New agreements with HIV drug suppliers to save $324 million

The Global Fund to Fight AIDS, Tuberculosis and Malaria has signed multi-year framework agreements with suppliers of HIV medication that will save US$324 million by the end of 2021 and secure the supply of lifesaving drugs for over 4 million people.

The framework agreements, engaging 14 pharmaceutical companies, build an enlarged base of suppliers and deliver cost competitiveness and supply security, essential elements in expanding HIV treatment in the most reliable and cost-effective way. Projected contracts for antiretroviral drugs total US$1.2 billion over the coming four years.

“These agreements are a strategically smart and highly effective way to secure greater volumes of medication that save lives,” said Peter Sands, Executive Director of the Global Fund. “In a complex, high-volume business, it’s a performance-based approach that reduces risk and gets essential HIV drugs at the most competitive prices, with consistency and reliability.”

The framework agreements address several challenges in purchasing large volumes of antiretroviral drugs, including a shorter product lifecycle, higher competition and availability of active pharmaceutical ingredients. The agreements also seek to maximize use of newer, more effective and less expensive HIV drugs as they become available.

In recent years, the Global Fund has evolved its procurement strategy from a system of spot tendering, to a more strategic approach that focuses on performance and effective management of supplier relationships with stricter quality and sustainability criteria. The Global Fund also requires compliance with a code of conduct for suppliers.

In the new framework agreements, the Global Fund is achieving financial savings through a careful balancing of cost competitiveness with long-term incentives for suppliers, while strengthening sustainability. Suppliers with a high performance of delivering products on time and in full can benefit from higher volumes of orders.

A long-term and performance-based approach to responsible procurement directly benefits partners in global health. Many countries can use domestic funding for health to take advantage of the Global Fund’s Pooled Procurement Mechanism and online platform, wambo.org, with strong benchmarking on prices and improved business practices.

The selection of suppliers to take part in the framework agreements followed a rigorous evaluation process. A technical evaluation committee carefully reviewed proposals, and scored each supplier and each product on technical and commercial criteria, allowing the Global Fund to focus sharply on quality, price, supply security, ability for on-time, in-full delivery, and overall responsiveness.