PAHO REVOLVING FUND

"Making Vaccines Affordable"

The PAHO Revolving Fund for Vaccine Procurement is a mechanism developed by the Pan American Health Organization in 1979 for the purchase of vaccines, syringes/needles, and cold chain equipment for countries in Latin America and the Caribbean. Through a system of bulk purchasing, the Fund has secured for the past 20 years a supply of high quality vaccines for national immunization programs at affordable prices, and it has also allowed for the orderly planning of immunization activities. Between 1979 and 1999, the dollar value of vaccines purchased through the Fund has grown from US $2 million to approximately US $86 million for 1999. Initially contracts included vaccines against diphtheria, pertussis, tetanus, poliomyelitis, measles and tuberculosis. Currently, the Fund is playing an instrumental role in the rapid introduction of new and other vaccines in the Americas at affordable prices, such a Haemophilus influenzae type b (Hib), measles/mumps/rubella (MMR), hepatitis B and yellow fever vaccines.

Objectives of the PAHO Revolving Fund for Vaccine Procurement

Following a resolution of PAHO’s Governing Bodies in 1977, the PAHO Revolving Fund for Vaccine Procurement was established with the capitalization of US$1 million. The purpose of the Fund was to provide participating Member States with a means of assuring the smooth and constant flow of vaccines and related supplies for the implementation of immunization programs. PAHO does not sell vaccines to its Members States, but rather it establishes annual vaccine contracts on their behalf. Operation of the Fund began in 1979 with the purchases of vaccines, syringes, needles and cold chain equipment.

The objectives of the Fund are to: 1) provide countries with a continuous supply of vaccines that meet PAHO/WHO standards at affordable prices; 2) enable countries to procure the required supplies of vaccines and syringes for immunization activities, thereby preventing interruptions due to lack of vaccines or immediate funds; 3) facilitate the use of local currency for the reimbursement of invoices; 4) consolidate vaccine and syringe contracts for bulk purchasing, which results in more advantageous prices and improved delivery; 5) assure quality of vaccines being used in national immunization programs; and 6) establish procedures with suppliers to permit urgent orders to be placed and delivered on short notice.

How does the PAHO Revolving Fund for Vaccine Procurement Work?

The Fund operates on an annual cycle. Ministries of Health of each participating country establish annual vaccine requirements for the following year using a quarterly system. PAHO consolidates these annual requirements and places bids to international tender. Criteria for selecting suppliers are based on WHO/PAHO vaccine quality specifications, price, and suppliers’ track record for timely delivery of vaccines. Once suppliers and prices are established, PAHO averages the prices across sellers for each product and distributes lists to countries. PAHO then places a quarterly order to a supplier, specifying amount, as well as destination and date of shipment.

A second phase of PAHO’s role involves monitoring orders, expediting delivery and arranging freight-forwarding services. Following satisfactory delivery, PAHO sends an invoice to collect reimbursement, adding a 3% service charge applied to the cost of vaccines. The service charge is held in a special reserve account to which PAHO charges losses incurred by the Fund, due to shipment problems and/or losses incurred from currency transactions. If the reserve account exceeds US$100,000, the surplus reverts to the Fund’s capitalization. At present the capitalization of the Fund is at US$14.150.000. Countries have 60 days to repay the Fund. If a country is in arrears, no further orders will be placed until debits are cleared. It should be noted that the Fund has had an excellent track record of members paying their invoices.

Role of the Fund in the Introduction of New Vaccines

The culture of prevention brought about by the successes of national immunization programs in the Western Hemisphere is stimulating the introduction of new vaccines in routine immunization programs. Key issues surrounding the sustainable introduction of these vaccines have been the development of an infrastructure and strategies that countries and the international community should follow to shorten the timeframe from research to the actual widespread and cost-effective utilization of vaccines. Given that the price of vaccines remains an important factor, PAHO’s Revolving Fund for Vaccine Procurement is playing a mayor role in accelerating the incorporation of additional vaccines, by allowing countries to acquire high quality vaccines at affordable prices. Priority has been given to including those vaccines that have already been available in the market for the past 15 years, which include yellow fever, MMR, hepatitis B vaccine, as well as newer vaccines, such as Hib, and/or other combination vaccines.

The Fund’s role has been instrumental in the introduction of MMR, Hib and Hepatitis B vaccines in the Region’s regular immunization programs. Measles, mumps and rubella vaccine was being used in the Region, but it was only in 1998 that its use became widespread. Today, more than 90% of the countries in the Americas are including this vaccine in their regular immunization programs. In 1996 only two countries were using Hib vaccine; however, by the year 2000, over 90% of children born in the Americas have had this vaccine as part of their routine immunization schedule. In 1997, the Hepatitis B vaccine was limited to risk groups and risk areas, but now it is included in most regular immunization programs. It is important to highlight that the dramatic drops seen in the price of these three vaccines have been the direct result of economies of scale derived from bulk purchasing through the Revolving Fund.

Prices change for selected vaccines under contract 1997-1998

Benefits of PAHO’s Revolving Fund for Vaccine Procurement

A major benefit of the PAHO Revolving Fund for Vaccine Procurement has been its impact over vaccine costs. Studies carried out by PAHO in the early 1980s show the wide price differences charged by manufacturers for the same vaccine. Competitive procurement through the Fund has kept price increases for vaccines under contract at a minimum. At the same time, PAHO’s ongoing dialogue with vaccine manufacturers has allowed them to make long-term production plans and decisions on capital investments.

Another major benefit lies in the Fund’s role as a means of delivering technical cooperation. Through the Fund, PAHO has established a direct line of communication with health authorities making decisions on immunization programs. Issues discussed include vaccine requests versus size of the population, evidence of disease burden, targeting entire populations versus high risk groups, financial sustainability, and cost-benefit aspects, particularly with the new vaccines. In this regard, the criteria for participating in the Fund also encompass: 1) availability of a specific line item within the national budget to cover recurrent costs of vaccines and syringes; 2) formulation of a comprehensive and realistic national plan of operations covering at least a 5-year period and conforming to general policies of the national immunization programs; and 3)appointment of a national program manager with the authority to develop and implement the country’s immunization program.

Countries have also benefited from the Fund’s continuous supply of vaccines that meet PAHO/WHO biological standards, and from the assurance of vaccine availability on short notice, which is critical during disease outbreaks.