Transitioning from Global Fund Grants to Domestic Funds in Middle Income Countries

Preparing the transition of Middle Income Countries from Global Fund to domestic funds may provide new opportunities to strengthen procurement and supply chain management areas.  Reforming health products’ procurement procedures, price policies, domestic financial flows and national quality assurance procedures are likely to represent needed steps to capitalize on Global Fund supported health procurement. This will require renovated country ownership and a central role for WHO to implement efficiently collaborative regulatory projects

By Barbara Milani

Independent Consultant, Pharmaceuticals and Public Health – Programme & Policy Specialist

Transitioning from Global Fund Grants to Domestic Funds

A New Opportunity for Strengthening Health Products’ Procurement and Supply Chain Systems in Middle Income Countries?


The Global Fund financing model started off with unprecedented central ownership placed at national level for procuring quality assured health products at competitive prices. At the same time, by establishing clear procurement and supply chain management  (PSM) policies it has created a global market for quality assured medicines prequalified by WHO and/or registered by Stringent Regulatory Authorities. (1) Among the several requirements that the Global Fund placed on country systems, quality control of medicines has motivated several countries to strengthen national Quality Control laboratories to obtain WHO accreditation.

The Global Fund procurement policies embraced a much larger field of opportunities to strengthen health product management systems at the national level; either strategically building through disease specific grants or using Health System Strengthening dedicated grants. Many countries were supported to meet the most urgent needs such as central storage facilities and distribution systems meeting WHO Good Storage and Distribution Practices. Much of the potential to strengthen PSM remained underused due to weak proposal conceptualization. A 2017 Global Fund systematic analysis using a sample of 15 countries clearly recognized that supply chain management remains a major challenge. (2) Technical assistance is still required in several countries for quantification and procurement planning.  As reported by several organizations, risks of stock-outs and actual stock-outs are not unusual and technical assistance is often called in on an emergency level to solve or mitigate these risks.  (3) (4)

In the wider context of all Global Fund supported countries, the challenges raised for an unplanned transition are understandable. (3) (4) The positive element is that the Global Fund has set policy and guidance for co-financing and transition learning from the first experiences on transition. (5) (6) The policy reassures on the fact that the transition process has to be prepared and evaluated before enacting the actual transition.

There are countries for which the Global Fund contribution constitutes only a minimal fraction of the national programme operating budget (20% or less). However, this contribution can be vital for several reasons. In many cases the Global Fund contribution covers key activities that the national health system is currently unable to absorb. These activities range from community approaches addressing the epidemics in the most vulnerable and difficult to reach populations to the procurement of specific categories of health products.

De facto, the Global Fund systems have allowed countries to procure quality assured medicines even in small quantities through international procurement mechanisms bypassing price-related or government procedural limitations. In other instances, the Global Fund has mandated procurement of specific health products through certain channels. According to Global Fund policies, second line anti-tuberculosis medicines shall be procured through the Global Drug Facility, a United Nations-based  procurement agency which is pooling demand and consolidating a market for quality assured medicines for less than half a million patients per year globally.

In preparing the transition of Middle Income Countries, there are opportunities to strengthen PSM areas, which have been neglected during the rollout of grants. There is also an unprecedented possibility to prepare the transition in ways that support countries to reform their laws, regulations and procedures to procure and supply health products using modalities that meet WHO standards and obtain the “best value for money”. More specifically, domestic procurement of quality assured health products at competitive or internationally negotiated prices requires that government procurement procedures be reformed and adapted. These, among other aspects, shall enable timely procurement of health products, which are single/limited source or required in small quantities or for which internationally negotiated prices are available. These categories of products require distinct procurement methods beyond national tendering processes.  Assessing the current status of government procurement procedures for health products seems a starting point for preparing a step-wise transition. Reforming national procurement procedures for health products requires conceptualization and time.  Such processes are indeed framed within the legislative system of the country. (6)

Price policies should also be evaluated and reviewed. Especially in Middle Income Countries, price policies shall favour all measures to access quality assured health products at the most affordable price. These include among various interventions, mechanisms for procurement of health products at internationally negotiated prices as discussed above, but also training to enhance knowledge, reform and use of TRIPS flexibilities included in national laws. (6)

Another crucial aspect is the quality assurance of medicines and other health products. This requires major involvement and a renovated role of the World Health Organization to make use, expand and evaluate the WHO collaborative projects aimed at facilitating registration of quality assured medicines at the national level. (7) While the Global Fund has mandated quality standards for health products procured with its funds, the transition may result in procurement of locally registered medicines without recognition of the nearly two decades of work to expand access to generic affordable medicines through the WHO prequalification programme. (1) (3) (4) National disease programmes, through the implementation of Global Fund procurement procedures, have generally acquired the concept of quality assured medicines and its link with treatment’s efficacy and prevention of drug resistance. This may not be the case for unstructured and understaffed National Regulatory Agencies. Hence the need for WHO to offer, engage and measure participation in the WHO collaborative registration project seems the only way to interface with governments. Until now, the collaborative procedures for accelerated registration for medicines prequalified by WHO and registered by Stringent Regulatory Agencies (SRA) have been largely underused by the participating countries. Effective collaborative procedures to facilitate registration of quality assured medicines are very much needed. Countries preparing for a transition from Global Fund grant shall engage in such collaborative procedures.

Secondly, the Global Fund financing is often used to overcome limitations in procurement due to unreliable flow of domestic funds. In preparing for a transition, the domestic financial procedures need to be reviewed to enable reliable national procurement planning. Financial engagement and disbursement for health products shall be framed to allow the regular launch of national procurement processes and suppliers contracting.  Irregular availability of funds is detrimental to procurement planning, may discourage suppliers to apply for national tenders also for health products required in considerable quantities. Irregular financial flow makes any health products quantification and procurement planning exercise ineffective.

While several elements come into play to ensure an uninterrupted supply of essential health products to patients, it is important to highlight key elements that are likely to come up for any Middle Income Country transition.  Addressing the suitability of national health product procedures, price policies, quality assurance systems and domestic financial procedures shall be at the core of discussion. Moving in this direction requires renovated country ownership to make the best use of this opportunity to improve efficiency throughout the whole health system as well as a renovated role of WHO to address shortfalls in the functioning of National Regulatory Agencies.



1 -Guide to Global Fund Policies on Procurement and Supply Management of Health Products, July 2017 Geneva,  Switzerland

2 -Audit Report :The Global Fund’s In-country Supply Chain Processes, GF-OIG-17-008, 28 April 2017, Geneva, Switzerland

3 -Article: Transitioning in the context of universal health coverage: Reflections from STOPAIDS and partners event at World Health Assembly 71, Jenny Vaughan, 11th June 2018

4 -MSF calls on Global Fund Board to make urgent changes to prevent drug stock-outs and quality issues, Geneva, 13 November 2018 and co-

5 -The Global Fund Sustainability, Transition and Co-financing Policy, 35th Board Meeting, GF/B35/04 – Revision 1 Board Decision

6 -Guidance Note: Sustainability, Transition and Co-financing of programs supported by the Global Fund, 13 January 2017

7 -Website : Prequalification of medicines: Collaborative Procedure for Accelerated Registration