A cost analysis of medicine donation programs to Tanzania’s neglected tropical diseases control program

Abstract

Overreliance on donor supported health programs has crippled many African countries and there is inadequate long-term planning on the future sustainability of health systems. In the age of uncertainty in global politics and global economy, the future of these donor funded programs is also uncertain. It is imperative for African nations to begin to take responsibility for their health programs. In as much as the name “donation” suggests that something is given free of charge, in actual sense this may not be the case due to hidden costs attached. In medicine access, the hidden costs are the supply chain costs including cost for clearance, storage and distribution of such medicines which are charged as a percentage of claimed commodity costs on donors’ or suppliers’ invoices. Since the medicines donated are in originators’ brands, the invoiced prices are high thus supply chain costs are high as well. In some cases, it is thought that the hidden costs are higher than the cost of medicines had they been sourced locally as generics. The aim of this research was to assess and determine the hidden supply chain costs associated with the four medicine donation programs supporting the Tanzania Neglected Tropical Diseases Program and inform policy decision on optimal financing options for the program Methodology The cost analysis of the two options was undertaken from a payers’ perspective which in this case is the Government of Tanzania (Ministry of Health). Data was collected on both product and supply chain cost drivers incurred in the medicine donation programs from July 2014 to June 2017. Costs of the current mechanism were obtained from the program’s quantification reports and transaction data for the study period. Transactional data was obtained from shipment documents including sales invoices, parking list, proof of delivery and goods receiving notes were evaluated for actual quantities shipped, commodity prices and other supply chain cost. To verify the actual supply chain cost charged by the program, both the official bills from Medical Stores Department (MSD) to the program and the electronic bills available at MSD electronic database covering the study period were studied.