WASHINGTON, D.C. – The U.S. Agency for International Development (USAID) announced today a new approach to purchasing and distributing life-saving medicine and health supplies. USAID will use data analytics and innovative tools to drive-down the price of medicines and increase delivery speed. As funding for global health has remained relatively stable over the past several years, this new approach will enable USAID to reach millions more patients with the same amount of resources.
As the global leader in health, the U.S. Government has helped hundreds of millions of people worldwide over the past ten years through key initiatives, including the U.S. President’s Emergency Plan for AIDS Relief, the U.S. President’s Malaria Initiative, and USAID health programs that together aim to end preventable child and maternal deaths, create an AIDS-free generation, and protect communities from infectious diseases.
"We’ve learned that USAID is most successful at reaching people faster with lifesaving medicines when we harness the expertise of a broad group of partners," said USAID Acting Administrator Alfonso Lenhardt. "This approach demonstrates how we’re stretching our resources to achieve the ambitious goal of eliminating extreme poverty by 2030."
A well-functioning health care delivery system requires a strong supply chain. Without one, antiretroviral medicines, insecticide-treated bed nets, condoms, contraceptives, vaccines, and other health supplies will not reach those most in need in a secure, timely, and cost-efficient manner. For the first time, the new Global Health Supply Chain Program consolidates all USAID supply purchasing and distribution projects across the health sector, creating one streamlined supply chain.
By incorporating lessons learned from a decade of global health supply chain management and from the commercial sector, USAID will continue to drive savings in procurement such as the one we are announcing today, ensure timely delivery of essential health commodities, and strengthen country-led health supply chains through the following methods:
- Requiring that implementing partners cannot charge a fee on the cost of purchasing medicines and health supplies, which will account for approximately 85% of the money USAID spends through the new approach. In addition, no overhead will be applied on the cost of medicines and health supplies.
- Partnering with other donors, multilateral organizations, and private foundations to leverage our joint purchasing power in negotiations with suppliers to drive down the prices of medicine and health supplies.
- Switching from brand-name to high-quality generic medicine and health supplies.
- Using innovative business intelligence and analytics to forecast and predict when country stockpiles run low to avoid gaps in delivery and ensure emergencies are averted.
- Improving ability to forecast and plan helps USAID purchase in bulk, further driving down the cost of medicines and health supplies.
Through the new approach of USAID’s Global Health Supply Chain Program, the Agency expects to spend up to $10.5 billion over eight years through a broad group of partners including Chemonics International, IntelliCog, Remote Medical International, FHI 360, IBM, Kuehne+Nagel, and others to help save and improve lives in more than 50 developing countries worldwide.