Archive | February 23, 2012

Delivering Malaria Meds Using Coca Cola Supply Chains?

Coca Cola is walked to points of sale in unreachable areas of Africa

Last year, I took a part time job in the UM Business School. At first, I was hesitant. A job in the business school? Isn’t the B-School the heart of all that is evil and wrong with the world? The desperate in me whispered that I needed the money and the academic in me reminded me that I’m intrigued by anything having to do with developing world health delivery. Moving in the circles of business might, at the very least provide insight into how the world of malaria policy works.

Though the details were hazy at first, over time, I’ve come to understand what my employers are trying to do.

In Africa, health care is a premium. What health care is offered is often difficult to access. When accessible, medicinal supplies are limited, stock outs are common, delivery ineffective and, user fees prevent the poorest of households from obtaining affordable medications.

Coca Cola on the other hand is ubiquitous. I may not be able to buy anti-malarials, get on ARTs or even a decent meal, but I can get a bottle of Coke for an affordable price just about anywhere in all of Sub-Saharan Africa, even in conflict ridden corners of the DRC. Better yet, at least for me, this is the old Coke made from cane sugar, not the new, artificial kind we get in the US.

Some folks (who pay me money to do stuff) ask the obvious question: if the multi-national Coca Cola company can get soft drinks in every corner of the globe, why can’t we effectively deliver badly needed medicines to the same people?

My colleagues then examined the nature of private supply chains that deliver Coca Cola and contrasted them with current methods of pharmaceutical delivery. Private supply chains which deliver things like Coca Cola, beer, soap, shampoo and cel phone cards are incredibly efficient.

Soft drink manufacturers, ship concentrates (to protect intellectual property) into developing countries directly to factories which bottle and prepare stocks for delivery. Stocks are then sent by truck to smaller distributors where trucks are able to pass. Distributors then sell to even smaller distributors who deliver stocks to small shops by vehicle, bicycle, or cattle driven cart, delivering to areas inaccessible due to poor roads, seasonal rains or regional insecurity. Every step of the chain is accountable to the link above it, stocks are paid for on delivery and open competition for delivery routes keeps everybody honest. Empty bottles are then returned along the same supply chain for further bottling, saving resources and keeping costs low.

It’s brilliant, really. It keeps people employed, sales generate cash that goes into communities and insures that small shops are open which can sell other types of consumer goods.

Medicines, on the other hand, are distributed through state run warehousers, which then deliver to district level storage facilities, which then are responsible for delivery to smaller clinics and dispensaries. The trouble is that 1) points of distribution are few and often inaccessible for people in rural areas 2) delivery methods often rely on vehicles which can’t pass through many of the most needy of areas, and 3) deep state control prevents competition amongst distributors and fosters corruption and a lack of accountability.

To encourage this distribution model, policy makers have begun subsidizing ACTs (an effective anti-malarial medication) to bring prices to a level where small corner shops can afford them. They are then sold to local wholesalers, who distribute the meds using the same model as that of Coca Cola, penetrating previously unreachable areas. The model works through low cost and the utilization of informal networks of delivery.

Of course, my politics tell me that bolstering an unregulated private market in essential drugs only undermines the overall quality of public health delivery. Indeed problems do exist and the program is not without its critics, but to deny that the role of private markets is essential to health delivery is short sighted and idealistic. In this case, even given potential problems and implications, the benefits far outweigh the costs.

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