Both USAID and CDC provide technical assistance to  partner countries to support supply chain management. First, PEPFAR and USAID have consolidated supply chains for  PEPFAR’s ARV drug procurement, enhancing efficiency and reducing  operational costs. Second, PEPFAR has improved donor coordination by  creating a network to facilitate information sharing and by developing an  emergency procurement mechanism. Third, PEPFAR has provided  partner countries with technical assistance, such as assessment tools  and training, to help strengthen their supply chains and manage them  more effectively. PEPFAR Has Consolidated Supply Chains for ARV Drug Procurement

PEPFAR has consolidated supply chains for ARV drugs across partner  countries to increase the efficiency of ARV drug procurement and  shipping. PEPFAR Has Improved Coordination of ARV Procurement with Other Donors

PEPFAR has also coordinated with other donors to improve those  elements of the supply chain that operate within the control of partner  countries. In particular, it has developed an information-sharing network  and established an emergency procurement mechanism. PEPFAR determines the level and type of supply chain assistance  primarily on the basis of each country’s treatment program and supply  chain capacity and the state of its HIV epidemic. However,  11 of the 16 evaluations of partner-country supply chains that we  reviewed identified weaknesses in inventory controls; 7 of these 11  evaluations also cited weaknesses in record keeping, including missing or  inaccurate drug consumption data. Human resource constraints  contribute to these weaknesses, and PEPFAR is making efforts to  address them over the long term. In addition, because OGAC does not  require country teams to monitor partner countries’ progress in measuring  ARV drug consumption, waste, and loss, OGAC may not be able to  reliably ascertain the extent to which supply chains in partner countries  are affected by shortages, waste, and loss and take appropriate action to  mitigate these risks. Inadequate Inventory Controls and Record Keeping in Some Partner- Country Supply Chains May Increase the Risks of Shortages, Waste, and Loss

From our review of 16 supply chain evaluations conducted in seven  PEPFAR partner countries since 2011, we identified inadequate inventory  controls for monitoring drug supply, as well as missing or inaccurate  record keeping, as key weaknesses in ARV drug supply chains controlled  by partner countries. These weaknesses can increase the risks of drug  shortages, waste, and loss. However, OGAC does  not specifically require country teams that support partner-country supply  chains to develop and implement plans to strengthen partner countries’  inventory controls and record keeping to reduce the risks of shortages,  waste, and loss in ARV drug supply chains. Recommendations for Executive Action

To help ensure that drug supply chains in PEPFAR partner countries  function efficiently and mitigate the risks of shortages and wasted and lost  drugs, we recommend that the Secretary of State direct the U.S. State agreed with the intent of our first recommendation to improve  partner countries’ inventory controls and record keeping for drug supply  chain management. We  believe that requiring country teams to track the progress partner  countries are making in measuring ARV drug consumption, waste, and  loss in whatever way is most appropriate in those countries would be  beneficial in two ways: (1) it would provide a measure of accountability for  partner countries as they transition to assuming greater responsibility for  managing their supply chains, and (2) it would provide OGAC with  flexibility in the differing contexts of PEPFAR involvement in each country. Global AIDS Coordinator and interested congressional  committees. This report examines (1)  actions PEPFAR has taken regarding antiretroviral (ARV) drug supply  chains and (2) partner-country ARV drug supply chain operations. The expert review we also analyzed was a  best-practices supply chain study for the U.S. Agency for International  Development (USAID). To examine actions PEPFAR has taken regarding ARV drug supply  chains, as well as to describe partner-country ARV drug supply chain  operations, we reviewed reports and guidance issued by PEPFAR and its  implementing partners, including all 35 PEPFAR country and regional  operational plans and all 22 PEPFAR country partnership frameworks for  fiscal year 2012. Global Health: Spending Requirement Presents Challenges for Allocating  Prevention Funding under the President’s Emergency Plan for AIDS  Relief. Global HIV/AIDS Epidemic: Selection of Antiretroviral Medications  Provided under U.S.
Why GAO Did This Study

PEPFAR, first authorized in 2003, has supported significant advances in HIV/AIDS prevention, treatment, and care in over 30 countries, including directly supporting treatment for about 5.1 million people; however, millions more people still need treatment. PEPFAR has allocated more than half of its funding to care and treatment and has spent over $1.2 billion to purchase ARV drugs. In addition to supplying ARV drugs directly in some countries, PEPFAR also helps partner countries manage their drug supply chains. GAO was asked to review PEPFARsupported ARV drug supply chains. GAO examined (1) actions PEPFAR has taken regarding ARV drug supply chains and (2) partner-country ARV drug supply chain operations. GAO reviewed PEPFAR and the U.S. Agency for International Development (USAID) guidance and supply chain studies; analyzed 16 supply chain evaluations conducted in seven countries and published in 2011 and 2012; interviewed officials from OGAC, USAID, and other agencies; and conducted fieldwork in three countries selected on the basis of program size and other factors.

What GAO Found

The President's Emergency Plan for AIDS Relief (PEPFAR) has worked with U.S. implementing agencies, international donors, and partner countries to increase the efficiency and reliability of antiretroviral (ARV) drug supply chains. It has done so by improving drug supply planning and procurement as well as incountry distribution of drugs. First, PEPFAR has consolidated supply chains for ARV drug procurement for more than 20 partner countries to enhance efficiency and reduce costs and has begun further consolidation with other U.S. global health programs. Second, PEPFAR has improved coordination among donors by creating an information-sharing network to help detect and resolve supply gaps and other supply chain weaknesses and by developing an emergency drug procurement mechanism. Third, PEPFAR has provided partner countries with technical assistance, such as assessment tools and training, to help them better manage drug supply planning, procurement, and distribution.
Evaluations of partner-country supply chains reflect weaknesses in inventory controls and record keeping, which may increase the risk of drug shortages, waste, and loss. The Department of State's Office of the U.S. Global AIDS Coordinator (OGAC) has issued guidance for PEPFAR emphasizing the importance of effective information management for efficient ARV drug supply chain operations. However, 11 of the 16 supply chain evaluations GAO reviewed cited weaknesses in partner countries' inventory controls; 7 of these 11 evaluations also cited weaknesses in record keeping, including incomplete or inaccurate data on the consumption of ARV drugs. These weaknesses can increase the risks of drug shortages, waste, and loss of inventory. In one country, an evaluation team identified losses valued at about $265,000. Human resource constraints contribute to these weaknesses, and PEPFAR is addressing them through technical assistance and training. However, OGAC does not require PEPFAR interagency teams in each country to develop plans to strengthen inventory controls and record keeping. Nor does OGAC require country teams to track the progress partner countries are making in measuring ARV drug consumption, waste, and loss. Thus, OGAC cannot ascertain the extent of partner-country supply chain weaknesses and take appropriate action to mitigate risks. For PEPFAR and partner countries to continue expanding treatment programs to serve up to 23 million eligible people, further improving drug supply chains is critical, particularly the efficiency of elements managed by partner countries. These improvements will become increasingly important as partner countries assume more responsibility for managing supply chains.

What GAO Recommends

The Secretary of State should direct OGAC to require country teams to (1) develop and implement plans to help partner countries improve inventory controls and record keeping; and (2) track the progress partner countries are making in measuring ARV drug consumption, waste, and loss. State generally agreed with the intent of both recommendations; GAO revised the second to make it broader and more feasible to implement in differing partner-country contexts.