OGAC sets overall PEPFAR policy and strategies and coordinates PEPFAR programs and activities, allocating funds to PEPFAR implementing agencies, primarily CDC and USAID. As of fiscal year 2012, these agencies executed PEPFAR program activities through agency headquarters offices and interagency country and regional teams in more than 30 countries and regions with PEPFAR-funded programs. OGAC coordinates the activities of these country teams through its approval of operational plans, which document work plans, budgets, and the anticipated results of HIV/AIDS-related programs. OGAC provides annual guidance on how to develop and submit operational plans. In fiscal years 2009 through 2012, OGAC approved country operational plan budgets totaling over $16 billion. USAID and CDC obligate the majority of PEPFAR funds through grants, cooperative agreements, and contracts with implementing partners, such as U.S.-based nongovernmental organizations (NGO) and partner- country governmental organizations and NGOs. With regard to supply chains for treatment programs, USAID and CDC typically provide assistance in different ways. USAID purchases the majority of ARV drugs and is the primary funder of supply chain services to partner countries through centralized contracts with large international NGOs, for-profit development assistance firms, and NGOs in partner countries. CDC provides funding to purchase ARV drugs and related commodities, including laboratory equipment and test kits, through cooperative agreements. Both USAID and CDC provide technical assistance to partner countries to support supply chain management. Health care drug supply chains involve the following six key elements (see fig. 1): product selection: selecting drugs based on national treatment guidelines and approval; forecasting and supply planning: estimating the quantity of drugs needed to ensure an uninterrupted supply; procurement: contracting with suppliers to obtain drugs within agreed-upon production and delivery time frames and costs, including freight; warehousing: maintaining appropriate security and environmental conditions (e.g., temperature and humidity); inventory management: monitoring for shortages and waste due to expired products, keeping accurate records of available and anticipated stock, and preparing orders for distribution; and distribution: managing the flow of drugs from the point of production to the end user for consumption (i.e., facilities where the drugs are dispensed to patients). All or most of these six elements involve the following three processes: information management: generating and analyzing the data needed to manage the supply chain from both a cost and service standpoint (for example, gathering consumption and inventory data to determine how much of a drug to order); human resource management: training and supervising staff responsible for placing orders, monitoring stock, and providing drugs to patients, and ensuring that key positions are filled; and quality assurance: ensuring that drugs are approved for use in a partner country, meet certain standards, undergo testing, and are monitored as they move through the supply chain. PEPFAR has taken three key steps to make ARV supply chains for treatment programs more efficient and reliable for all PEPFAR partner countries. First, PEPFAR and USAID have consolidated supply chains for PEPFAR’s ARV drug procurement, enhancing efficiency and reducing operational costs. Second, PEPFAR has improved donor coordination by creating a network to facilitate information sharing and by developing an emergency procurement mechanism. Third, PEPFAR has provided partner countries with technical assistance, such as assessment tools and training, to help strengthen their supply chains and manage them more effectively. PEPFAR has consolidated supply chains for ARV drugs across partner countries to increase the efficiency of ARV drug procurement and shipping. In 2005, USAID contracted with the Partnership for Supply Chain Management, a nonprofit consortium of over a dozen organizations, to create the Supply Chain Management System (SCMS) project, which pools procurement across more than 20 partner countries on a voluntary basis. According to USAID, this central procurement system provides those countries having less procurement capacity and smaller markets with the opportunity to benefit from the lower prices and consistent supply associated with bulk purchases. SCMS consolidated forecasts and established long-term supplier contracts to obtain favorable pricing and delivery conditions. SCMS has provided HIV/AIDS treatment supply chain services for PEPFAR-supported programs, procuring and distributing $1.43 billion in HIV/AIDS-related products, including $858 million in ARV drugs, as of March 31, 2013, according to USAID; these products include 74 percent of the ARV drugs purchased using PEPFAR funding in fiscal year 2012. In addition, USAID has taken initial steps to consolidate supply chains for PEPFAR with USAID’s other global health programs to reduce overall management time and operational costs. These steps include reviewing its current supply chains and developing a consolidation proposal. Specifically, USAID announced in June 2012 a plan to offer a new, consolidated contract that is to combine supply chains managed by SCMS with those managed by the USAID DELIVER PROJECT (DELIVER), which works with over 20 national and international organizations to procure non-ARV health care commodities, such as condoms, for PEPFAR and other USAID health programs. According to USAID, consolidating these supply chains will help ensure an uninterrupted supply of health commodities for PEPFAR and the other programs, reduce costs to the U.S. government, and mitigate risk through collaborative strategies that will include forecasting, warehousing, and distribution. PEPFAR has also coordinated with other donors to improve those elements of the supply chain that operate within the control of partner countries. In particular, it has developed an information-sharing network and established an emergency procurement mechanism. Information-sharing network. In June 2006, PEPFAR developed an information-sharing network with the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) and the World Bank called the Coordinated Procurement Planning Initiative. Since then, other key organizations, including OGAC, USAID, the Global Fund, three UN entities, and two NGOs, have used the network to identify and address ARV drug supply chain weaknesses. SCMS facilitates information sharing within the network. The network has taken a number of steps to improve supply forecasting and procurement to support the availability of ARV drugs and other health care commodities needed by HIV/AIDS patients. For example, network members have met quarterly to discuss potential gaps in delivery of ARV drugs and solutions to these gaps, including emergency disbursement of funds to procure drugs and avoid shortages. In addition, the network developed tools that alert key donors to treatment interruption crises and enable members to share best practices regarding potential approaches to address and mitigate these crises. Emergency procurement mechanism. In 2010, PEPFAR established a funding mechanism called the Emergency Commodity Fund, whose primary aim has been supporting emergency purchases of ARV drugs when threats arise to the continuity of patient treatment or critical prevention programs. According to USAID, this funding mechanism has been used to assist five countries with emergency ARV procurement when they faced problems with Global Fund grants. PEPFAR country operational plans for fiscal year 2012 reported that six other countries came close to experiencing shortages of ARV drugs and other HIV-related commodities due to Global Fund delays. For example, the Democratic Republic of Congo’s ministry of health requested that the U.S. government ensure a buffer stock of ARV drugs because the Global Fund, which was the source of a majority of the country’s commodities, had become slow in processing grants and was experiencing difficulties forecasting drug supply and keeping ARV drugs in stock. PEPFAR has also provided technical assistance to the Global Fund to improve its procurement system, with the goal of reducing the need for further emergency support from PEPFAR. According to USAID officials, in September 2012, PEPFAR helped the Global Fund develop a proposal for its own emergency procurement mechanism. As of March 2013, the Global Fund had not notified PEPFAR whether it had established this mechanism. As partner countries assume greater responsibility for managing supply chains, PEPFAR is moving from a direct supply role to a more advisory role. PEPFAR’s long-term aim is to develop effective, reliable partner- country-owned and -operated supply chain systems at the national, regional, district, and local levels. At present, PEPFAR’s role in supporting partner-country HIV program supply chains ranges from direct control of major supply chains to providing training and technical assistance. PEPFAR generally relinquishes control of the ARV drugs once they reach a partner country’s central warehouse; from that point on, partner countries are responsible for ensuring that the drugs reach patients. PEPFAR determines the level and type of supply chain assistance primarily on the basis of each country’s treatment program and supply chain capacity and the state of its HIV epidemic. For example, in some countries, PEPFAR may directly procure almost all ARV drugs and centrally control supply chains through an implementing partner such as SCMS. In other countries, PEPFAR may provide no procurement support for ARV drugs and only training and technical assistance for specific elements of the partner country’s supply chains, which carry out all supply chain functions with funding from PEPFAR, other donors, and/or the partner-country government. PEPFAR country teams provide technical assistance to support public and private drug supply chains for medical supplies, including USAID- purchased commodities. This assistance includes tools to assess supply chains and identify any weaknesses, and other types of training and advice. USAID and its implementing partners have developed and begun implementing tools for identifying any needed improvements in partner countries’ supply chains. The following are examples of two such tools: The Supply Chain Capability Maturity Model is used to identify performance problems by rating each element of a supply chain against best practices. The tool also helps identify and prioritize areas in need of strengthening and provides a method for tracking progress. In 2012, USAID piloted the Supply Chain Capability Maturity Model in three countries—Botswana, Paraguay, and South Africa—and used it to assess their supply chains.