In a well functioning market, prices for commodities fall as newer and more sophisticated ones enter the market. However, health care markets are well known to have higher risks of monopolization and information flow inadequacies, both of which may lead to reduced supply and increased prices [9, 10]. For this reason, prices for health care commodities should be monitored continuously, and corrections made where market failures emerge. This work contributes to the objective by providing information on regional and temporal trends in the procurement costs for three key malaria commodities.
The analysis found significant declines in cost trends over the seven years, with LLINs and AL showing larger declines than RDTs. The drop in the cost for LLINs possibly reflects a rise in competition and demand that followed an overall increase in malaria funding over the period. According to WHO, international funding for malaria increased from below US$ 100 million in 2000 to US$ 1.71 billion in 2010 . Domestic funding was also reported to have increase in most countries over the period.
Low LLIN prices are not however a direct reflection of cost-efficiency. Indeed, malaria control programs are encouraged to consider longevity alongside cost . Higher initial costs may reduce the cost-per-year and result in more savings if the nets have a considerably longer lifespan [11, 12]. The Global Fund has been criticized for overemphasizing low unit cost at the expense of longevity (although the Global Fund promotes procurement of the lowest priced WHO-prequalified LLINs, longevity of prequalified nets also varies) . Future analyses should look at the price benefits of procuring LLINs of varying durability across different settings. This could not be done because brand information was not provided.
The cost of AL also showed a significant decline over the period of analysis. This may be attributed mainly to a decade-long agreement between the Global Fund and Novartis, a major producer of AL. The agreement stipulated that Novartis would supply AL to public sector buyers at cost price . Several rounds of price negotiations between Novartis and the Global Fund over the period resulted in further declines in AL prices, which is reflected in the observed trends. These negotiations explain why AL procurement costs did not increase in the face of a volatile market for the artemisinin raw material over the period of analysis .
Another factor that may have contributed to the AL procurement cost decline was the overall growth in the market for ACTs. The number of WHO-prequalified ACT manufacturers rose from one manufacturer producing a single product in 2005, to seven firms producing at least 11 different ACT formulations by 2011 . Growth in demand was also seen, with the number of ACT doses purchased by donors increasing from 11.2 million to 217 million between 2005 and 2010 . Costs are, however, unlikely to drop much further, as production processes for ACT are believed to be optimum . Further cost reductions may require the introduction of new combination molecules.
Unlike LLINs and AL, the cost for RDTs only showed a mild decline over the period. This result must, however, be interpreted with caution, as information on brand names was unavailable. Unlike the other two commodities, RDTs vary considerably, from simple kits designed to test for Plasmodium falciparum only, to more sophisticated brands that can detect P. falciparum and Plasmodium vivax. Not having this information meant inference could not be made on whether procured kits were of the same exact specifications.
The slight decline in the overall RDT costs is nonetheless positive, especially considering the growing importance of diagnostic confirmation. RDTs have been linked to better treatment and reduced wastage of medicines . However, while demand for AL is expected to fall with the shrinking malaria map, demand for RDTs is likely to remain high, particularly in areas where fevers are common . This underscores the importance of pursuing even lower prices for RDTs.
There were significant regional variations in the cost for all three commodities. These variations may have resulted from countries procuring commodities from different suppliers located across different countries.
Comparing PQR and VPP procurement showed pooled procurement to have some benefit for RDTs and AL, although the differences in cost were not significant at the 95% level. However, as the VPP was only introduced in 2009, analysis could only be done over a three-year period. The marginal price benefit seen for RDTs and LLINs agrees with analyses by the Global Fund, which showed VPP prices to be either at par, or slightly lower than PQR prices [4, 19]. However, the significance of the price difference would only become clear after a longer period of VPP usage. It should, nonetheless, be noted that the VPP has other potential benefits besides cost reduction. These include increased transparency in procurement, improved payment terms for countries and better availability of commodities .
There were some limitations in the analysis. First, only one type of ACT was included in the analysis, meaning the patterns may have differed if another combination had been used. The decision to only include the most procured ACT (AL) was informed by the need to avoid introducing additional variability that may come with combining products of different composition under one analysis. However, future analyses should consider looking at other ACT combinations, as well as differentiating between LLINs and RDTs of different quality.
Another major limitation was the presence of some outliers believed to result from data entry errors. This is a problem that the Global Fund has recognized in the past . While measures such as omitting extreme values and using medians would have minimized the outlier effect, the possibility that data entry errors may have biased the results in one direction or the other cannot be ruled out. Another possible cause of bias was low data availability, especially prior to 2008. There was no way of exploring whether transactions that were captured differed systematically from those that were not captured during the early years of the PQR. It is expected that more data will be captured as the PQR system improves over time. Already, there has been a progressive increase in data captured in the PQR system across all commodities, with less than 100 total annual entries from 2003 – 2005 rising to over 4000 per year since 2011.
When doing analysis for AL, the pack sizes were not factored in. This may have caused some slight bias, especially where countries changed their AL procurement preference over time (for instance, changing from smaller (pediatric) pack sizes to larger (adult) pack sizes or the reverse. However, this would have little public health significance, as the same AL tablets (20 mg + 120 mg) are used to treat adults and children (variations only come in the number of tablets administered).
The cost patterns discussed reflect a variety of market factors. However, the role of the Global Fund and other bilateral and multilateral health initiatives cannot be overlooked, as they have contributed substantially to increased demand, lowered procurement costs and stabilized markets. As more data become available, research should describe the variations in greater depth, including the effect of the type of procuring organization (whether government or non-government), order lead times, procurement volumes and shipment or transport costs. Future analyses should also examine the effect of using the VPP system over longer periods of time.