAC, USAID, and other agencies; and conducted fieldwork in three countries selected on the basis of program size and other factors.

What GAO Recommends

The Secretary of State should direct OGAC to require country teams to (1) develop and implement plans to help partner countries improve inventory controls and record keeping; and (2) track the progress partner countries are making in measuring ARV drug consumption, waste, and loss. State generally agreed with the intent of both recommendations; GAO revised the second to make it broader and more feasible to implement in differing partner-country contexts.

For more information, contact David Gootnick at (202) 512-3149 or gootnickd@gao.gov, or Marcia Crosse at (202) 512-7114 or crossem@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: State generally agreed with the intent of this recommendation. According to an OGAC official, State took the actions outlined below at least partially in response to GAO's recommendation. The official added that even in those instances where some of the actions were already in process, the GAO recommendation gave OGAC considerably more incentive and energy. Since the report was issued, PEPFAR has developed and is implementing plans to help partner countries strengthen inventory controls and record keeping. According to information provided by OGAC in 2015 and 2017, this effort includes the following five actions. First, a site improvement monitoring system was implemented beginning in late 2014, which has already assessed data on the availability of ARVs and other commodities thousands of times. The site visits include examining the availability of ARVs and other commodities at health facilities as well as the facilities' inventory management, record keeping, and ordering practices. PEPFAR partners implement remediation plans for sites which score poorly and the sites are reassessed after six months. Second, additional technical assistance began in 2016 under a new Global Health Supply Chain Procurement and Supply Management project contract. For example, in one country, assistance has been focused on transportation, storage, stock data, and forecasting at the regional level in four provinces. Third, an increased number of supply chain assessments have been conducted which cover a number of indicators, including stock accuracy (ensuring that countries are aware of their stock available and doing good inventory management) and percent of required reports submitted complete and on-time. As of April 2017, assessments were completed in 17 countries, with three more planned for 2017. Fourth, steps have been taken toward instituting a barcoding system for tracking ARVs and related commodities through the supply chain under the 2016 supply chain contract. Fifth, a new information system was launched that enables country teams to place orders online and track the order status. A planned update will include logistics data for all orders as well stock status in regional distribution centers. In addition, PEPFAR's 2017 Annual Report to Congress stated that in 2016 PEPFAR updated a Sustainability Index and Dashboard, which nowincludes indicators and milestones for ensuring a secure, reliable, and adequate supply of and distribution system for drugs and other commodities needed to achieve sustainable epidemic control. One of these indicators focuses on inventory controls by examining processes and systems that ensure appropriate ARV stock levels.

    Recommendation: To help ensure that drug supply chains in PEPFAR partner countries function efficiently and mitigate the risks of shortages and wasted and lost drugs, the Secretary of State should direct the U.S. Global acquired immunodeficiency syndrome (AIDS) Coordinator to require that country teams develop and implement plans for assisting countries to address inadequate inventory controls and record keeping.

    Agency Affected: Department of State

  2. Status: Closed - Implemented

    Comments: State generally agreed with the intent of this recommendation. According to an OGAC official, State took the actions outlined below at least partially in response to GAO's recommendation. The official added that even in those instances where some of the actions were already in process, the GAO recommendation gave OGAC considerably more incentive and energy. GAO?s report noted that PEPFAR had developed a tool to assess supply chain performance based on private sector best practices, that the tool provides a method for tracking progress, and that it had been piloted in three countries. The use of this tool has significantly increased, based on information provided by a PEPFAR supply chain official in April 2017. PEPFAR has reportedly completed assessments in 17 countries, with three more assessments planned for 2017. The assessments cover a number of indicators, including inventory depletion at all levels of the supply chain, from central warehouses to the facility level; reporting on HIV commodities (such as ARVs) ordered at treatment sites; forecast accuracy; and percent of total stock expired. More accurate forecasting should result in greater supply chain efficiency and less wastage. For example, overstocking of drugs can lead to waste as drugs expire and can no longer be used, potentially resulting in fewer patients receiving treatment. In addition, the U.S. Agency for International Development, a key PEPFAR implementing agency, signed a new Global Health Supply Chain Procurement and Supply Management project contract in 2016 that has taken the first steps toward implementing a barcode system for HIV-related commodities such as ARVs and rapid test kits. The PEPFAR supply chain official indicated that unique barcode serial numbers will enable PEPFAR to trace the supply of ARVs and other commodities all the way to the patients who consume them, reducing the diversion of products outside the supply chain and preventing counterfeit products from reaching patients. The barcode system should help reduce ARV losses and make it easier for countries to track ARV consumption. PEPFAR also continues to provide technical assistance, according to information provided by OGAC. For example, in one country, OGAC indicated that interns worked with staff in 374 facilities to update and manage inventory records, determine average monthly consumption and stock status of products, and prepare reports.

    Recommendation: To help ensure that drug supply chains in PEPFAR partner countries function efficiently and mitigate the risks of shortages and wasted and lost drugs, the Secretary of State should direct the U.S. Global AIDS Coordinator to require that country teams track the progress partner countries are making in measuring ARV drug consumption, waste, and loss.

    Agency Affected: Department of State

 

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