The African Pooled Procurement Mechanism

In February 2024, during the African Union (AU) Summit in Addis Ababa, a landmark decision was made to establish an Africa Pooled Procurement Mechanism overseen by the Africa Centers for Disease Control and Prevention (Africa CDC).

This initiative aims to streamline the procurement of pharmaceuticals across the continent, leveraging collective bargaining power to improve access and affordability.

A few months later, in Mombasa, Kenya, African ministers convened to synchronize the operationalization of the AfCFTA-anchored Pharmaceutical Initiative with the initial phase of the African Pooled Procurement Mechanism.

This coordination marks a significant step towards addressing Africa’s critical pharmaceutical needs.

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Addressing Africa’s Pharmaceutical Challenges

Africa endures a disproportionately high disease burden yet continues to rely heavily on foreign imports for its pharmaceutical needs.

This dependency has led to persistent issues such as limited accessibility, high costs, and frequent shortages of essential medicines. Furthermore, the prevalence of substandard and falsified drugs has made the situation worse.

While there has been a concerted effort to boost local pharmaceutical production, questions about feasibility remain a significant obstacle.

The primary argument for local production is the potential cost savings from reduced transportation expenses and customs fees.

However, as noted by Warren Kaplan and Richard Laing in their paper “Local Production of Pharmaceuticals,” if a developing country imports active pharmaceutical ingredients (APIs) at high costs, local production may not lead to significantly lower prices for the end products.

Thus, merely shifting to local production without addressing the cost of raw materials might not improve access to affordable medicines.

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Benefits of Pooled Procurement

Pooled procurement offers several significant benefits for African countries in their quest to improve access to affordable and high-quality medicines:

1. Increased Purchasing Power: By consolidating demand, pooled procurement enhances the collective purchasing power of participating countries. This leverage enables them to negotiate better terms and conditions in supply agreements, potentially lowering the cost of medicines.

2. Cost Savings: Economies of scale achieved through pooled procurement can lead to substantial savings. These savings come from reduced unit costs, lower procurement expenses, and decreased overheads in the supply chain and administrative operations.

3. Improved Accessibility: Smaller countries that struggle to meet high minimum order requirements can benefit from pooled procurement. By aggregating their orders with those of other countries, they can access a broader range of medicines, ensuring that no country is left out due to insufficient order volumes.

4. Quality Assurance: Consolidation of procurement processes helps maintain high product quality standards. It also fosters local production investment by providing vendors with volume guarantees, encouraging them to invest in local manufacturing facilities.

By leveraging these benefits, the pooled procurement mechanism can play a crucial role in enhancing the efficiency, affordability, and reliability of the pharmaceutical supply chain across Africa.

Ensuring Success Of Pooled Procurement in Africa

Implementing pooled procurement in Africa involves several key steps to ensure success and sustainability. Here are the crucial areas of focus:

Regulatory and Formulary Harmonization

To effectively navigate pooled procurement across the continent, a consistent regulatory framework among participating countries is essential.

Harmonization of standards, guidelines, and procedures for handling and distributing medical products is crucial. This alignment will eliminate bottlenecks in the registration process, pharmacovigilance, and post-market surveillance.

As of 2024, several African countries still lack autonomous national medicines regulatory authorities overseeing the regulation of health products and technologies.

Establishing these authorities and aligning their structures is vital.

The African Medicines Agency (AMA) is making progress in this area, aiming to create a unified regulatory environment for pharmaceutical sector development in Africa.

With 29 out of 55 AU countries having ratified the Treaty, there is optimism that harmonization will pave the way for successful pooled procurement.

Health Policy Alignment

Aligning national formularies, essential medicines lists, and standard treatment guidelines across countries is critical for successful pooled procurement.

Consistent health policies will ensure that the demand for medicines is harmonized, preventing discrepancies in the management of the same diseases across different nations.

Political Goodwill

Achieving pooled procurement requires strong political support. Top leadership and relevant ministries across African countries must collaborate and commit to this strategy. Political goodwill is essential to create the necessary efficiency and reap the intended benefits promptly.

Foreign Partnerships

Forming partnerships with regions that have mature pharmaceutical sectors can provide valuable insights and resources. For example, India has demonstrated its capability to consolidate resources and produce medicines for both domestic use and global export.

Partnering with such regions can help Africa develop effective pharmaceutical procurement strategies.

Regional Hubs and Increased Production Capacity

For pooled procurement of active pharmaceutical ingredients (APIs) targeted for local production, it is more sustainable to establish regional manufacturing hubs rather than individual country-level production.

This approach ensures optimal production utilization and increases the capacity of manufacturing plants. Regional hubs can serve specific pharmaceutical market needs, fostering a more efficient and scalable production system.

Infrastructural Upgrades

Efficient movement of consignments across countries requires upgraded infrastructure.

Enhancing connectivity through improved transportation networks and upgrading warehousing capabilities to accommodate pharmaceuticals, including those needing specific temperature and humidity controls, is crucial for the success of pooled procurement.

Creating Transparency and Visibility

Supply chain optimization requires visibility across the procurement process. Leveraging technology to create a procurement and inventory management platform will enhance transparency within the procurement pool.

Understanding which countries are ordering which items and in what quantities is essential to prevent overstocking and ensure equitable distribution of medicines.

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Conclusion

Implementing pooled procurement in Africa is a multifaceted process that involves regulatory harmonization, health policy alignment, political support, strategic partnerships, regional production hubs, infrastructural upgrades, and enhanced transparency.

While not a panacea, pooled procurement, combined with other strategic efforts, holds significant promise for improving Africa’s pharmaceutical sector.

Political will and a collaborative spirit are crucial to overcoming the challenges and realizing the benefits of this initiative, ultimately providing high-quality, safe, and affordable medicines to patients across the continent.

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