An Assessment of Vaccine Supply Chain and Logistics Systems in Thailand

Abstract

Improper storage and transportation can put vaccine products at risk of degradation. Therefore, an effective vaccine supply chain and logistics system is essential to ensure product quality. Since the conventional vaccine supply chain and logistics system was inefficient, resulting in wasted and expired vaccine products, inventory control issues, and high costs, in 2009, the government of Thailand launched a pilot project to outsource vaccine supply management and distribution to the Government Pharmaceutical Organization (GPO), which in turn introduced and managed a vendor-managed inventory system (VMI) and subcontracted with a private logistics company to distribute vaccine products in 28 of 76 provinces. The system gradually expanded nationwide by late 2010. The goal of VMI is to streamline supply chain operations for suppliers and their customers, increasing management efficiency and reducing vaccine wastage. The Health Systems Research Institute, in collaboration with PATH and the World Health Organization, commissioned a study led by the Faculty of Pharmacy, Mahidol University, to better understand the vaccine supply chain system in Thailand and the challenges of implementing the streamlined VMI system. Specifically, the study aimed to evaluate the overall performance of VMI compared to the conventional system that was implemented prior to 2009 and the associated vaccine logistics costs, as well as to provide recommendations to improve the vaccine supply chain and logistics system in Thailand. The study was conducted in 12 provinces (Angthong, Saraburi, Trad, Kanjanaburi, Surin, Loei, Ubonratchathani, Uthaithani, Phitsanulok, Lumphun, Phang Nga, and Trung) from March 2010 to July 2011. The study employed a combination of methodologies, including document review, interviews with representatives of implementing agencies, surveys of health officials, and an economic analysis. The findings revealed that the VMI system has been implemented successfully in Thailand. The transition from the conventional vaccine distribution system to the VMI system was viewed positively by staff and implementers. Problems encountered in the early stages of VMI system implementation were adequately resolved. The information technology (IT) used in the current VMI system, although satisfactory, could be further developed to gain even greater efficiency. An economic analysis comparing the two systems found that the VMI system saved nearly onefifth of the total cost of vaccine procurement and distribution in its first year through more efficient use of resources, lower logistics costs, and a smaller number of vaccines procured and distributed. Our findings suggest that multiple factors contributed to the success of the transition to the VMI system in Thailand. The transition was driven by problems with the conventional system, the earlier successful distribution of AIDS drugs by the GPO through the VMI system, a viable existing health care infrastructure and IT, and strong political will and commitment to address the problems of the vaccine supply chain and logistics. The VMI system has streamlined the supply chain, improved communication, built on existing infrastructure, and increased staff IT capacity. Despite the successes, challenges remain. Feedback from implementing agencies identified two major pitfalls to the VMI system. The first involves a shortage of GPO-manufactured vaccine. The GPO, which serves as both the vaccine procurement agent and the local manufacturer of Japanese encephalitis vaccine, has been reluctant to procure vaccines from other companies for fear of losing market revenue. This has led to repeated vaccine shortages. In retrospect, since the GPO is also the contractor to the National Health Security Office (NHSO) on vaccine distribution, assigning vaccine procurement activities to another agency not involved in vaccine production could prevent this conflict of interest. Another option would be to implement a penalty for failing to meet the procurement timeline. In addition, the national safety stock level of vaccines has not been clearly stated in the contract between the NHSO and the GPO and should be set to achieve a balance between the benefits of holding reduced inventory and the need to store enough vaccine to serve as a buffer against possible vaccine shortages. The second pitfall is related to the roles and responsibilities of each party involved in the National Immunization Program. Staff members indicated they were not clear whose job it is under the VMI system to provide technical support on supply chain management, vaccines, and vaccination. In the VMI system, the NHSO is responsible for vaccine procurement and distribution, whereas issues regarding immunization policy and practices are the responsibility of the national Department of Disease Control (DDC). However, when there are vaccine-related problems, systematic responses are not yet in place. For instance, it is not clear whether the DDC or the NHSO is responsible for managing events such as a cold chain breakdown, a change in the dose or strain of a vaccine, or the response to a serious adverse event following immunization. In order to mitigate these problems, terms of reference, working guidelines, standard operating procedures, and workflows for each activity among stakeholders should be developed. The results of this study have led to the following recommendations: • Increase the efficiency of the VMI system by improving IT systems (i.e., the VMI web presence, the improvement of vaccine inventory software, and the reliability and speed of Internet connections). The benefit of extending the VMI vaccine distribution system to the health center level should also be explored. • Improve the quality of vaccine distribution services between the GPO and the district warehouses. The system should impose quality control measures such as a systematic quality monitoring system and the Good Distribution Practice guidelines. • Increase the quality of vaccine management at district warehouses and health centers through training, supervision, and monitoring. • Extend the IT system to health centers to improve efficiency. • Improve the system at the central level to better manage the vaccine supply chain, clinical services, and technical support. Clear roles and responsibilities of the three major stakeholders need to be established, with the DDC as immunization manager, the NHSO responsible for vaccine procurement and distribution, and the GPO as a contractor for the NHSO on vaccine distribution and procurement.