landscape review: private logistics and …...landscape review: private logistics and distribution...

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Landscape Review: Private Logistics and Distribution of

Medicinal Products in Ukraine

March 2019

SAFEMed

2

Identify main players in the distribution of medicinal products both in the private and public sectors

Identify potential opportunities for the private logistics services within public sector

1

MEETING AGENDA

Identify gaps and issues in the distribution of medicinal products within selected regions

Investigate medicinal products distribution in PEPFAR high-burden regions

2

4

3

Purpose of the Landscape Review

SAFEMed

Distributors vs. Logistics Companies

Distributors Logistics Companies

Obtaining license for the wholesale business are required to transport and store medicines as regulated in the Licensing Conditions for Wholesale by the CMU

To comply with Licensing Conditions for the wholesale business (p.103) licensee must follow approved guidelines of GDP (СТ-Н МОЗ 42-5.0:2014) and GWP (СТ-Н МОЗ 42-5.1:2011)

In case of licensee outsourcing transportation services, there has to be an agreement in place with an outsourcing company and the licensee that complies with GDP requirements

Need to obtain license for the wholesale business, and/or for importing of medicines and/or for manufacturing and need to comply with GPD requirements in order to perform transportation services of medicines as regulated in the Licensing Conditions for Wholesale by the CMU

https://zakon0.rada.gov.ua/laws/show/929-2016-%D0%BF

http://dls.gov.ua/state_supervision/%D0%BF%D0%B5%D1%80%D0%B5%D0%BB%D1%96%D0%BA-%D0%BD%D0%BE%D1%80%D0%BC%D0%B0%D1%82%D0%B8%D0%B2%D0%BD%D0%BE-%D0%BF%D1%80%D0%B0%D0%B2%D0%BE%D0%B2%D0%B8%D1%85-%D0%B0%D0%BA%D1%82%D1%96%D0%B2-%D0%B4%D0%BE/

https://zakon0.rada.gov.ua/laws/show/929-2016-%D0%BF

SAFEMed

Distributors Overview

SAFEMed

Source: Proxima Research. Available at https://www.apteka.ua/article/476606

The largest private distributors remain the same for the past three years with top two controlling more than 50% of the market:

1. BaDM2. Optima3. Venta4. Pharmplaneta5. Fito-Lek

Shares of Top-10 Distributors Based on Cost of Medicinal Products Supplied to Pharmacies*

https://www.apteka.ua/article/476606

SAFEMed

Largest Distributors in Ukraine with Regional Warehouses

Kyiv

Mykolayiv

Odesa Kherson

Dnipro

SAFEMed

20 Certificates of Compliance with GDP requirementsApplicant The name of the structural unit Place of performance Certificate No.

Date of issue of the Certificate

Certificate validity period

LLC "Badm" Pharmacy warehouse №8 Kharkiv region, Kharkov region, with. Kommunar, st. Ozernaya, 11 01/2014/GDP 08.04.2014 14.03.2019

LLC "Badm" Pharmacy warehouse No.6 Rivne, street. Prince Vladimir (Moskalenko St.), 109 02/2014/GDP 12.06.2014 16.05.2019

Evistat Ltd. Pharmacy warehouse №2 Kharkov, street. Iskrinskaya, 37 03/2014/GDP 02.09.2014 01.08.2019

LLC "Badm" Pharmacy warehouse №9 Odesa region, Bilyaivsky district, 1665th km of the highway Kiev-Odessa 04/2014/GDP 19.09.2014 29.08.2019

LLC "Badm" Pharmacy warehouse No 14 RC- Udarnikov Dnipro, street. Udarnikov (Krasnogvardeysky, Leninsky district), 27 05/2014/GDP 05.12.2014 07.11.2019

LLC "Badm" Pharmacy warehouse No 13 Nikolaev, street. Gromadskogo, 123 01/2015/GDP 07.05.2015 09.04.2020

LLC "SERVICE UKRAINE" Pharmacy warehouse №2Kyiv region, Boryspil district, p. Velyka Oleksandrivka, st. Kievsky Shlag,

121th02/2015/GDP 02.09.2015 14.08.2020

LLC "Badm" Pharmacy store №11 Vinnitsa, st. Vatutina, 137 01/2016/GDP 26.02.2016 22.01.2021

"Valartin Pharma" Ltd. Pharmacy warehouse №1 Kyiv region, Kyiv-Svyatoshinsky district, with. Seagulls, st. Hrushevsky, 60 02/2016/GDP 15.07.2016 01.07.2021

LLC Materia Medica-Ukraine Pharmacy warehouse №1 Kyiv, st. Nevskaya, 20 03/2016/GDP 30.09. 2016 09.09.2021

Geldfarm Ltd. Pharmacy warehouse №1 Kyiv, st. Krasnov, 27 02/2017/GDP 23.10.2017 27.09.2022

OOO "Istok-Plus" Pharmacy warehouse №2 Zaporozhye region, Zaporozhye city, street. Makarenko, 4 01/2018/GDP 15.03.2018 16.02.2023

Farmasoft Ltd Pharmacy warehouse №2 Kyiv region, Boryspil district, p. Velyka Oleksandrivka, st. Borispolskaya, 9 02/2018/GDP 07.05.2018 04.05.2023

LLC "Badm" Pharmacy warehouse №7 Kyiv region, the city of Irpin, town of Gostomel, st. Central, 1 03/2018/GDP 22.05.2018 11.05.2023

LLC "Badm" Pharmacy warehouse №1 «РЦ-Паникахи» Dnipro, st. Panikahi, 2 04/2018/GDP 02.07.2018 13.06.2023

LLC "Badm" Pharmacy warehouse №4 Dnipropetrovsk region, Kryvyi Rih, vul. Kobylyansky, 154b 05/2018/GDP 02.07.2018 15.06.2023

SUEP "Optima-Farm, LTD" Pharmacy # 1 Central Kyiv, st. Borispolskaya, 9-th 06/2018/GDP 05.12.2018 15.11.2023

LLC "Badm" Pharmacy warehouse №12 Poltava, 22, st.Veterinarnaya 07/2018/GDP 28.12.2018 11.12.2023

LLC "Badm" Pharmacy warehouse №3 Lviv, 11, st. Bohdanivska 08/2018/GDP 28.12.2018 14.12.2023

Ost-West Express Pharmacy warehouse №1 Kyiv, Dniprovodska 1 street, `K`, building 1/3 01/2019/GDP 21.01.2019 22.12.2023

Source: http://dls.gov.ua State Medical Service, February 2019.

http://dls.gov.ua/

SAFEMed

The main distributors in the public sector on national level• Ukrvaccine (state-owned enterprise)• Ukrmedpostach (state-owned enterprise)

BaDM is the leader in both private and public sectors

Shares of Top 20 Distributors Based on the Cost of Medicinal Products Procured by the Public Sector*

Source: SMS MiMo Database analyzed by SAFEMed in January 2019.

29.09%

17.91%

4.34%6.89%3.46%

1.52%

1.27%

5.61%

1.28%

5.77%

5.21%

4.75%

0.00%4.13%

1.53%

1.21% 3.01%

0.55% 0.27%2.21%

Top 20 distributors in regional tenders 2018Y LC(%)

BADM-B LTD

M.T.K. MEDICAL CENTRE LTD.

MEDFARKOM CENTER JSC

FARMADIS LTD

LUDMILA-FARM LTD

DIAVITA LTD

PHARMPLANETA LTD

PHARMACIA KIEV

LINK MEDITAL LTD.

OPTIMA-FARM LTD

TOMASH LTD

SANA CO PE

MED-TRADE LTD

2017Y 2018Y

LC LC(%) LC LC(%)

BADM-B LTD 559,916,847 22.03% 463,433,641 29.09%

M.T.K. MEDICAL CENTRE LTD. 215,401,335 8.47% 285,267,546 17.91%

MEDFARKOM CENTER JSC 312,704,970 12.30% 69,071,903 4.34%

FARMADIS LTD 256,445,333 10.09% 109,788,523 6.89%

LUDMILA-FARM LTD 112,778,695 4.44% 55,144,229 3.46%

DIAVITA LTD 142,292,416 5.60% 24,185,726 1.52%

PHARMPLANETA LTD 136,391,434 5.37% 20,238,369 1.27%

PHARMACIA KIEV 62,495,065 2.46% 89,331,266 5.61%

LINK MEDITAL LTD. 130,120,091 5.12% 20,435,607 1.28%

OPTIMA-FARM LTD 48,671,560 1.91% 91,868,833 5.77%

TOMASH LTD 57,014,678 2.24% 83,003,773 5.21%

SANA CO PE 54,475,829 2.14% 75,622,922 4.75%

MED-TRADE LTD 93,901,581 3.69% 0.00%

AMETRIN FK LTD 25,875,190 1.02% 65,719,485 4.13%

BUSINESS CENTRE PHARMACY LTD 60,753,764 2.39% 24,424,411 1.53%

BIOFARMA 65,268,735 2.57% 19,293,678 1.21%

FARMAK LTD 31,123,365 1.22% 47,897,020 3.01%

RENART LTD 69,586,764 2.74% 8,692,812 0.55%

UKROPTPOSTACH COMPANY LLC 70,451,039 2.77% 4,259,256 0.27%

SANITAS FIRM PE 36,481,749 1.44% 35,156,631 2.21%

Grand Total 2,542,150,441 100.00% 1,592,835,629 100.00%

SAFEMed

Top Ten Distributors in Select PEPFAR-supported Regions for the Public Sector*

Top three distributors leading in both private and public sectors:

1. BADM2. MTK Medical Center3. Optima-Farm

Source: SMS MiMo Database analyzed in January 2019.

Distributors

2017Y 2018Y

LC LC(%) LC LC(%)

DNIPRO REGION

BADM-B LTD 114,333,535 33.77% 72,500,655 32.88%

PHARMACIA RCE DNEPROPETROVSK 7,607,584 2.25% 21,859,272 9.91%


DIAVITA LTD 18,748,748 5.54% 14,453,896 6.56%

DIATOM LTD 732,950 0.22% 9,758,089 4.43%

OPTIMA-FARM LTD 7,008,034 2.07% 8,624,575 3.91%


LIKI UKRAINE 7,473,643 2.21% 4,866,476 2.21%

BUSINESS CENTRE PHARMACY LTD 6,068,048 1.79% 4,159,129 1.89%

FARMADIS LTD 6,103,804 1.80% 4,114,333 1.87%

ODESA REGION

SANA CO PE 40,303,968 11.61% 51,112,903 31.98%


BADM-B LTD 7,918,337 2.28% 14,611,984 9.14%


FARMA-SVIT LTD 10,017,990 2.89% 8,920,607 5.58%

OPTIMA-FARM LTD 576,425 0.17% 7,156,358 4.48%

ODESFARM KP 2,757,919 0.79% 5,677,425 3.55%

AMETRIN FK LTD 95,676 0.03% 5,524,999 3.46%

SOFIA LTD 5,232,743 1.51% 5,286,988 3.31%

FARMADIS LTD 419,448 0.12% 4,521,266 2.83%

SAFEMed

Regional/district level distribution schemes

Distribution under National Programs

Distribution of medicines from the MOH to regional health facilities is performed by State-Owned enterprises (Ukrmedpostach/Ukrvaccine)

Distribution of medicines from regional to districts facilities is performed by districts health facilities:

- Do not use specialized vehicles for transportation of the medicines (for example ambulance cars, regular cars);

- Do not have budget for logistics;

- Combine travelling to regional facilities to pick-up medicines under National Programs with other purposes;

- Compliance with cold chain requirements is not monitored. For transportation, sometimes they use special cold bags or refrigerator, if available. No temperature recording and tracking (only if available in regional facility).

- «Cold chain equipment not fit for purpose & presenting risks to vaccines (domestic fridges,

inappropriate vaccine carriers, no continuous temperature monitoring devices, no freeze

monitors)» ***

- Try to keep safety stock for 3 months and pick up medicines from regional facility regularly.

(*** Joint UNICEF-WHO Effective Vaccine Management Assessment venue for October 22 -23, 2018)

Distribution under Regional procurement

Distribution of medicines to the district health facilities is made by the tender`s winner

Delivery at recipient's place is one of the requirements to win the tender.

Price for delivery included in price of medicines. There is no separate budget for logistics.

Delivery to district facilities is made with no temperature tracking even by winner companies.

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MOHSOE (Ukrmedpostach/

Ukvaccine)warehousing

Regional facility warehousing

District facilities

Logistics by SOE Logistics by SOE Logistics by district facilities

Winner of tender Delivery includes in terms of the tender District facility

SAFEMed

Estimated Value of Logistic Services (3%) in the Public Sector: Odesa and Dripro regions

PURCHASESPublic sector purchases Potential distribution value, 3%

2016 2017 2018 2016 2017 2018UNITS LC UNITS LC UNITS LC LC LC LC

DNIPRO REGION

Hospitals 5,231,110 108,109,196 6,292,655 151,707,960 5,665,050 164,075,043 3,243,276 4,551,239 4,922,251

MOH Distribution 440,807 175,262,420 459,385 240,194,372 593,076 297,600,784 5,257,873 7,205,831 8,928,024Not in tenders purchases 4,774,191 61,884,136 6,505,937 64,614,756 1,709,389 18,587,914 1,856,524 1,938,443 557,637Regional not in tenders 759 25,945 56,382 2,012,348 1,371 122,538 778 60,370 3,676Regional tenders 732,874 210,282,121 744,957 181,690,722 111,813 32,899,402 6,308,464 5,450,722 986,982

DNIPRO REGION Total 11,179,741 555,563,818 14,059,316 640,220,158 8,080,699 513,285,681 16,666,915 19,206,605 15,398,570

ODESA REGION

Hospitals 5,224,073 314,283,684 6,821,928 330,008,184 3,180,118 126,225,520 9,428,511 9,900,246 3,786,766

MOH Distribution 422,516 118,519,613 384,603 173,690,917 504,219 249,097,534 3,555,588 5,210,727 7,472,926Not in tenders purchases 721,933 7,337,022 1,871,293 25,065,594 418,139 4,514,168 220,111 751,968 135,425Regional not in tenders 59,161 796,190 147,383 1,317,999 1,144 45,893 23,886 39,540 1,377Regional tenders 331,339 8,056,959 693,494 16,834,755 41,309 5,808,058 241,709 505,043 174,242

ODESA REGION Total 6,759,023 448,993,468 9,918,701 546,917,448 4,144,929 385,691,173 13,469,804 16,407,523 11,570,735

Distribution under National Programs from Oblast level facilities to districts is the only possible option for PPP at the moment.

Assuming an average logistics fee in the private market at 3% of the total value of the invoice, an estimated annual turnover of regional logistics services in public sector (in MOH-distribution) can reach:

Dnipropetrovsk region 7.1 million UAH (~ 255k USD) Odesa region 5.4 million UAH (~ 193k USD)

SAFEMed

Estimated Value of Logistic Services (3%) of distribution of HIV & viral hepatitis and TB medicines in Odesa region

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Odessa regional AID center will be merged with regional TB center and will have one common warehouse,thus volumes of medicines to be operated will be increased (TB+ARV).Assuming an average logistics fee in the private market at 3% of the total value of the invoice, an estimatedannual turnover of regional logistics services for distribution of HIV& viral hepatitis medicines to the districtscan reach 1.9M UAH.The MOH recipient of HIV medicines in Odessa region– Odessa regional AIDs center. Potential piloting

HIV, viral hepatitis &TB medicines

MOH Distribution, HIV& viral hepatitis medicines Potential distribution value, 3%

2016Y 2017Y 2018Y 2016Y 2017Y 2018Y

LC UNITS LC UNITS LC UNITS LC LC LC

J04A1 Antituberculars, single ingredient 23,909,817 268,489 9,098,885 82,331 2,099,793 19,188 717,295 272,967 62,994

J04A7 Antituberculars, fixed dose, two ingredients 4,345 45 0 0 130

J05B1 Viral hepatitis products 9,342,414 2,598 2,457,328 462 5,184,416 736 280,272 73,720 155,532

J05C1 Nucleoside and nucleotide reverse transcriptase inhibitors 4,701,266 36,846 4,681,240 37,019 4,243,176 38,280 141,038 140,437 127,295

J05C2 Protease inhibitors 22,159,788 16,145 70,027,965 45,704 6,074,053 1,891 664,794 2,100,839 182,222

J05C3 Non-nucleoside reverse transcriptase inhibitors 2,744,990 12,217 1,228,413 13,200 484,688 1,891 82,350 36,852 14,541

J05C5 HIV antivirals, integrase inhibitors 428,842 50 609,861 64 12,865 18,296 0

J05C9 Other HIV antivirals 711,635 968 496,022 1,606 22,506,004 130,653 21,349 14,881 675,180

Grand Total 63,998,753 337,313 88,599,714 180,386 40,596,476 192,684 1,919,963 2,657,991 1,217,894

SAFEMed

1414Estimated costs for Odesa regional logistics for HIV & viral hepatitis and TB medicines

1st Scenario: 33 ART and 6 TB sites will take 62% of logistics costs. Monthly estimated costs for logistics per 1 ART/TB approx. 90 USD

2nd Scenario: 25 districts (33 ART sites and 6 TB sites) will take 96% of logistics costs. Monthly estimated costs for logistics per 1 ART/TB in district – approx. 142 USD, in Odessa – 9 USD

ART sites TB sites Districts

Estimated ratio of logistics expenses in

region (based on number of ART/TB sites)

Yearly estimated value of logistics

expenses in region, UAH

Yearly estimated value of logistics expenses in region,

USD

Monthly estimated value of logistics

expenses per 1 ART site, UAH


expenses in district, USD


expenses per 1 ART/TB site, UAH

Monthly estimated value of logistics expenses in

district, USD

Districts 33 6 25 62% 1202912 $ 42,961 3038 $ 108 2570 $ 92

Odessa 20 6 1 38% 729037 $ 26,037 3038 $ 108 2337 $ 83

Total 53 12 26 1 1931949 $ 68,998 6075 $ 217 4907 $ 175

ART sites TB sites Districts

Estimated ratio of logistics expenses in

region (based on number ART/TB sites in district)

Yearly estimated value of logistics

expenses in region, UAH


USD


expenses per 1 ART site, UAH



Monthly estimated value of logistics expenses per 1

ART/TB site, UAH


district, USD

Districts 33 6 25 96% 1857644 $ 66,344 4691 $ 168 3969 $ 142

Odessa 20 6 1 4% 74306 $ 2,654 310 $ 11 238 $ 9

Total 53 12 26 1 1931949 $ 68,998 5001 $ 179 4207 $ 150

SAFEMed

Design of distribution pilot in Odesa region

SOE (Ukrmedpostach/ Ukrvaccine)

26 Districts of Odessa region

Odessa

Stock of regional AIDs center

Private logistic company

In the region there are:53 ART sites (20 are in Odessa)12 TB sites

SAFEMed

Summary from Odesa visit

Distribution

There are 26 districts in Odesa region

Supplies to district warehouses (actually, facilities) performed by themselves by picking up medicines from facilities above using not specialized vehicles both under National programs and facilities procurement.

There is no funding to support logistics at region and district levels (or so they say!) Only fuel for health facility vehicles is budgeted which is little.

Distribution on district level is organized by facilities’ Chief Physicians and their personal commitments. No systematic approach is in place. District and Oblast level facilities/authorities do not see value added in changing existing approach, though they understand risks.

Warehousing in district facilities is somewhat organized, while transportation issues remain. Private logistics companies can perform this function, in addition to distributors.

3-4 vehicles from districts travel to Oblast AIDS center daily to pick up HIV commodities. We may consider a project with Oblast facility with large volumes for transportation, which may be interesting for the private market.

There is no funding to support logistics at region and district level. At least, they say so. As usually, only fuel is needed for facilities to make distribution happen using non-specific vehicles.

Warehousing

Medicines are stored in medical warehouses within facilities.

There is no problems of free space to store medicinal products at districts level warehouses.

There is no warehousing personnel in place (loaders for example).

Stock management in districts is mostly presented as paper-based and to some extent in excel with basic info and manually managed. Only AIDS centers are using “HIV infection in Ukraine” MIS for entering data also related to stock availability.

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SAFEMed

Estimated Value of Logistic Services (3%) of distribution of HIV, viral hepatitis medicines in Dnipro region

17

Assuming an average logistics fee in the private market at 3% of the total value of the invoice, an estimated annual turnover of regional logistics services for distribution of HIV& viral hepatitis medicines to the districts can reach 2M UAH. The MOH recipient of HIV medicines in Dnipro region– Dnipro regional AIDs center. Potential piloting

HIV & viral hepatitis medicines


2016Y 2017Y 2018Y 2016Y 2017Y 2018Y


J05B1 Viral hepatitis products 9,140,386 4,944 2,653,705 1,070 5,716,433 478 274,212 79,611 171,493

J05C1 Nucleoside and nucleotide reverse transcriptase inhibitors 6,098,282 45,988 3,010,882 25,198 4,655,224 38,628 182,948 90,326 139,657

J05C2 Protease inhibitors 29,854,588 21,507 104,918,139 67,916 5,008,474 1,954 895,638 3,147,544 150,254

J05C3 Non-nucleoside reverse transcriptase inhibitors 18,343,860 8,338 720,493 6,433 390,084 763 550,316 21,615 11,703


J05C9 Other HIV antivirals 157,324 214 2,050,757 9,835 21,800,696 123,595 4,720 61,523 654,021

Grand Total 63,808,861 81,016 114,030,541 110,523 37,570,911 165,418 1,914,266 3,420,916 1,127,127

SAFEMed

1818Estimated costs for Dnipro regional logistics for HIV, viral hepatitis and TB medicines

1st Scenario: 31 ART sites will take 78% of logistics costs. Monthly estimated costs for logistics per 1 ART approx. 160 USD

2nd Scenario: 20 districts (31 ART sites) will take 95% of logistics costs. Monthly estimated costs for logistics per 1 ART in district – approx. 197 USD, in Dnipro – 34 USD

ART sites Districts

Estimated ratio of logistics expenses in region (based on number of ART sites)


UAHYearly estimated value of

logistics expenses in region, USD

Monthly estimated value of logistics expenses per 1 ART

site, UAH



Districts 31 20 78% 1669430 $ 59,622 4488 $ 160

Dnipro 9 1 23% 484673 $ 17,310 4488 $ 160

Total 40 21 1 2 154 103 $ 76,932 8 975 $ 321

ART sites Districts

Estimated ratio of logistics expenses in region (based

on number ART sites in district)


UAHYearly estimated value of

logistics expenses in region, USD

Monthly estimated value of logistics expenses per 1

ART site, UAH


district, USD

Districts 31 20 95% 2051527 $ 73,269 5515 $ 197

Dnipro 9 1 5% 102576 $ 3,663 950 $ 34

Total 40 21 1 2 154 103 $ 76,932 6 465 $ 231

SAFEMed

Design of distribution pilot in Dnipro region

SOE (Ukrmedpostach/ Ukrvaccine)

21 Districts of Dnipro region

Dnipro

Kyiv?

In the region there are:40 ART sites (among them 6 AIDS centers)

Stock of regional AIDs center

Source: http://aids.dp.ua , Dnipro regional AIDs Center Statistic report, February 2019.

http://aids.dp.ua/

SAFEMed

Summary from visit to Dnipro

Distribution

Dnipro oblast consists of 21 districts.

Distribution scheme is the same as in Odesa and all over Ukraine

Oblast level AIDS center make quantification and ordering centrally in MIS based on information provided by 45 so called “ART sites”

Frequency of supplies from Ukrmedpostach (Ukrvaccine) to Oblast level AIDS center 2-3 times/year, pick up by regions around 20-45 times a year.

Some facilities have annual agreements with communal companies for renting ambulance cars

Warehousing

There is lack of warehousing personnel, such as loaders in place (critical for regional facilities)

Inappropriate warehouse conditions in regional facilities (rarely - in district facilities) and lack of space

Large overstock of medicinal products in districts facilities (about 12 months of ARV drugs).

20

SAFEMed

Estimated Value of Logistic Services (3%) of distribution in Poltava region (Health reform pilot area)

21

HIV & viral hepatitis medicines


2016Y 2017Y 2018Y 2016Y 2017Y 2018Y


J05B1 Viral hepatitis products 3,557,831 1,021 1,008,718 504 5,198,867 1,148 106,735 30,262 155,966

J05C1 Nucleoside and nucleotide reverse transcriptase inhibitors 1,427,501 7,852 979,975 8,943 770,212 5,715 42,825 29,399 23,106

J05C2 Protease inhibitors 4,024,505 2,974 13,101,270 8,865 360,432 214 120,735 393,038 10,813

J05C3 Non-nucleoside reverse transcriptase inhibitors 178,873 2,180 472,549 5,398 14,275 199 5,366 14,176 428


J05C9 Other HIV antivirals 266,128 362 360,644 1,375 2,888,778 16,825 7,984 10,819 86,663

Grand Total 9,540,607 14,399 16,399,609 25,135 9,232,564 24,101 286,218 491,988 276,977

HIV & viral hepatitis medicines in Poltava region under National Programs

All medicines procured for Poltava region

All medicines

2016Y 2017Y 2018Y 2016Y 2017Y 2018Y

UNITS LC UNITS LC UNITS LC LC LC LC

Hospital 752,004 42,158,366 2,320,158 70,893,275 2,867,047 68,024,633 1,264,751 2,126,798 2,040,739

MOH Distribution 165,928 56,242,262 186,250 102,617,491 303,604 165,897,667 1,687,268 3,078,525 4,976,930

Not in tenders purchases 645,478 9,542,376 1,400,680 15,609,388 697,998 9,966,100 286,271 468,282 298,983

Regional not in tenders 89,778 226,125 0 6,784 0

Retail 26,257,610 845,767,931 26,022,351 904,209,966 23,542,914 987,835,682 25,373,038 27,126,299 29,635,070

Grand Total 27,821,020 953,710,935 30,019,217 1,093,556,245 27,411,564 1,231,724,081 28,611,328 32,806,687 36,951,722

SAFEMed

Summary Findings from Effective Vaccine ManagementAssessment by WHO and UNICEF

General weaknesses identified

• Inadequate stock management leading to overstocking & stock outs (entire annual amount shifted to district and service level while upper levels are empty)

• Cold chain equipment not fit for purpose & presenting risks to vaccines (domestic fridges, inappropriate vaccine carriers, no continuous temperature monitoring devices, no freeze monitors)

• No systematic supervision in place

• Outdated vaccine management guidance (Order No. 595) tools and forms (temp monitoring, stock records, no open MDVP)

• No appropriate injection devices, no AD syringes (planned to be addressed)

• Disposal of used syringes and needles presenting high risks to health workers and potentially communities

22

SAFEMed

Key Findings (1)

Logistic (transportation) services can be performed by companies, who obtained Licenses for the wholesale business, and/or for manufacturing medicines and/or for importing medicines

Outsourcing of services of medicines transportation is legislatively possible only by Licentiate. In practice, Licentiate outsources transportation services to logistic company, which often doesn’t have GDP . The largest players being outsourced for transportation of medicines are AVF-Service (no GDP), Farmasoft (GDP). Warehousing of medicines services can be outsourced only to Licensee company.

Licensing conditions for the wholesale business regulate (1) logistics requirements of the pharmaceutical products and (2) distributor to use appropriate outsourced logistic companies. In practice, distributors occasionally use unappropriated vehicles for medicinal products’ delivery (urgent orders, seasonality, etc.).

There are only few GDP-certified distributors in Ukraine. State-owned companies (e.g. Ukrvaccine, Ukrmedpostach) that distribute medicinal products under national programs are not GDP certified.

BadM and Optima – the largest distributors in UA (hold more then 50% of private market distribution) also take leading positions in regional public procurement. Optima has its own logistics company Universal Logistics.

23

SAFEMed

Key Findings (2)

Prices for medicines in regional public procurement already include logistics fee

Logistics fee in the private market ranges from 3-15% of the value of the invoice based on complexity of the delivery item. An estimated annual turnover of regional logistics services in public sector (MOH-distribution) can reach 5M and 7M UAH in Odesa and Dnipro regions, accordingly

There is no systematic approach for regional distribution in place in public sector

Transportation of medicinal products in regions in public sector is often inappropriate (used not specialized vehicles, without appropriate cold chain monitoring)

Warehousing is performed within facilities. There is a lack of qualified personnel in place to support basic warehouse operations. Regional facility warehouses operate with large volumes of medicinal products.

Pilot can take place in connection to the Regional AIDS Center (Odesa or Dnipro). Both centers have large volume of PEPFAR commodities to operate, lack of professional personnel in place at the warehouse, distribution from those centers to district level facilities has no systematic approach. Potential logistics fees in Regional AIDs Centers can reach up to 2M UAH in Dnipro and 1.9M in Odessa.

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SAFEMed

Next steps and opportunities

Identify volume and potential profit for the engagement of private logistics and/or distribution companies

Outline financial and non-financial benefits for the PPP for all parties involved; monetarize non-financial benefits were feasible and appropriate

Study legislative limitations for the PPP, including those for budgeting logistics costs within oblast/district health facilities budgets

Explore how new financial mechanism (health reform) will affect budget once it is fully rolled out

Identify resources of funding and the breakdown among the partners

Prepare pitch and full business case for private logistics/distribution companies

Design PPP with clear roles, objectives, timeline

25

SAFEMed

Thank you!

SAFEMedSAFEMed

Additional Information

SAFEMed

General discussion:

- UNDP made a decision to support CPA by providing space in their own office for some CPA staff;

- UNDP is going to provide trainings for some CPA staff abroad (in-house; consultants) and locally;

- Tender for eStock system development hasn't been announced yet. The deadlines for development are hardly predictable;

- UNDP proposed to have a broad meeting of technical projects to align their activities. This could be done as a Working group on procurement reform

Technical discussion.

Algorithm of deliveries:

1. Exemption from VAT for cargo have to be obtained before any delivery takes place;

2. Delivery terms: vehicles, air, rarely by sea (INCOTEMS 2010 DAP);

3. Customs bonded warehouse owned by LLC used for customs clearance of cargo. Customs clearance is the responsibility of state enterprizes ("SE" -

below);

4. Quality control performed by laboratories and initiated by SE;

5. Then cargo goes to SE warehouses. UNDP audits SE warehouses on an annual basis;

6. Deliveries schedule: 3-4 deliveries per week in average. More than 4 trucks per week;

7. There are 3 agreements: 1st (MoH & UNDP), 2nd (MoH & SE), 3rd (UNDP & SE);

8. Fee for logistics services proposed by SE each time within the tender procedure held by UNDP;

9. SE delivers cargo to regional level facilities.

Issues faced in logistics:

1. Lack of staff in SE thus there are delays in processing the documents;

2. SE "Ukrvaccine" lacks some space in warehouse.

Summary of SAFEMed Meeting with UNDP

SAFEMed

Farmasoft is specialized in humanitarian cargo, logistics in clinical trials, accent to cold chain. Has joint collaboration with:1. EBRD on:- international consultancy- assessment if Ukrainian market is ready to introduce specialized logistics for pharmaceuticals2. Network, Alliance. UNICEF, WHO.Make deliveries to rayon level facilities, but not to villages.

Farmway is specialized in deliveries to pharmacies.Farmway deliver goods to local branches of Ukrposhta, where patients can pick up their medicines.Biocon holds 45k square meters on 2 pharmaceutical warehouses, which are GDP certified.

Specializes in making deliveries to pharmacies. Deliveries from central level to the regions are cheaper than keeping regional warehouses. Central stock is more effective when we talk about redistribution of medicines between the regions.

Discussion of issues on regional level:It was unanimously said that to build regional warehouses is not cost effective. Existing regional warehouses do not meet requirements to pharmaceutical warehouses, lack vehicles, refrigirators, no IT solutions.

IT solutions for deliveries tracking. There is no such solution exist for customers to monitor deliveries remotely. Each company develop their own solution which comply ISO and GPD.

There are several methods of calculation logistic services costs:- volumes processed- price for 1 pack processed- % invoice amount

Actual selection of method depends mostly on customer's preferences. Sometimes manufacturers contract logistics company, sometimes pharmacies do the same thing. The trend is that manufacturers are trying to have more control over supply chain.Roche cannot validate quality of medicines if they go through SE "Ukrvaccine".

Meeting Summary with Private Logistics Companies

landscape review: private logistics and …...landscape review: private logistics and distribution...

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