Office of the Inspector General

Audit of Global Fund Supply Chain Processes

28 April 2017

This OIG audit concluded that, despite multiple hurdles, health products financed by the Global Fund are getting through to their intended beneficiaries. This has allowed the Global Fund and its partners to support 10 million people with anti-retroviral drugs, treat 16 million people for tuberculosis and distribute 713 million anti-malaria nets over the past 15 years. However, due to the complexity of in-country supply chains, the OIG also highlighted several long-term challenges that impede the Global Fund’s ability to maximize impact against the three epidemics.

Procuring and supplying health products are critical to the Global Fund’s mission to end AIDS, tuberculosis and malaria. The Global Fund’s biggest investments relate to health product procurement (estimated at 40% but as high as 90% for some grants). Overall, an estimated 40% (about US$10 billion) of the Global Fund’s total disbursements over 15 years (over US$29 billion) have gone towards health commodities.

The auditors identified four main systemic barriers to supply chain management. These barriers are not all within the control of the Secretariat and must be evaluated within the broader context of the Global Fund, taking into account factors related to country ownership, constraints to mandate, and limitations in its partnership model. Supply chain systems belong to the countries first and foremost. Given these broader factors, the issues noted in this report cannot be solved by the Global Fund in isolation; however, they present significant risk to the achievement of the strategic objectives of maximizing impact and ending the epidemics. Progress cannot be made without a collective effort, involving the Global Fund and partners, to tackle them in the long-term:

  • Regarding country ownership and governance, structures in 14 out of the 15 countries reviewed by the OIG are not fully effective in resolving supply chain challenges;
  • almost all countries reviewed had problems in providing accurate and reliable data resulting sometimes in treatment disruptions and drug expiries;
  • a serious shortage of health workers is one of the most critical constraints to the achievement of health and development goals; and
  • inadequate funding is an impediment to transforming supply chain systems, with more than a third of the countries unable to meet the operational costs to run their own supply chain.

In a partnership model, there are significant inter-dependencies and shared accountabilities, which means that some aspects remain outside the direct control of the Global Fund. Supply chains, which belong to the countries themselves as part of national health systems, are no different. Considering this, the OIG rated the Secretariat interventions in the areas over which they have more control, including the Global Fund’s internal structures and assurance framework to mitigate in-country supply chain challenges, as needing significant improvements. The rating is a reflection of the lack, to date, of a comprehensive supply chain strategy to guide the Secretariat’s work, although this strategy is now under development. If well designed and effectively implemented, it would bring a more strategic discipline to the Global Fund’s management of supply chain risks in its programs and accordingly help mitigate many of the risks.

The OIG also noted that ongoing Secretariat projects have not been fully leveraged to find solutions for supply chain management. The Implementation through Partnership (ITP) project, designed to increase shared ownership and mutual accountability in 20 countries, is seen as a mitigating measure for treatment disruption. However, no solutions were proposed to address the supply chain related risks identified in six out of the 15 countries reviewed by the OIG where ITP had been implemented.

Finally, the auditors concluded that the Secretariat’s assurance framework in supporting the identification and mitigation of supply chain related risks needs significant improvement. For example, Local Fund Agent resources have traditionally not been focused on supply chain although an estimated 68% of grant disbursements in the 15 countries audited relate to these activities.

The Global Fund Secretariat concurs with the issues raised in the report and corrective actions are already underway. A supply chain initiative, launched in 2016, includes the development of a supply chain strategy, the creation of a new Supply Chain Department and an approach called ‘project last mile’ designed to assist in improving the availability of critical medicines at the last stage of the supply chain by building the capacity of ministries of health.

  • The Global Fund’s In-country Supply Chain Processes (GF-OIG-17-008 - 28 April 2017)
    download in English | Français

For more information:

Thomas Fitzsimons
Email:
Mobile: + 41 (0)79 412 1461

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The Office of the Inspector General safeguards the assets, investments, reputation and sustainability of the Global Fund by ensuring that it takes the right action to defeat AIDS, tuberculosis and malaria. Through audits, investigations and consultancy work, it promotes good practice, reduces risk and reports fully and transparently on abuse.

Established in 2005, the Office of the Inspector General is an independent yet integral part of the Global Fund. It is accountable to the Board through its Audit and Ethics Committee and serves the interests of all Global Fund stakeholders. Its work conforms to the International Standards for the Professional Practice of Internal Auditing and the Uniform Guidelines for Investigations of the Conference of International Investigators.

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