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Challenges of vaccine procurement
The procurement of vaccines is a complex process which requires specialized knowledge in order to ensure the timely and cost-effective supply of high-quality products. Public procurement entities need to appropriately address a number of issues in order to achieve these goals. Limitations in the supply base of quality assured vaccines, different market dynamics for individual products, product specific characteristics and logistical challenges involving the transport and storage of biological products need to be addressed.
In order to conduct an effective procurement process that fulfills the needs of their National Immunization Programme (NIP), countries need to be aware of the vaccine market dynamics, the various procurement mechanisms and stages of the procurement cycle, as well as general best practices of vaccine procurement.
Vaccine procurement cycle
The vaccine procurement cycle describes essential phases in the procurement of vaccines as presented in the chart below.
Vaccine procurement includes the following steps:
- Identification of needs of the NIP (products, volumes, deliveries, timing, stock management etc.): taking into consideration possible opportunities to achieve the most cost effective and appropriate outcome;
- Prequalification of vaccines to minimize the risk of purchasing inferior products and/or accepting bids from unsuitable sources;
- Optimizing competition and selection of suppliers, which should be carried out in advance of the contracting process;
- Developing programmatic and technical specifications for the solicitation of responses from suppliers;
- Establishing mandatory and flexible criteria to best suit the needs of the NIP, the individual vaccine market conditions, and the legal requirements for procurement;
- Methods of procurement, i.e. tendering, competitive bidding, requests for proposals, requests for quotations or sole source procurement;
- Preparations for bidding and evaluation, establishing, documenting and communicating a clear system and strategy for bidding and evaluation procedures.
- Solicitation and receipt of offers, issuing clear and equitable solicitation documents to prospective selected suppliers, following a documented process for responding to requests/clarification in an equitable manner and a defined process for receipt of offers;
- Evaluation and adjudication of bids, Following a predefined equitable evaluation procedure involving the key stakeholders and the utilization of a un-biased evaluation system for recommendations to be presented to the country decision maker;
- Selection and award process, Communicating in a timely manner the outcome of the evaluation and adjudication processes;
- The Contract, including the defined mandatory terms and the outcome from the evaluation of any flexible terms proposed during the bidding process.
- Performance monitoring and reporting; monitoring the ability of both contractual parties to meet the terms of the agreed contract and monitoring the performance of the vaccine in the NIP through appropriate regulatory and programmatic reporting.
Available procurement mechanisms
There are different options of procurement mechanisms that can be used by countries to procure their vaccines. Countries that opt for self-procurement assume full ownership and responsibility of the procurement process, using either public or private entities. Alternatively, countries can choose to delegate the procurement of their vaccines to mechanisms such as PAHO Revolving Fund, for countries and territories of the Americas, or UNICEF Supply Division and benefit from the advantages of these large procurement pools. Another option would be to collaborate with other countries to build their own pooled procurement mechanism.
Click on the right menu to learn more about the different procurement mechanisms.
Best practices in vaccine procurement
Collaboration between departments
An optimal vaccine procurement system requires effective collaboration between the government departments, technical and clinical advisory groups, and entities involved in vaccine regulation, finance and procurement and ultimately the decision makers. It is essential that all entities and groups involved in the procurement process and communicate and work together as a group in a structured and documented way with defined roles and responsibilities.
Click on the right menu to learn more about the actors to be involved in the procurement cycle.
Vaccines selected for procurement should meet the identified needs of the National Immunization Programme. Vaccine specifications should be appropriate for the target population and suit the relevant immunization schedules. They should furthermore take into account EPI programme capacities and constraints (e.g. cold chain and human resource capacities, thermostability/storage, dose volume, anti-microbial preservatives of products, etc.)
- Click here for more information on Assessing the Programmatic Suitability of Vaccine Candidates for WHO Prequalification
Optimizing programmatic performance and flexibility to accommodate alternatives gives greater flexibility and possible competition in procurement.
WHO also communicates key regulatory issues to national authorities through guidance documents addressing both general issues and specific products. This enables individual country NRA to assess critical issues based on the regulatory requirements and methodologies that have been found optimal for ensuring the supply of high quality products. Should the procurement of WHO prequalified vaccines not be feasible (as not all vaccines and antigens are WHO prequalified), the selection of products that meet the quality standards NRA or other stringent regulatory authorities may be an acceptable alternative.
Accurate demand forecasting and optimal delivery schedules are essential to good vaccine procurement. Accurate forecasting helps ensure that suppliers are notified in time and that appropriate stock levels are maintained throughout the cold chain which will facilitate optimal programmatic performance.
A reliable prediction of demand for vaccines can contribute to increased security of supply, both minimizing the risk of “out-of-stock” scenarios and reducing wastage rates. In order to achieve accurate demand forecasting for vaccines, it is necessary to take into account metrics such as birth cohort data, available stocks, wastage rates and buffer stock levels.
Accurate forecasting (both strategic and operational for long- and short-term planning) is a crucial component of the planning and budgeting process and should be achieved well in advance of annual budget requests.
Targeting the lowest prices possible
The goal of “lowest price possible” per dose or per course is based on a number of criteria in any given procurement system, with the affordability of vaccines, containment of total costs and the sustainability of national immunization programmes being three important factors. Nevertheless, the principle of “lowest price possible” always assumes that vaccine quality and the supply security aspect remain the primary concerns of the procurement process.
The delivery schedule should be agreed between supplier and purchasing countries in order to ensure feasibility based on the suppliers’ production and delivery capacities as well as the country’s demand requirements and limitations related to programmatic aspects, cold chain storage capacity, financial procedures and others. Good contract management and careful stock monitoring are required to avoid “out of stock” or “over stock” scenarios.
A reliable supplier is responsive to the purchaser’s needs and enquiries, has a proven track record, carries out adequate supply chain management, offers high quality products at reasonable prices and meets all the agreed terms and conditions of the contract.
Supplier reliability requires good contract monitoring. Suppliers should be aware that contract monitoring is in place and that reliability will be measured. The inclusion of contractual clauses into supply contracts can help countries protect themselves against failure of delivery or breach of contract, ensuring the supply of vaccines at the agreed price. Contract terms that help reduce the risks of countries of experiencing additional costs or vaccine shortages. Such terms can include, among others:
- Indemnity, to make up for the failure of a supplier to deliver the agreed quantity of vaccines within the agree time.
- Liquidated damages to account for the administrative costs to identify and secure substitute deliveries from other sources.
- The reservation of the right to not select the lowest price supplier in order to exclude suppliers which are known to be unreliable.