USAID’s antiretroviral (ARV) procurement strategy, through GHSC-PSM, increases private-sector involvement in the delivery process and creates a more sustainable environment where suppliers are true partners in addressing in-country supply chain challenges. The long-term goal of these relationships is to reshape the market, building sustainable, market-led HIV supply chains that benefit the procuring countries and manufacturers, and ultimately the people at the end of the supply chain availing of these lifesaving medications.
Beginning in 2021 with the Group D Incoterms (D-Terms) program, GHSC-PSM began shifting the risks and complexities associated with international shipping to the supplier, away from the procuring countries and USAID. In 2024, the project expanded the USAID vendor-managed solutions (VMS) program to build upon the success of the D-Term program.
GHSC-PSM worked in collaboration with the manufacturers and ministries of health to expand the scope of qualified vendors from freight services to supply chain partners. Through this program, three VMS suppliers are responsible for delivering ARVs that they preposition in quality-assured bonded warehouses in South Africa, forward stocking products in Southern Africa for regional use. The stock is prepositioned at their own risk, which they base on demand signals shared by GHSC-PSM. Strategic prepositioning of health commodities in the region reduces lead times for product availability.
This creates opportunities for countries to lower their stockholding levels, alleviating warehousing constraints without increasing the risk of stockouts or product expiries. GHSC-PSM cut the lead time from order to final delivery in half under the VMS program, from an average 120 days to 63 days while maintaining first-line treatment costs under $40 per patient per year.
USAID has moved from market takers to market shapers.
