Optimal Supply Chain Structure for Distributing Essential Drugs in Low Income Countries: Results from a Randomized Experiment

Abstract

Despite increased investments in health commodity procurement, the availability of essential medicines at health facilities remains very low in many low and middle income countries. The lack of a well-functioning supply chain for essential medicines is often the cause of this poor availability. Using a randomized experiment conducted in over 400 health facilities and 24 districts in Zambia, this study helps understand the optimal supply chain structure for essential medicines distribution in the public sector in low income countries. It focuses on the availability of 15 essential medicines at the health facility level and compares between a cross-dock based two-tier distribution network and a three-tier network. The study shows that a two-tier “cross- dock” like system outperforms a traditional three-tier drug distribution system due to better information flow and better management accountability even though stock is positioned closer to the health facilities in the three-tier system. Results from the study advance existing knowledge in the area of public sector distribution system design in general and drug distribution systems in developing countries in particular.