Shortly after the publication of UNICEF’s State of the World’s Children report in April 2023, UNICEF explored the reasons for its procurement approach: pooled procurement. Through this approach UNICEF delivers over 2 billion vaccines for children. These protect against diseases like measles and polio.
Pooled procurement is a process that allows UNICEF to forecast and combine vaccine demand to “get better commercial terms from manufacturers” than would be available to individual countries.
“It gives suppliers a long-term sense of the doses required, allows for large-scale production of vaccines, and helps UNICEF to get competitive prices by asking manufacturers to submit proposals for supply.”
In this post we look at the 5 reasons that UNIEF presents for this approach.
Uninterrupted supply
UNICEF works with countries to “estimate expected vaccine requirements” for the future, procuring childhood vaccines for 45% of the world’s children under 5. It can therefore plan for supplies to be available with manufacturers who need long-term visibility. As vaccine production is a complex process it can take up to 2 years, so this visibility is helpful.
In the tendering process manufacturers submit details such as pricing, cold chain requirements, and yearly dose availability. Next, UNICEF evaluates the commercial offers while WHO reviews the technical aspects. Before contracts are signed UNICEF can negotiate with suppliers.
“The ideal mix of vaccines and suppliers is determined by factors such as the suitability of vaccines for the country context, pricing, delivery times, production capacity, and geographical distribution of the suppliers.”
Price reduction
Pooled procurement also offers “significant benefits by allowing countries to access vaccines at lower prices” than could be achieved through individual negotiations. Economies of scale enable manufacturers to reduce costs and streamline processes over larger volumes and extended periods. Furthermore, they only need to deal with one buyer.
Healthy markets
UNICEF is the “largest single vaccine buyer” in the world. It therefore works with partners to “ensure vaccines markets remain healthy”. This means considering more than “pricing and production schedules”. For example, the organisation emphasises the importance of having more than one manufacturer of each vaccine to ensure that prices and supply are stable.
To do this, UNICEF evaluates proposals to reduce market barriers. Additionally, it works with new suppliers and encourages them to join the market “when appropriate”.
Partnering for progress
“UNICEF does not work alone.”
With a combination of donor funding, vaccine industry consultations, and competitive tenders, UNICEF secures access. It also works in collaboration with partners like the Global Polio Eradication Initiative and the Measles and Rubella Initiative. UNICEF is also a member and the “main procurement agency” of Gavi.
“Only through regular collaboration can UNICEF continue to reach children with the vaccines they need.”
A success story: the pentavalent vaccine
Considering one example as evidence that pooled procurement is effective, UNICEF explores the history of the pentavalent vaccine. This protects against “five potentially fatal diseases”: diphtheria, tetanus, pertussis, hepatitis B, and haemophilus influenzae type b.
In 2001 only one manufacturer produced it, meaning that there were “insufficient doses” for every child in need. By 2007 there were two suppliers, but the price per dose was still at $3.50. With funding from Gavi and efforts from UNICEF, demand was consolidated and opportunities for manufacturers to enter the market were created.
Now, with “ongoing efforts” to sustain a healthy vaccine market, four manufacturers supply the vaccine to UNICEF, with the lowest price at $0.78 per dose. This is almost 80% lower than 2007.
“Pooled procurement, alongside UNICEF’s efforts to shape a healthy market, enables equitable access to lifesaving vaccines for every child.”
What benefits can you see to pooled procurement, and how can it be implemented most effectively to provide for those who need vaccines most?
