Situation
The single best way to strengthen families and improve the well-being of communities across the world is to empower women and girls. By providing women with options for family planning, including access to safe and affordable contraceptives, we can help families grow healthy and strong. Globally, 214 million women and girls who do not want to get pregnant have an unmet need for modern contraception. In 2012, the global community came together at the London Summit on Family Planning and committed to an ambitious goal: that by 2020, an additional 120 million women and girls will have access to and use contraception. While we’ve made significant progress—38.8 million more women are using contraception today than in 2012—we need to accelerate progress to achieve that goal as a milestone on the path to universal access by 2030.
For women who choose them, contraceptive implants can be an effective option. And although there is high demand for long-acting reversible contraceptives (LARCs), including implants, many women in developing countries do not have access to them.
Approach
To improve access to family planning, the Gates Foundation strategic investing team sought to increase the availability and affordability of contraceptive implants. At the time of the London Summit, contraceptive implants represented just a small percentage of contraceptive use, due to high prices and variable demand.
In 2012, the foundation joined with public and private sector partners to begin working with countries, donors and suppliers to develop strategies to increase access to contraceptive implants. Along with the Clinton Health Access Initiative, the foundation evaluated factors to determine how to reduce prices and expand access and uptake of implants.
To address the problem, we chose a volume guarantee to stabilize demand for suppliers and lower for purchasers. In volume guarantee investments, the foundation guarantees a certain volume of sales over a specified period of time—allowing suppliers to optimize manufacturing and focus on investing in production in order to reduce the cost of critical products, such as contraceptive implants.
The foundation engaged partners to provide financial backing in the effort: the government of Norway, the Swedish International Development Cooperation Agency, and the Children’s Investment Fund Foundation served as guarantors, while USAID, and the U.K. Department for International Development supported implementation. Both Bayer and Merck agreed to reduce prices in return for purchase commitments over six years.
Results
In the first five years of the agreement, more than 42 million implants have been distributed to the world’s poorest countries. The combined guarantees will generate nearly $500 million in procurement savings over the term of the investment. Both Bayer and Merck have also committed to extend the pricing for an additional five years beyond the guarantee commitment term, increasing access and improving affordability. The growth in demand will be further supported by the entrance of an additional quality-certified supplier in the market, Shanghai Dahua.
Lessons Learned
Volume guarantees can be an effective investment tool to sustainably lower costs and expand access to critical commodities, such as contraceptive implants, vaccines and other life-saving drugs. With any investment, close consultation with partners and strong collaboration can make all the difference. The effort to reduce contraceptive implants benefited from supportive partners in the public and private spheres leveraging their unique strengths to form an international commitment to address the problem.