Drug supply management.pdf

Drug supply Management
phar 4144
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Why worry about medicines
• To clinicians facing the sick and injured on a daily basis the importance of
medicines is obvious.
 Medicines save lives and improve health.
 Medicines promote trust and participation in health services
 Medicines are costly
 Medicines are different from other consumer products
 Substantive improvements in the supply and use of medicines are possible
3

Pharmaceuticals need to be managed properly because;
Access to medicines is a fundamental human right.
Medicines are part of the link between the patient and health services.
The issue of medicine is not the responsibility of only health workers. It
has political, economic and social dimensions.
 Poor medicine management obstructs access to medicines; results in
wastage and health hazard
4

What is management?
• A set of activities directed at the efficient and effective utilization of resources in
the pursuit of one or more goals.
• Working with human, financial, and physical resources to achieve organizational
objectives by performing the planning, organizing, directing and controlling
functions.
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A problem solving process of effectively achieving
organizational objectives through the efficient use
of scarce resources.

The Management Process
–There are three dimensions of management:
1.Activities that managers perform
2.Resources that managers need
3.Levels at which managers make decisions
–Every action taken by a manager involves at least one aspect of each of the three
dimensions.
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Classical Management Activities
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Planning
–Central functions of management
–Determines the organizational direction
–It is a rational systematic way of making decision today that will
affect the future.
–is predetermining a course of action based on one’s goals and
objectives.
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• Important for purpose of scarce resources
• Effective planning incorporates the effects of both external and
internal factors.
E.g. The chief pharmacist at a community pharmacy develop plans which
drug products he wishes to carry
Organizing
–Requires formal structures of authority and direction and flow of
such authority.
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• Organizing : concerned with
–Identifying tasks that must be performed
–Assigning tasks to personnel
–Defining authority & responsibility of assigned personnel
–Delegating such authority to employees
–Establishing a relationship b/n authority & responsibility
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E.g. Once a pharmacist has decided which drug products he should
offer, he needs to ask himself
owhat resources he needs to provide them
oWho is responsible for procurement
ohow he will go about obtaining these resources
oand determine when he will need to obtain.
Leading or directing
–bringing about purposeful action toward some desired outcome.
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Control or evaluation
 Involves reviewing the progress that has been made toward the
objectives that were set out in the plan.
 Determining what actually happened and why it happened.
E.g. Pharmacists can ask themselves if the goods and services they offered met
their goals (e.g. Did the goods and services result in high quality patient care or
improved clinical outcomes?)
13

Resources that are Managed
Managers, organizations and individuals must use resources to
achieve their goals and objectives.
Resources are scarce
 Money, People, Time
 Material (E.g. drug products, equipment, and supplies)
 Information
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Levels of Management
• Managers perform management activities at a number of level
Individual management
 Self-management
 occur much more frequently at lower levels.
Interpersonal management
 Between the manager and one other person
 E.g. a pharmacist counseling a patient about a medication
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Organizational management
 Occurs less frequently
 Involves actions that affect groups of people
E.g.1 deciding where to go for lunch
E.g.2 when a pharmacist needs to develop a policy or make a decision that
may affect many people at the pharmacy
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•Politics, economy, human resources and infrastructure development
contribute for success or failures.
•But success lies on:-
–Managerial task
–Managerial role
–Managerial skill
–Qualities of the manager
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What makes successful manager?

Managerial tasks
•Crisis management
–e.g. outbreak of meningitis and its management
•Routine administration
–e.g. receiving report, managing staff, making decision
•Long term program development
–It is little time consuming
–Failure to plan and implement needed change will increase the
number of problems, makes routine administration less effective
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Managerial role
Role
• is a set of expectation place on any one in a position of responsibility by the
people around that person
Role of manager
•Leader
–Directing
–motivating staff
–maintaining liaison with other organization
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Managerial role
•Communicator
–maintaining networks of formal or informal
–Disseminating information
–Serving as spokes person
•Decision maker
–Resource allocation
–Program change and development
–Problem solving
–Negotiating
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Managerial skill
•Technical skill
e.g. pharmacy, other skill related to specific jobs
•Conceptual and analytical skill
–ability to synthesize information
–understand the prevailing circumstance
–use planning program to move forward
•Decision making skill
–Identify and select option using analytical and technical skill
–Decide
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Managerial skill
•People skill
–Understanding, motivating and directing people
–Building team and improving effectiveness
•Financial skill
–Budgeting
–Assessing value for money in people and projects
•Negotiating
–Adhering to budget
–Coping with constraint
•Communication and research skill
–Listening , reading, writing, running meeting and making public presentation
•Computer skill
–Proficiency in different software
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Is technical skill required at lower level
and strategic level the same?
Middle Level
Top
Level
Fig: Leadership skill across levels
Lowe Level
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Leadership VsManagement
Leadership is the art or process of influencing people so that they
will strive willingly and enthusiastically towards the achievement of
the organizational goals. It includes making peoples perform near to
their full capacity.
 Therefore, Leadership is the function of
 The Leader
The Follower and
The Situation
• L= f(L,F,S)
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Leadership Vs Management……cont’d
Subject Leader Manager
Risk Takes Minimizes
Focus Leading people Managing work
Have Followers Subordinates
Horizon Long-term Short-term
Power Personal charisma Formal authority
Style Transformational Transactional
Direction New roads Existing roads
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Leadership VsManagement…cont’d
“Most organizations are over managed and under led“
 Leaders “walk the talk” by stepping outside the executive suit & doing
things that symbolizes the vision.
Modeling the vision is based on “watch what I do, not what I say.”
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Qualities of manager
Provide clear direction
Encourage open communication
Coaches and support people
Recognize staff for good
performance
Follow up on important issues and
provide feedback
Select the right people for specific
assignment
Understand the financial implication of
decision
Encourage creativity and new ideas
Give staff clear cut decision when they
are needed
Consistently demonstrate a high level of
integrity
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2. Concepts of Essential Drugs And National
Drug Policy
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2.1 Concept of Essential medicines/ Drugs
• Health is a fundamental human right.
• Access to health care, which includes access to essential drugs, is a
prerequisite for realizing that right.
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Access
 Physical availability
the type and quantity of product or service needed and provided
 Affordability
users ability to pay for the products/services
 Geographical accessibility
the location of the product/service and eventual user
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Essential medicines
• are medicines that satisfy the priority health care needs of the
population
• and therefore should be
available at all times,
in adequate amounts
in appropriate dosage forms and
at a price the individual and the community can afford”
31

Essential drugs concept
• “a limited number of carefully selected drugs based on agreed clinical
guidelines leads to more rational prescribing, to a better supply of drugs and
to lower costs”.
• It is a global concept that can be applied in any country, in the private
and public sectors and at different levels of the health care system.
33

Medicines
Registered
Medicines
Public Health
Relevance
Efficacy and
safety
Cost
effective
Essential Medicines: Selection
Essential
Medicines
34

WHO Model Lists of Essential Medicines
• The WHO Model Lists of Essential Medicines has been updated every
two years since 1977.
• The current versions are the 21th WHO Essential Medicines List (EML)
and the 7th WHO Essential Medicines List for Children (EMLc) updated
in 2019.
CURRENT LISTS
• EML – 22nd edition (March 2021, amended August 2021)
• EMLc – 7th edition (March 2019, amended August 2019)
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2.2The formulary process
The formulary process
• consists of preparing, using and updating a
Formulary list or essential medicines list (EML)
Formulary manual
Standard treatment guidelines (STGs).
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The formulary list or Essential medicines list
The formulary list/ essential medicines
• Is a list of pharmaceutical products approved for use in specific health care
setting
E.g. National formulary list, provincial formulary list, Hospital list
• Alphabetically and therapeutically arranged lists of drugs
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Advantages of essential medicines list
• Prescribing
Training is more focused and simpler
More experience with fewer medicines
Non-availability of irrational treatment
Reduction of antimicrobial resistance
Focused drug information
Better recognition of ADR
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Advantages of essential medicines list
• Supply
Easier procurement, storage and distribution
Lower stocks
Better quality assurance
• Cost
Lower prices, more competition
• Patient use
Focused education efforts
Reduced confusion and increased adherence to treatment
Improved medicine availability
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How STGs and EMLs lead to better prevention and care
43

Formulary/essential medicines list
• Selection criteria
☞Pattern of prevalent disease
☞Treatment facilities
☞Training and experience of available personnel
☞Financial resources
☞Genetic, demographic and environmental factor
☞Medicines which have sound, adequate data on efficacy and safety (clinical studies,
evidence from general setting)
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☞ Adequate quality, including bioavailability, stability under anticipated conditions of
storage and use
☞ When two or more medicines appear to be similar in the above respects,
☞the choice is made by carefully evaluating their relative efficacy, safety, quality,
price and availability.
☞ Cost
☞Consider the cost of the total treatment rather than the unit cost of the medicine
☞The basis of a cost-effectiveness analysis.
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☞Other factors such as
☞PK properties, availability of facilities for storage or manufacturers.
☞Essential medicines are formulated as single compounds.
☞But fixed-ratio combination products are acceptable only when
☞The dosage of each ingredient meets the requirements of a defined
population
☞The combination has a proven advantage over single compounds
administered separately in therapeutic effect, safety or compliance.
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Developing and implementing a formulary list
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STEP 1
• Prioritize a list of common problems/diseases being treated in the
hospital and determine the first choice of treatment for each problem
STEP 2
• Draft, circulate for comment, and finalize the formulary list
STEP 3
• Develop policies and guidelines for implementation
STEP 4
• Educate staff about the formulary list and monitor implementation

Formulary manual
 is the publication that brings all the important summary information
on medicines in the formulary list together in a manual.
Is drug centered
Handy reference that contains selected information relevant to prescriber,
dispenser, nurse or other health worker
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Drug information included in a comprehensive formulary
• Introductory information
• Acknowledgment, List of approved abbreviation
• Introduction ( development of manual, intended user)
• Formulary policies and procedures
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Formulary manual
• Basic information about each
medicine
Generic name
Dosage and strengths
Indications, CI and
precautions
Side-effects
Dosage schedule
Instructions and warnings
Drug, food, laboratory
interactions
• Supplementary information for
medicines
Price
Regulatory category
Storage guidelines
Patient counseling
information
Labeling information
Brand names and synonyms
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Formulary manual
• Prescribing and dispensing guidelines
Rational prescribing techniques
Principles of prescription writing
Guidelines for quantities to be dispensed
Controlled drug requirements
Adverse drug reaction reporting requirements
Dispensing guidelines
List of precautionary labels
Common drug interaction tables
52

StandardTreatment Guidelines
• Systematically developed statements that help practitioner or
prescriber in deciding on appropriate treatments for specific clinical
conditions.
• It reflect consensus on the optimal treatment option within health
facility or health system
53

Standard Treatment Guidelines
It is disease centered
common disease and complaints, treatment alternatives
STG exist for various level of health care
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Information on STG
• Diagnostic criteria
• Treatment of first choice
• Cost of treatment
• Important CI, SE
• Important drug information, warnings and precautions
• Referral criteria
• index
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Potential benefits of STG
For health officials
Identify cost effective treatments
Provides a bases for assessing and comparing quality of care
It helps to combat antimicrobial resistance
Provides information for practitioner on institutions standards of care
Is a vehicle for integrating special programs such as control of diarrheal
disease, acute respiratory tract infection, TB, Malaria at the point of
primary health care provider
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For supply management staff
Identifies which medicines should be available for the most
commonly treated problem
Facilitates pre packaging of course of therapy quantities of
commonly prescribed items
Makes medicine demand more predictable, so forecasting is more
reliable
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For patients
Encourage adherence to treatment through consistency among
prescriber at all location within the health care system
Ensures most cost effective treatment are provided
Improves availability of medicines
improves treatment and outcomes
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The problems associated with STGs include:
The development process
• Difficult, time-consuming, and requires human and financial resources
the need to update regularly to avoid STGs becoming obsolete
the danger of inaccurate or incomplete guidelines
• providing wrong information to prescribers
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Steps in developing and implementing STGs
STEP 1 Identify the working group to adapt/develop the hospital STGs.
STEP 2 Develop an overall plan for developing and implementing the
STGs
STEP 3 Identify the diseases for which STGs are needed
STEP 4 Determine the appropriate treatment
STEP 5 Determine what information should be included in the STGs
STEP 6 Draft the STGs for comments and pilot test
STEP 7 Implement – publish, launch, disseminate, train and supervise
STEP 8 Update
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•EML, STG, Formulary Manual,
• Which one need to be developed 1st ? Why?
62

STG, List of medicines and Formulary for Ethiopia
LIST OF ESSENTIAL
MEDICINES
FOR ETHIOPIA
Editions
First Edition 1985
(Developed by DACA → FMHACA)
STG 1st 2004, 2nd 2010, 3rd 2014
List of medicines for
Ethiopia
Editions
First Edition 1980
Second Edition 1989
Discussion:
Second Edition 1987
Third Edition 2004
Fourth Edition 2010
Under revision, will be
printed soon
ETHIOPIA MEDICINES FORMULARY
1st edition 2008, 2nd edition 2013, 4th 2014
Third Edition 1996
Fourth Edition 2002
Fifth Edition 2007
Sixth Edition 2010
Under revision??
 Appreciate the effort
made, comment on
frequency and order?
63

National medicine policy
INTRODUCTION:
• The world pharmaceuticals market has witnessed an increase in the
number of pharmaceutical products circulating worldwide, leading to a
rapid growth in both medicines consumption and expenditure.
• However WHO estimates that, at least one-third of the world’s population
still lacks access to EMs,
66

In poorer areas of Asia and Africa this figure may be as high as
one-half.
Because:
EMs are not available or
EMs too expensive, or
there are no adequate facilities or trained professionals to prescribe
Ems.
67

National medicine policy…………
• As a result,
millions of children and adults die or suffer needlessly, although
their disease could have been prevented or treated with cost-
effective and inexpensive essential medicines.
• Experience in many countries has shown that these complicated
and interdependent problems can best be addressed within a
common framework:
68

National medicine policy…………
 WHO recommends that all countries formulate and implement a
comprehensive national medicine policy (NMP).
A policy is not static and will usually evolve over time.
Most countries will need to revise their policies within five
years.
69

What is a national drug policy?
A political commitment to a goal and a guide for action.
It expresses and prioritizes the medium- to long-term goals set by the
government for the pharmaceutical sector, and identifies the main
strategies for attaining them.
It provides a framework within which the activities of the
pharmaceutical sector can be coordinated.
It covers both the public and the private sectors, and involves all the
main actors in the pharmaceutical field.
70

Why is a national drug policy needed?
• To present a formal record of values, aspirations, aims, decisions and
medium- to long-term government commitments;
• To define the national goals and objectives for the pharmaceutical sector,
and set priorities;
• To identify the strategies needed to meet those objectives, and identify the
various actors responsible for implementing the main components of the
policy;
• To create a forum for national discussions on these issues.
71

• The policy document should be developed through a systematic process of
consultation with all interested parties.
• In the Policy process:
 The objectives must be defined,
Priorities must be set,
Strategies must be developed and
 Commitment must be built.
72

• Progress in developing and implementing national medicine policies has
been impressive since the concept was launched in the mid-seventies.
By the end of 1999 over 100 countries had a national medicine
policy
• A national government will be the principal agency responsible for
creating the overall NMP and putting it into practice; however,
collaboration will be needed with stakeholders.
73

History of National medicine Policies
• 1985 Nairobi Conference of Experts on rational Use of
medicines
• 1987 Working group of Experts to draft guidelines for
NMP’s
• 1988 Guidelines for NMP’s released
• 1995 Expert Committee on NMPs met
report issued
• 2002 New Guidelines published 74

Characteristics of a National Medicines Policy
• Essential part of health policy, must fit within the framework of a
particular health care system.
• Goals should be consistent with broader health objectives
• Health policy and the level of service provision in a particular country are
important determinants of medicine policy and define the range of
choices and options.
75

Objectives of a national medicine policy
 In the broadest sense an NMP should promote equity and sustainability of
the pharmaceutical sector.
76

Objectives of a National Drug policy
The general health related objectives
• To ensure:
• Access: equitable availability and affordability of essential drugs
• Quality: the quality, safety and efficacy of all medicines
• Rational use: the promotion of therapeutically sound and cost-
effective use of drugs by health professionals and consumers.
77

National Drug policy
Other Goals of NDP
• Economic related goals
• To reduce foreign exchange for pharmaceutical import
• To provide jobs (dispensing, pre-packaging, production of pharmaceuticals)
• National development goal
• Develop national pharmaceutical production
• To take a stand on intellectual property rights
78

National Drug policy
The specific goals and objectives of a NDP may vary from country to
country depending on
• Structure of health care system
• Capacity of drug regulating authority
• Pharmaceutical distribution system
• The level of funding of pharmaceuticals
• The country situation
• The national health policy
• Political priorities set by the government
79

Example: Objectives of Ethiopian NDP
To meet the country’s demand for essential drugs and to systematize its
supply, distribution and use.
To create conducive situations to make the prices of drugs compatible with
the people’s purchasing power.
To ensure the safety, efficacy and quality of drugs.
To develop a domestic drug manufacturing capacity and gradual supply to
the export market.
80

To expand the training of manpower and drugs research and development.
To devise ways and means for the utilization of traditional drugs in the
regular health services after ensuring their safety and efficacy.
81

Key components of a national drug
policy
82

Key components of an NMP
• An NMP is a comprehensive framework in which each component
plays an important role in achieving one or more of the general
objectives of the policy (access, quality and rational use).
• The policy should balance the various goals and objectives, creating
a complete and consistent entity
83

Key components of an NMP………
For example, access to essential medicines can only be achieved
through rational selection, affordable prices, sustainable financing
and reliable health and supply systems.
Each of the four components of the “access framework” is essential
but not sufficient in itself to ensure access.
 rational use of medicines depends on many factors, such as rational
selection, regulatory measures, educational strategies and financial
incentives.
84

Key components of ..……..cont’d
I. Selection of essential drugs
Key policy issues
• Adoption of the essential drugs concept
• Selection criteria
• Sound and adequate evidence, cost effectiveness
• Procedures to define and update the national list(s) of essential drugs;
• Selection mechanisms for traditional and herbal medicines.
85

II. Affordability
• Affordable prices are an important prerequisite for ensuring access to
essential drugs in the public and private sectors.
For all drugs:
• Reduction of drug taxes, tariffs and distribution margins; pricing policy;
For multi-source products:
• Promotion of competition
• generic policies, generic substitution and good procurement practices;
86

• For single-source products:
• Price negotiations
• Therapeutic substitution
87

III. Drug financing
• Ensuring stable and adequate financing for health care is becoming
increasingly difficult in the face of economic pressures, continued
population growth and the growing burden of disease.
• In countries where government policies are not geared to
protecting the needs of the poorest people, the poor may be
denied access to medicines.
88

Key policy issues
• Commitment to measures to improve efficiency and reduce waste
• Increased government funding for priority diseases, and the poor and
disadvantaged
• Promotion of drug reimbursement as part of public and private health
insurance schemes
• Use and scope of user charges as a (temporary) drug financing option
• Use of and limits of development loans for drug financing
• guidelines for drug donations
89

IV. Supply systems
• Whatever Supply system is developed, it should ensure continued
availability of essential medicines with low rates of stock-outs and
low costs of medicines.
• Key policy issues are to:
• public–private mix in drug supply and distribution systems;
• commitment to good pharmaceutical procurement practices in the
public sector
90

• publication of price information on raw materials and finished products
• drug supply systems in acute emergencies
• inventory control, and prevention of theft and waste
• disposal of unwanted or expired drugs
91

V. Legislative and Regulatory framework
• government commitment to drug regulation, including the need to ensure a
sound legal basis and adequate human and financial resources;
• independence and transparency of the drug regulatory agency; relations with
the ministry of health (MoH)
• Functioning drug regulatory authority
• stepwise approach to drug evaluation and registration
92

• Pharmaceutical quality assurance including inspection and enforcement
• commitment to GMP, inspection and law enforcement
• access to drug control facilities
• commitment to regulation of drug promotion
• regulation of traditional and herbal medicines
• need and potential for systems of ADR monitoring
• international exchange of information.
93

V. Regulation and quality assurance
94

VI. Rational use
• development of evidence-based clinical guidelines, as the basis for training,
prescribing, drug utilization review, drug supply and drug reimbursement;
• establishment and support of drugs and therapeutics committees (DTC);
• promotion of the concepts of essential drugs, rational drug use and generic
prescribing in basic and in-service training of health professionals
96

• continuing education of health care providers
• independent, unbiased drug information
• consumer education, and ways to deliver it;
• financial incentives to promote rational drug use;
• regulatory and managerial strategies to promote rational drug use.
97

VII. Research
Key policy issues
• The need for operational research in drug access, quality and rational
use;
• The need and potential for involvement in clinical drug research and
development.
98

VIII. Human resources development
• Government responsibility for planning and overseeing the development
and training of the human resources needed for the pharmaceutical sector;
• Definition of minimum education and training requirements for each
category of staff;
• Career planning and team building in government service;
• The need for external assistance (national and international).
99

Monitoring and evaluation
• Explicit government commitment to the principles of monitoring and
evaluation;
• Monitoring of the pharmaceutical sector through regular indicator-based
surveys;
• Independent external evaluation of the impact of the NDP on all sectors of
the community and the economy.
100

2.5 How to develop the NDP?
• A national drug policy involves a complex process of development,
implementation and monitoring.
• Throughout the process
• careful planning
• involvement of all parties
• the political dynamics needs to be considered at all times.
101

How to develop…….cont’d?
• Planning
• A drug policy without an implementation plan remains a dead
document.
• strategic plan/master plan: e.g to develop the policy itself
• Annual work plans
102

Involving all parties
• Consultation, dialogue and negotiations
with all interested groups and
stakeholders throughout the policy
process is important to develop sense of
ownership.
• Stakeholders
• ministries of (Health, education, trade,
industry)
• doctors, pharmacists and nurses,
• pharmaceutical industries (local and
international )
• drug sellers, academia, NGOs,
• professional associations
• consumer groups,
• traditional and herbal medicine
practitioners,
• The drug regulatory agency
• Insurance companies
103

Political dynamics
• Formulating and implementing a NDP are highly political processes.
• Given the diverse interests &
• the economic importance of the issues involved,
• Opposition to the new policy and attempts to change is expected. For
this reason it is important to:-
• identify political allies, and to maintain their support throughout the
process.
• Strategies and ways working with opponents should be developed
• Strong political leadership and sustained commitment are vital
104

National Medicines policy process
Formulation and
Updating NMP
 Identify problems
 Define objectives
 Develop strategies
Monitoring & evaluation
 Develop system
 Identify tools
 Use results
Implementation
 Develop and execute action
plan based on available
resources
 Prioritize and implement
strategies
Formulating a national medicine policy
105

Formulating a NDP/NMP
Step 1: Organize the policy process
• ministry of health plus a small committee of selected experts.
• decide how to organize the development process
• identify the structure of the policy
• major objectives
• priority components.
• all the interested parties
• the necessary resources and how these can be obtained.
Step 2: Identify the main problems
• situational analysis
• to understand the main problems in the pharmaceutical sector and set realistic
objectives
106

Step 3: Make a detailed situation analysis
• To further analyze the source of the problems,
• Identify potential solutions
• Choose the most appropriate strategies
• Set priorities
• Serve as a baseline for future systems of M and E.
Step 4: Set goals and objectives for a national drug policy
• Identify the main problems and then set goals and prioritize objectives
Step 5: Draft the text of the policy
Step 6: Circulate and revise the draft policy
• MoH, other gov’t ministries and departments
107

Step 7: Secure formal endorsement of the policy
• demonstration of political commitment but it can also cause
problems, as future adjustments to the policy may become
difficult.
Step 8: Launch the national drug policy
• promote the policy through a clear and well-designed
information campaign.
• Public endorsement by respected experts and opinion leaders.
108

Implementing a NDP/NMP
• A policy without implementation is worthless
• NDP needs
implementation plan or “master plan”
a detailed strategy and
specific action plans
109

Priorities for implementation
• Priorities should be
• based on the severity of the problems
• on the potential for success in achieving the objective
• making an impact with available resources.
110

Master plan and work plans
• The master plan should be broken down into:
annual action plans and work plans
specify in detail who is responsible,
listing the major tasks,
describing the target output, the detailed time frame and the exact budget
111

Responsibilities in implementation
• The ministry of health or a separate unit within the ministry
should oversee and coordinate all activities, and monitor the
extent of implementation and the achievement of targets.
112

Creating a national consultative forum
To oversee policy implementation.
To maintain countrywide support for the policy
To ensure that the major stakeholders remain informed and involved.
Financial resources
Actively seeking funds and be able to secure regular funding from the
government, international and local donors.
There should be no conflict of interest in accepting donor
contributions
113

Logistics and Supply chain Management
117

What Is Logistics and SCM?
• “Supply chain management encompasses the planning and management of
all activities involved in sourcing and procurement…and all logistics
management activities. Importantly, it also includes coordination and
collaboration with channel partners, which can be suppliers, intermediaries,
third party service providers, and customers.
• In essence, supply chain management integrates supply and demand
management within and across companies.”
118

Logistics management as—
– part of supply chain management that plans, implements, and
controls the efficient, effective forward and reverses flow and storage
of goods, services and related information between the point of
origin and the point of consumption in order to meet customers’
requirement…
119

The Logistics cycle
Why Logistics Matters
• Well functioning supply chain benefit public health programs
– increasing program impact
• No product? No program!
– enhancing quality of care
– improving cost effectiveness and efficiency.
122
Health programs cannot succeed unless
the supply chain delivers a reliable,
continuous supply of health commodities
to its customers.

The Logistics cycle
The PURPOSE of a logistics system is to get the
RIGHT QUANTITIES of the
RIGHT GOODS to the
RIGHT PLACES at the
RIGHT TIME in the
RIGHT CONDITION at the
RIGHT COST.
123

Drug Supply Management cycle
124

• Management support → core
–Organization → functional
–Financing and sustainability → adequate
–Information management → reliable
–HR management → motivated staff
• The entire framework relies on policies, laws and regulation
125

• NDP/NMP provides a sound foundation for managing pharmaceutical supply
• Wise medicine selection underlies all other improvements
• Effective management and good governance save money and improve
performance.
• Rational medicine use requires more than just dissemination of information's
• N.B: Systematic assessment and monitoring are essential
126

Home take assignment
1. Inbound logistics and outbound logistics
2. Freight forwarding and custom clearance
3. Value chain in Pharmacy
4. Supply Chain Drivers and Metrics
5. Six sigma and Kaizen principle
6. Mckinsey’s 7s Model and 5th level Leadership
128

3.2 DRUG SELECTION
• Nowadays there are about 250,000 drug products available in
the world market.
As many as 70% of the pharmaceuticals in the world market
today are:-
Duplicative or non essential
Many are minor variation with proto type without significant
therapeutic advantages.
May show high toxicity relative to their benefit
Some are newly released with insufficient information on their
efficacy and toxicity.
129

• No program can afford to purchase all drugs circulating in the
market within its given budget.
• Resources are limited and choices have to be made.
• Drug selection, by systematically reducing the number of drug
products, promote efficient drug supply management and
rational drug use
130

Purpose of Product Selection or Advantages of limited list of
Essential Medicines
• Supply
– Easier procurement, storage and distribution
– Lower stocks
– Better quality assurance
• Prescribing
– Training is more focused and therefore simpler
– More experience with fewer medicines
– Non availability of irrational treatment
– Reduction of antimicrobial resistance
– Focused drug information
– Better recognition of ADR
131

Purpose of Product Selection or Advantages of limited list of
Essential Medicines
• Cost
– Lower prices, more competition
• Patient use
– Focused education efforts
– Reduced confusion and increased adherence to treatment
– Improved medicine availability
132

Basic steps and criteria in drug selection
1. Establish drug selection committee with an appropriate representation.
2. Determine the prevalent health problems and patient characteristics
3. Decide which health problems may be treated at the level of health care
unit before selection.
4. Choose the drugs to be used for the health problems
133

Basic steps……..Cont’d
5. Structure the list of drug products
• The list of selected drug should be categorized:
– Pharmaco-therapeutically and/or alphabetically.
– By the level of health care
134

• If the prepared list includes drug products to be used by different level of
health care and dispensing units, it should be structured accordingly to the
level of importance (VEN)
• All the drugs included in the list may not be equally important and hence,
they should be categorized by the level of importance into three categories.
135

i) Vital drugs (very essential)
☞Which are potentially lifesaving and have major importance
in basic health services. e.g. Anti-malaria, ORS, vaccines ,etc.
ii) Essential drugs
☞Which are effective against less life threatening, but significant
health problems
e.g. certain antibiotics
136

iii) Non essential
☞This are used for minor or self-limiting health problems or have a high
cost and low therapeutic advantage. e.g. cough syrup, antacid tablet or
suspension.
N.B:- This type of classification help in setting priority for drug
purchasing and stock keeping
137

6. Introduce the final list of drugs
7. Up – date the list of drugs
 The list of drug should be reviewed periodically
 Any addition into and deletion should be on the basis of the selection
criteria.
138

Monitoring & evaluation of drug selection
• Drug selection should be monitored & evaluated against its
objectives using indicators.
Sample indicators are:-
Availability of drug which are not relevant
Availability of drug above the level of health institution.
Unavailability of relevant drugs
Whether selection of drugs is done without considering the major
factor for drug selection.
139

VEN Analysis
 Method of classifying pharmaceuticals by their clinical importance
into Vital (V), Essential (E) or Less essential (N)
 A method used to prioritize medicines for purchase and stock
 Unique to the disease patterns of a specific area
 Important in ABC Analysis of pharmaceutical consumption
140

Criteria for Vitals (V)
• Potentially life-saving - without which it is impossible to alive the
patient /patient may die due to lack of this drug/ reagent
• Crucial to provide basic health services - without which it is impossible
to deliver the service
• It is mandatory to be available 24 hours of a day, 7 days of a week and
12 months of a year
• Are top priority pharmaceuticals (to be adjusted last and least in
reconciling requirement with available budget/fund during purchase)
141

Criteria for Essentials (E)
• Effective against less severe but significant illness, not vital; it is
between Vital and Less Essential
• Life-saving, without which patient may be in difficulty/ problem / may
be substituted
• Essential to the service without which it is difficult to give service
• It is mandatory at least once a day, or at least once in a week, or at least
once in a month or once in a quarter of the year, but not as highly
mandatory as vitals
• 2nd priority pharmaceuticals
142

Criteria for Less Essentials (N)
 Effective for minor illnesses and have low therapeutic advantage
 Important to patients; however , patients will not die in the
absence of these pharmaceuticals
 Necessary to give the health service ; however, health service
delivery will not stop by absence of these pharmaceuticals
 Last priority pharmaceuticals
143

Categorises medicines by their relative public health value as:
Vital (V): Potentially lifesaving; significant withdrawal side-effects; or
crucial for basic health services
Essential (E): Used for less severe, but significant illnesses; not vital for basic
health care
Non-essential (N): Used for minor or self-limiting illnesses; questionable efficacy;
or comparatively high cost for marginal therapeutic advantage
144

VEN Criteria summary
Characteristic of Drug or Target
Condition
(V) Vital (E) Essential (N) Nonessential
Occurrence of target Condition
Persons affected (% of population) Over 5% 1 – 5% Less than 1%
Persons treated (number per day at
Average health center)
Over 5% 1 – 5% Less than 1%
Severity of target condition
Life-threatening Yes Occasionally Rarely
Disabling Yes Occasionally Rarely
Therapeutic effect of drug
Prevents serious disease Yes No No
Cures serious disease Yes Yes No
Treats minor, self-limited symptoms
and conditions
No Possibly Yes
145

Example
146
Drugs V E N Remark
AZT + 3TC + NVP X Life saving and crucial
Vitamin E capsules X Not life saving and not crucial
Amoxicillin capsules X Life saving and may not be
crucial can be substituted
Co-trimoxazole 480mg
tablet
X Life saving (Co-trimoxazole
prophylaxis service will be
interrupted)

Conducting VEN Analysis
 Step 1 Classify all medicine on the facilities medicines list as V, E, or N.
 Step 2 Analyze the “N” items. Where possible, reduce quantities to
purchase or eliminate them.
 Step 3 Identify and limit therapeutic duplications.
 Step 4 Reconsider proposed purchase quantities.
 Step 5 Find additional fund if needed or possible.
147

VEN Applications
Prioritise procurement when there are not enough funds to
purchase all items required
Determining safety stock levels
Determining medicines sale prices
Directing staff activities
148

Quantification of Pharmaceuticals
151

• Quantification: is the process of estimating the quantity and cost of the
products required for a specific health program (or service), and, to
ensure an uninterrupted supply for the program, determining when the
products should be procured and distributed
 Process of estimating the quantities of specific drugs needed for
procurement.
 Quantification = forecasting + supply planning
153

• Quantification is not a one-time, annual exercise that ends when the final
quantities and costs of the pharmaceuticals have been determined. It is an
iterative process with reviews and updates required year-round
• Quantification is a critical supply chain activity that links information on
services and pharmaceuticals from the facility level with program policies and
plans at the national level, and is then used to inform higher level decision
making on the financing and procurement of pharmaceuticals
154

Steps in quantification of pharmaceuticals
155

1. Preparation
• Prior to collecting data, two initial steps should be taken:
A. Describe the program and
B. Define the scope, purpose, and timeframe of the quantification.
C. Collect required data
156

A) Describe the program
• Summarize the background, current status, and performance of the
program for which the pharmaceuticals/ commodities are being
quantified.
• This summary should include a review of program goals, strategies, and
priorities, and any expansion plans or change in policies that may
significantly influence uptake of services and demand for commodities
157

B. Purposeof the Quantification
• It is important to identify the purpose of the quantification and how it will
address the program’s needs.
• Examples of the purpose of a quantification include the following:
To provide data on specific commodity requirements and costs for the
government’s annual budget allocations
To inform donors about funding requirements and advocate for resource
mobilization for commodity procurement
158

Forecasting Time Horizons
 Short-range forecast
 Up to 1 year, generally less than 3 months
 Medium-range forecast
• 3 months to 3 years
 Long-range forecast
 3+ years
159

C. Collectrequireddata
• Data for Forecasting
Consumption data: quantity of each product dispensed or consumed over the
past 12month period
Services data: number of visits, number of services provided, lab tests
conducted, treatment episodes, or number of patients on treatment over the
past 12-month period
 Morbidity data: incidence and prevalence of specific diseases/health
conditions
160

2. Forecasting
 Forecasting, the second step in the quantification process, uses the data
collected during the preparation step to estimate the quantity of each
product that will be dispensed or used during each year of the quantification.
161

 These quantities are the basis for calculating the total commodity
requirements in the supply planning step.
 The forecasting step in a quantification exercise is afour-part process
 Organize, analyze, and adjust the data.
 Build and obtain consensus on the forecastingassumptions.
 Calculate the forecasted consumption for each product.
 Compare and reconcile results of different forecasts
162

3) Supply Planning
• Supply planning step is used to estimate the total pharmaceuticals
requirements and costs for the program
• To calculate this estimate, start with the forecasted consumption for each
product from the forecasting step; then,
consider the existing stock on hand;
any quantities of product already on order, but not yet received; and
the established maximum and minimum stock levels.
163

• Be sure to include procurement and supplier lead times and provide a
buffer stock for unexpected delays.
Supply planning process
Organize and analyze data.
 build supply planning assumptions.
 estimate total commodity requirements.
 develop supply plan.
 Compare costs to available funding.
164

Organize and analyze data
• Data for the supply planning step are different from the data for the
forecasting step. However, you can collect data for both the forecasting
and the supply planning steps at the same time
Product related data
• specific product characteristics (formulations, dosages, shelf life, temperature
requirements, number of units per pack size, unit cost, and others)
165

Supplier related data
• supplier prices, supplier packaging, information supplier lead times,
Current shipping and handling costs by supplier
Funding
• Funding sources for procurement of commodities, amount and timing
of funding commitments by funder funding disbursement schedule
Procurement
• Procurement lead time for each procurement mechanism
166

Importance of drug quantification
To prepare and justify a drug budget.
To plan for new & expanding program.
To optimize drug budgets & cost effective treatment approaches.
To calculate emergent needs for disaster relief & epidemics,
To resupply an existing supply network that has become depleted
of products
To compare current drug consumption with public health priorities
& usage in other health systems.
To prevent shortage, surpluses, inequity of supplies
167

• There are four basic methods for estimating drug quantities.
1) Consumption method
2) Morbidity method
3) The adjusted consumption method
4) Service – level projection of Budget requirements
168

Consumption Method
• This method uses past consumption of the selected drug in
order to calculate the total amount of drug required.
• Consumption data provides a direct link with the end users.
169

• This method is used if the health facility:
is adequately funded.
has acceptable patterns of prescribing
has adequate and uninterrupted drug supply.
has reasonable good stock management, complete and accurate
consumption and stock out information
has low level of wastage and losses
170

Consumption Method
Steps in quantification
1.Prepare list of drugs to be quantified
2.Determine the period of time to be reviewed for consumption
3.Enter consumption data for each drug
– The total quantity used during the review period in BUs(basic units)
– The number of the days in which the drug was out of stock
– The lead time for the last procurement (averaged from last several procurements)
171

NB! Sources of data:
• Stock records, invoices from supplier
• Dispensing records (e.g. patient drug registration
book)
• Distribution report (central/regional /district
distribution point)
• Computerized inventory mgt. e.g. Dagu HCMIS
172

Definition of common terms
Basic Unit (BU):
– the smallest unit in which a medicine can be conveniently dispensed or
administered. E.g. capsule, tablet, tube, vial
Lead time:
– The time between when new stock is ordered and when it is received and
available for use.
Safety stock:
– the buffer or minimum stock that is kept on hand to protect against stock outs
that are caused by delay in deliveries, increased consumption, or product losses.
173

Consumption Method
4.Calculate average monthly consumption
CA= CT/(RM - (DOS/30.5) ………....................................................equation 1
Where
CA =average monthly consumption (AMC), adjusted for stock out
CT = total consumption during the review period, in Basic Unit
RM = Review period in months
DOS = No. of days an item was out of stock during the review period
5.Calculate projected average monthly consumption for expected changes in
consumption pattern
CP=CA+ (CAxAU)
Where CP= Projected average monthly consumption
AU= Use adjustment
174

Consumption Method
6.Calculate the safety stock needed for each drug
SS = CA X LT ………………………………………………………………………….equation 2
Where SS = safety stock
CA = average monthly consumption, adjusted for stock out
LT = average lead time
7.Calculate the quantity of each drug required in the next procurement period
QO= CP X (LT + PP) + SS - (Si + So)
Where QO = quantity to order before adjustment for losses or program change
PP=procurement period
Si = stock now in inventory, in BU
So= stock now on order, in BU
175

Consumption Method
8. Adjust for losses
QA=QO+(QO x AL )
9. Compile decentralized quantification (if applicable)
10. Estimate costs for each drug and total costs
11.Compare total cost with budget and make adjustment
– either obtain more funds or
– reduce the number of drugs/or quantities ordered.
176
Adjust for avoidable wastage
mainly results from
• Poor stock management
• Poor storage
• Careless handling
• Theft Expiration … etc

Example, calculate the amount of Ampicillin 250 mg capsule for the next
six month (procurement period) based on the following data
– CT=89,000 capsule SI=81,000
– So=58,000 LT=3 month
– Dos= 34 days
– Use adjustment for 6 month=5%
– Loss adjustment for 6 month=10%
177

Consumption Method
CA = CT/(RM - (DOS/30.5)
= 89,000/(6 – (34/30.5)) = 18,218
CP = CA + (CAxAU)
= 18,218 + (18,218 x 5%) = 19,129
SS = CA X LT
= 18,218 x 3 = 54,654
QO= CP X(LT +PP)+SS -(Si+So)
= 19,129 x (3 + 6)+ 54,654 – (81,000 + 58,000)
= 87,815
QA= QO +(QO x AL)
= 87,815 + (87,815 x 10%)=96,596.5
178

Consumption Method
QA =QO+(QO x AL)
– 96596.5 capsule converted into pack
– 97 pack
– Probable price 1 pack = 24.70USD
– Value of proposed order (USD) = 2,395.9≈2396
179

Morbidity method
This method is used when:-
☞Available consumption data are incomplete or unreliable.
☞Prescribing patterns are not cost effective
☞The budget is unlikely to be sufficient to meet estimated requirements.
☞The health facility or services are expanding rapidly or new.
180
N.B:- morbidity method is estimation of required drug to treat common disease based on standard
treatment protocols and epidemiological data.

Morbidity method
• The morbidity method uses data on
patient use (attendances at the health facilities) and
morbidity (the frequency of common health problems) to project the
need for medicines based on assumptions about how the problem
will be treated.
181

Morbidity method
Steps in quantification using morbidity method
1. Specify the list of problems
2. Establish the list of medicines to be quantified
3. Establish standard or average treatments
QE = DCUX ND X LD
182
Where
QE = Quantity of medicine needed for each tt episode
Tt episode= a pt contact for which a std course of drug tt is required
DCU=basic unit per dose
ND=Number of doses per day
LD=length of treatment per episode

Morbidity method
4)Collect morbidity data for each health problems treated
Estimate expected number of contacts
CE= C+(C x AU)
183
Where, C - past total no. of contacts
AU - Use adjustment
CE-expected total no. of contacts

Morbidity method
Sources of information for Morbidity data
• Health Information system
– morbidity pattern and treatment episode
– Information is not usually available
• Special study in Sentinel facilities
– Retrospective review of records in
selected facilities
> accessible, complete and accurate
– Prospective study in a sample of health
facilities
Key issues in conducting studies
 Obtain No. of contacts and No. of
treatment episodes
 Include only pt contacts that normally
needs drug tt
E.g. exclude well baby clinic
184

Key issues in conducting studies…
 Express the frequency of each health problem in terms of common
denominator, such as 1000 inpatients or outpatient visits
 Separate frequencies must be developed for all age group specified in a STG
 If discrete type of prescribers (Doctors Vs Nurses) use different treatment
regimen, the number of episodes must be compiled separately for each
prescriber type
 The sample data should also specify the No. of patient contact per total
population in the area served by the sample facilities.
185

Morbidity method
5)Calculate the No. of tt episodes for each health problem
ET=CE X F
Where
ET = number of treatment episodes
CE = expected total number of contacts in thousands
F = the frequency of health problem estimated per 1000
contacts
186

6)Estimate the quantity of drugs needed for each health
problem
QT=ET X QE X PT
• QT=quantity of drugs needed
• ET= number of treatment episodes
• QE=quantity of drugs for each treatment episode, BU
• PT=percentage of cases that are treated with that specific regimen
187

Morbidity method
7) Combine the estimates for each drug from the various health problems into a
master procurement list
8) Adjust quantities to cover other health problems, for filling the pipeline and current
stock position, and for expected losses
9) Estimate costs for each drug and total costs
10) Compare total costs with budget and make adjustment
Example
Estimate the total quantity of medicines required for the treatment of Otitis Media
based on the following information.
• Last total No. of contacts (C)= 3,123,408
• 5% expected rate of increase
• Frequency of Otitis Media (per thousand) = (106 for <5, 29 for >5) 188

Morbidity method
Treatment for Otitis Media
• Under 5
– Cotrimoxazole suspension 5ml BID for 10 days
– Paracetamol sol/n of 120mg/5ml, 1.5ml QID for 10 days
– Pseudoephedrine syrup 2.5ml QID for 5 days
• Above 5
– Cotrimoxazole 800/160 mg tab BID for 10 days
– Paracetamol 500 mg tab, 2 tab QID for 5 days
– Pseudoephedrine 60 mg tab QID for 5 days
• All patients of Otitis Media are expected to be treated by cotrimoxazole
and paracetamol, whereas 80% of patients also treated with
Pseudoephedrine
189

Morbidity method
Solution
QE = DCU X ND X LD
Under 5
• Cotrimoxazole suspension
– 5ml x 2 x 10=100 ml
• Paracetamol 120mg/5ml
– 1.5ml x 4 x 10=60 ml
• Pseudoephedrine syrup
– 2.5ml x 4 x 5= 50 ml
Above 5
• Cotrimoxazole 800/160 mg
– 1 tab x 2 x 10 =20 tab
• Paracetamol 500 mg tab
• 2 tab x 4 x 5 =40 tab
• Pseudoephedrine 60 mg tab
• 1 x 4 x 5= 20 tab
• CE= C+(C x AU)
– 3,123,408 + (3,123,408 x 5/100))
– 3,279,578
• ET=CE X F
– 3,279,578 x 106/1000= 347, 635
– 3,279,578 x 29/1000= 95,108
190

Morbidity method
• QT=QE X ET X PT
– Under 5
• Cotrimoxazole suspension
–100 ml x 347, 635 x 1
–34,763,531
• Paracetamol 120mg/5ml
–60 ml x 347, 635 x 1
–20,858,119
• Pseudoephedrine syrup
–50 ml x 347, 635 x 0.8
–13,905,412
191

Proxy consumption method
Uses known consumption data from one system “standard” to
estimate the drug needs in a similar or expanded system “target”
– Population based, defining drug use per 1000 population
– Service based, defining drug use per specified patient case/inpatient
admission
Steps in quantification using proxy consumption method
Step 1: Select the standard system for comparison and extrapolation.
– The standard and the target should resemble in terms of
192

– Geography, climate, morbidity pattern, prescribing practice, drug supply
status
– The standard should have an adequate and uninterrupted drug supply,
fairly rational prescribing practice, complete and accurate records of
patient contact and inventory movement
Step 2 Develop the drug list
193

Step 3 Establish the time period to be recovered in the review
Step 4 Review records from standard system to compile contact or
population data
Step 5 Establish denominator for extrapolation
– E.g consumption either be thousands of pt contact or inhabitants in
the region
194

Step 6 Determine consumption rate in the standard system
– the adjusted annual consumption divided by either no. of thousands of contact or
inhabitants
Step 7 Extrapolate the standard system’s consumption rate (SCR) to the target system
– SCR(for each drug) X estimated no. of thousands of contacts or inhabitants for the target
facility
Step 8 Adjust for expected losses
Step 9 Estimate costs for each drug and total costs and make adjustment against the
available budget
195

Example
• Estimate Ampicillin 250mg required from the standard to the target
system based on the following information
196
Standard system consumption
50,000 inhabitants
32,500 outpatient
6 month total consumption: 89,000 capsule
Out of stock: 34 days
Target
80,000 inhabitants
Unknown outpatient

Step 1: Standard- X
Step 2: Ampicilline 250mg caps
Step 3: 6 month
Step 4: Per thousand inhabitants or per thousand outpatients
Step 5: SCR
• SCR= adjusted annual consumption
no. of thousands of contact or inhabitants
= (218,617/50,000 inhabitants) x 1000= 4,372 per thousand
Or
= (218,617/32,000 out patients) x 1000= 6,727 per thousand
197

Step 6 : Projected requirement
– Extrapolate SCR to the target system
– SCR X estimated no. of thousands of contacts or inhabitants for the
target facility
– 4,372 per thousand x 80,000 inhabitants
– 349,788 caps ~ 350 pack
– 1 Pack= 24.7
– Value of proposed order = 8,645USD
198

Service level projection of budget requirements
• Uses the average drug procurement cost per attendance or bed – day
in different types of facilities in a standard system to project drug costs
in similar types of facilities in the target system.
• It can be applied when only budget requirements and not specific drug
quantities are needed.
199

Information needed
• Average number of
– curative outpatient attendance,
– non curative attendance and
– patient bed days for each type of facility in the source health system
• The average cost
– per outpatient attendance,
– per non curative attendance and
– per bed-day in each type of facility
200

Steps in quantification
1)Establish the categories of facilities and determine the number in each
category (standard)
2)Determine the patient contact denominator for each type of facility and
compile or estimate the average number of patients contacts of each
type at each category of facility
201

3) Calculate the average cost per contact:
– The total drug purchases for the facility or facilities in class divided by
the attendances or bed-days
4)Calculate the total projected drug costs
202

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