Drug Supply Management

Haramaya University
2018

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 1. Introduction

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 1.1 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.
• A problem solving process of the effectively achieving
organizational objectives through the efficient use of
scarce resources.
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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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 The Management Process

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 Classical Management Activities
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
o what resources he needs to provide them
o Who is responsible for procurement
o how he will go about obtaining these resources
o and 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?)
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 Management activities cycle

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• 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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What makes successful manager?
•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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 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

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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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 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 of people for specific assignment
 Understand the financial implication of decision
 Encourage creativity and new ideas
 Give staff clear cut decision when they are needed
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Why we do worry about drug???????????????

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 Why we do worry about drug?
a) Drugs save lives and improve health
• Most of leading causes of discomfort,
disability and premature death can be
prevented, treated, or at least alleviated with
cost-effective essential drugs

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b) Drugs promote trust and participation
• The credibility of health care workers depends
on their ability to save dying patient by
administration of drugs.
• Availability of drugs and supplies also affects
the productivity of health staff, when drug
supplies fail to arrive, patient volume drops,
and health workers are left idle.

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c) Drugs are costly
• Although medicines are cost-effect, they can
be quite costly for an individual, a household,
a government health system, or a country.
• Income is lost when family members are
sick(indirect).
• In developing countries, expenditure on
medicines are about 30% of total health
expenditures

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d) Drug are different from other consumer
products
• Consumers often do not choose the drugs
they buy; physicians or health workers make
this choice for consumers.
– consumers must trust that the best choice
is being made.

• All of these make drugs vulnerable for

irrational use.

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• Generally managing drug supply properly
contributes to appropriate financial
expenditure, avoid wastage, increase access
and ensure that drugs are properly used.

• It may also be a source of revenue, which can

be used to cater for other health care needs
and in particular for disadvantaged populations.

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 1.2 Ethiopian Health care system
Modern Medicine in Ethiopia
•Modern healthcare– reportedly started in the 16th
century - Reign of Atse Lebnadengel (1520 -1526)
◦ Travelers, religious and diplomatic missions with no
formal training freely distributed drugs to the
population.
E.g. James Bruce arrived in Gondar in 1770 and:
treated thousands for malaria, syphilis, small pox
◦ All white men (faranjis) considered to be physicians
(hakims) until the Italian occupation

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Emperor Menelik II (1889-1913)
• Modern health care considered a privilege to the royal
family prior to the establishment of the first hospital.
• Russian Red Cross mission established the first hospital
with a modern pharmacy in Addis Ababa (1897)
• Health and pharmaceutical services became more
accessible to the public at the beginning of the 20th
century.
• The first government sponsored health facilities:
– Hospital in Harar by Ras Mekonen (1903)
– Menelik II Hospital in Addis Ababa (1909)

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Emperor Haile Selassie (1930 -1974)

Prewar period (up to 1935)

• Reforms in economic and social conditions including
health service expansion
• 12 hospitals and 35 clinics
• The 1st health legislation issued in 1930
• This drive was interrupted during the brief occupation
of Ethiopia by the Italians (1935 – 1941)

◦ Italians converted all health service facilities into army

medical clinics for use of the military and the benefit to
the population was insignificant
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Postwar period

• “Public Health Directorate” was established under the

Ministry of Interior in 1941.

• Ministry of Public Health established in 1948 following

health legislation of 1947.

• Major steps taken in the autonomous development of

health care

• Policy and strategy for the health sector with emphasis

on preventive health services and decentralization (1963)
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 Structure (Approach) of Health care
services

Modern medical care model (MMC) pre-1953

• Earlier period of introduction of health services

– Urban centered and Hospital based
– Services were inaccessible to majority of
rural population due to
• geographical, economical and cultural barrier
– It was mechanistic approach and not holistic
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 Approach of Health care services
Basic Health Service Approach (BHSA) (1953-74)

– progress in development was to be measured by

people’s access to the basic needs to sustain life –
adequate food, shelter, clothing, drinking water, and
health.
◦ The aim therefore was to organize a health delivery
system that is able to meet the most urgent health
care needs of the major section of population.

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The WHO-recommended BHS approach advocated:

• The extension of peripheral health centers (HCs) &

health stations (HSs)

• The utilization of auxiliaries as strategies for solving the

problems of availability, accessibility and appropriateness
of health services

• Improving access to health care was achieved to a

greater extent by taking services to where people live
(home visits, prison health services, etc.).

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 Approach of Health…..…….cont’d
The era of BHSA in Ethiopia
– One of the success stories registered in health sector
development
– The “Health Center Team Training Program” (1954)
• The organization and development of health
services at that time can be considered as four
tiered system:
– Health station (with health assistant at grass root level)
– Health center at Awraja level (health center team)
– Regional referral Hospital (Tekelaygizat level)
– Central referral hospital
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 Approach of Health…..…….cont’d
Problem with BHSA
– The services continued to remain largely
institutionalized & the rural population was
usually inhibited by socio-cultural factors
preventing it from utilizing the few
technologically oriented medical services.
– No mechanism for community participation that
can ensure sustainability and culturally
acceptable care

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Primary health care (PHC) approach
– WHO and UNICEF re-examined their practice and this led
to Alma-Ata declaration in 1978
– Belief that those most in need of health care (HC)
must participate in its delivery to:
• Generate any impact on the diseases afflicting them
and ,
• Community involvement can ensure that culturally
acceptable care is provided to those who are
underserved.
• Changing theories of development that linked
health to other sectors gave rise to the principle of inter-
sectoral collaboration in health work.
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 Approach of Health…..…….cont’d
Primary Health Care defined as
Essential health care based on practical,
scientifically sound and socially acceptable methods
and technology made universally accessible to
individuals and families in the community through
their full participation and at a cost that the
community and the country can afford to maintain
at every stage of their development in the spirit of
self-reliance and self-determination”

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Basic principles of PHC were:
• Community participation,
• Inter-sectoral collaboration,
• utilizing appropriate technology
• focus on prevention,
• equitable distribution
• real political commitment.

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 Approach of Health…..…….cont’d
Component/element of PHC
Immunization
Food supply and proper nutrition
Water and sanitation
Appropriate treatment of common disease and
injuries
Maternal child birth care including family planning
Providing essential drugs
Mental health
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 Approach of Health…..…….cont’d
Education concerning the prevailing health
problems and methods of preventing and
controlling them
Provision and control of locally endemic
Dental health
Traditional medicine
Control of HIV/AIDS and STIs
• PHC introduced into Ethiopia → 10 Years National
Perspective Health Sector Plan (1985 -1994) based
on the principles of PHC.
– the 1st health plan developed
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The ambitious goals of the health plan included:
• strengthening and expansion of mother and
child (MCH) services.
• a decrease in infant mortality from 145/1000 to
95/1000;
• A decrease in child mortality from 274/1000 to
150/1000; and
• An increase in life expectancy from 42 to 55
years
These activities claimed to set pace for hospital
expansion and inequitable distribution of health
resources in favor of the urban population
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 Approach of Health…..…….cont’d
Problems observed:
– Very limited intersectoral collaboration
– Lack of community involvement due to lack of
remuneration of trained CHWs; 85% were found
to be non functional
Achievement:
– Expansion of health services
– Control of iodine deficiency disorder
– Training in health education
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 Approach of Health…..…….cont’d
Organization of health delivery system was six
(five) tiered
– Community health service (not formal) e.g. TBA
– Health station
– Health center
– Zonal Hospital
– Regional referral hospital
– Central referral and training hospitals

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Six-tier health care delivery system in Ethiopia

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 Approach of Health…..…….cont’d
• Former Health care structure 4 tier
Primary health care unit PHCU (HC+5 HP)
– 10 beds, Technical staffs -28
– Population served – 25,000
District/zonal hospital
– 50 beds, Technical staffs -33
– Population served – 1,000,000

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 Approach of Health…..…….cont’d
Specialized hospitals
– 250 beds
– Technical staffs – 120
– Population served – 5,000,000

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 Four -tier health care delivery system

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 Approach of Health…..…….cont’d
Current health care delivery system : a three-tier

• First level of a Woreda/District health system

– Comprising a primary hospital
• Population coverage of 60,000-100,000
people),
– Health centers (15,000-25,000 population)
– Satellite Health Posts (3,000-5,000 population)
• Connected to each other by a referral system
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 Approach of Health…..…….cont’d
• NB! Primary Hospital, Health center and
health posts form a Primary health care unit
(PHCU) with each health center having five
satellite health posts.
• Second level - General Hospital
– Population coverage of 1-1.5 million people
• Third level - a Specialized Hospital
– Population of 3.5-5 million

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 Three-tier health care delivery system in
Ethiopia (currently used)

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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”

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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.

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 2.2 The 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

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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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Formulary/essential medicines list
– 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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Formulary/essential medicines list
– 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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 Formulary manual
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
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
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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
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 Standard Treatment Guidelines
STG:
• Is also called Treatment Protocol or Clinical Guideline
• Systematically developed statements that help practitioner
or prescriber in deciding on appropriate treatments for
specific clinical conditions.
• It reflects consensus on the optimal treatment option within
health facility or health system
– It is disease centered
– common disease and complaints, treatment alternatives
– STG exist for various level of health care
E.g Hospital, health center, region, nation
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 Standard Treatment Guidelines
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 for common health
problems
– Provides a bases for assessing and comparing quality of
care
– Identifies most effective therapy in terms of quality
– It helps to combat antimicrobial resistance
– Provides information for practitioner to give to patients
concerning the 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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 Potential benefits of STG
For supply management staff
– Identifies which medicines should be available for
the most commonly treated problem
And quantities of commonly prescribed items
– Makes medicine demand more predictable, so
forecasting is more reliable

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 Potential benefits of STG
For health care providers
– Provides expert consensus on most effective,
economical treatment for specific setting
– Gives provider the opportunity to concentrate on
correct diagnosis
– Sets a standard for quality of care
– Provide a basis for monitoring and supervision

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 Potential benefits of STG
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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 Standard Treatment Guidelines
 The problems associated with STGs include:
a development process
– Difficult, time-consuming,
– 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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 QUIZ
1. Briefly discuss the difference between
essential medicine list and formulary manual?
2. Under what conditions fixed dose combination
drugs are acceptable?
3. Discuss about essential medicine?
4. Write the selection criteria’s in formulary list?
5. What are problems associated with STG’s?

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National drug policy

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 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.

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 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.
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 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.

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 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
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 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
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 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.

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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.

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 Key components of ..……..cont’d
Selection of essential drugs
– 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.

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 Key components of ..……..cont’d
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
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procurement practices; Nanati L 85
• For single-source products:
– Price negotiations
– Therapeutic substitution

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 Key components of ..……..cont’d
Drug financing
– 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
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 Key components of ..……..cont’d
Supply systems
– public–private mix in drug supply and distribution
systems;
– commitment to good pharmaceutical procurement
practices in the public sector
– 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
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 Key components of ..……..cont’d
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
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 Key components of ..……..cont’d
– 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.

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 Key components of ..……..cont’d
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

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 – 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.

11/30/2024 Nanati L 92
 Key components of ..……..cont’d
Research
• the need for operational research in drug
access, quality and rational use;
• the need and potential for involvement in
clinical drug research and development.

11/30/2024 Nanati L 93
 Key components of ..……..cont’d
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).

11/30/2024 Nanati L 94
 Key components of ..……..cont’d
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.

11/30/2024 Nanati L 95
 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

11/30/2024 Nanati L 96
 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

11/30/2024 Nanati L 97
 How to develop…….cont’d?
• Involving all parties
– Consultation, dialogue and negotiations with all interested
groups and stakeholders throughout the policy process.
– 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 Nanati L
11/30/2024 98
 How to develop…….cont’d?
• 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:-
• identify political allies, and to maintain their support
throughout the process.
• Strategies and ways working with opponents should
be developed
– Strong political leadership
11/30/2024 Nanati L
and sustained commitment
99
 Implementing a NDP/NMP
• A policy without implementation is worthless
• NDP needs
implementation plan or “master plan”
a detailed strategy and
specific action plans

11/30/2024 Nanati L 100

 Implementing a NDP/NMP
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.
Master plan and work plans
• The master plan should be broken down into:

11/30/2024 Nanati L 101

 Implementing a NDP/NMP
– 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
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.
11/30/2024 Nanati L 102
3. Drug management cycle
 Drug Supply Management cycle

11/30/2024 Nanati L 104

 Drug Supply Management cycle
• 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
11/30/2024 Nanati L 106
 3.1 The Logistics cycle

11/30/2024 Nanati L 107

 The Logistics cycle
What Is Logistics?
• “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.”
11/30/2024 Nanati L 108
 The Logistics cycle
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…

11/30/2024 Nanati L 109

 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.

11/30/2024 Nanati L 110

 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.

11/30/2024 Nanati L 111

 Restaurant

11/30/2024 Nanati L 112

 Customer satisfaction

11/30/2024 Nanati L 113

 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.
11/30/2024 Nanati L 114
• 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
11/30/2024 Nanati L 115
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
11/30/2024 Nanati L 118
 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

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• 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.
11/30/2024 Nanati L 120
i) Vital drugs (very essential)
☞ Which are potentially life- saving 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
11/30/2024 Nanati L 121
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

11/30/2024 Nanati L 122

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.

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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
11/30/2024 Nanati L
for drug selection. 124
 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

11/30/2024 Nanati L 125

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)
11/30/2024 Nanati L 126
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
11/30/2024 Nanati L 127
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
11/30/2024 Nanati L 128
 VEN Analysis

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

11/30/2024 Nanati L 129

 VEN Criteria summary
Characteristic of Drug or Target (V) Vital (E) Essential (N) Nonessential
Condition
Occurrence of target Condition
Persons affected (% of population) Over 5% 1 – 5% Less than 1%
Persons treated (number per day at Over 5% 1 – 5% Less than 1%
Average health center)
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 No Possibly Yes
and conditions

11/30/2024 Nanati L 130

 Example
Drugs V E N Remark

AZT + 3TC + NVP X Life saving and crucial

Vitamin E capsules X Not life saving and not

crucial
Amoxicillin X Life saving and may not be
capsules crucial can be substituted
Co-trimoxazole X Life saving (Co-trimoxazole
480mg tablet prophylaxis service will be
interrupted)

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Conducting VEN Analysis

Purpose: for proper budget utilization

 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.

11/30/2024 Nanati L 132

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

11/30/2024 Nanati L 133

 ABC Analysis
 Method for determining and comparing
pharmaceutical consumption and costs within
the health facility

 “Separating the vital few from the trivial many”

- Pareto principle

 Tool for identifying many medicine use

problems
11/30/2024 Nanati L 134
ABC Analysis: A, B, and C Medicines (1)

Percentage of Percentage of
Category Budget Medicines Ordered

A medicines 70–80% 10–20%

B medicines 15–20% 10–20%

C medicines 5–10% 60–80%

11/30/2024 Nanati L 135

Sources of Data for ABC Analysis

 Purchase records (periodical, annual)

- Model 19, purchase invoice, stock card and bin card

 Consumption records (periodical, annual)

- Model 22, stock card, bin card, dispensing records

11/30/2024 Nanati L 137

11/30/2024 Nanati L 138
 Comparison table for each class of drugs
S/N Class “A” items Class “B” items Class “C” items
(High consumption value) (Moderate consumption value) (Low consumption value)

1 Very strict control Moderate control Loose control

2 No or very low safety stock Low safety stock High safety stock

3 Maximum follow-up and expediting Periodic follow-up Follow-up and

expediting in exceptional
cases

4 Rigorous value analysis Moderate value analysis Low value analysis

5 Carefully handled Can be handled by middle Can be fully delegated

management
6 Frequent ordering or weekly delivery Once in three months Bulk ordering once in 6
months
7 Weekly control statements Monthly control reports Quarterly control reports

8 Accurate forecasts in material Estimates based on past date on Rough estimate for
planning
11/30/2024 present
Nanati L planning 139
Steps in ABC analysis
Step 1
• Take note that ABC analysis will be advantageous if the
analysis is done on not less than three years
consumption data.

Step 2
• List all items (drug, medical supplies, lab. reagents)
purchased during the year at which the analysis being
done and enter the unit cost for each item in the list
(data source:- PFSA sales invoice, receiving models and
bin card.
11/30/2024 Nanati L 140
Step 3
• Crosscheck the price of each items purchased that is
found in model 19 (at pharmacy) does exactly correlate
with that of the finance section file.

Step 4
• Add items that might be purchased through petty cash,
and money paid for loading and unloading from the
drug budget.

11/30/2024 Nanati L 141

 Steps cont’d
Step 5
• Enter quantities consumed for each item during the
period of analysis being done (e.g. 1 year).

Step 6
• Calculate the total value of consumption (consumed
quantities) for each item
(Total value = Consumed quantities x unit price).

Step 7
• Sort the list in alphabetic order.
11/30/2024 Nanati L 142
Step 8
• Aggregate drugs, (of the same active ingredient, same
dosage form and same strength but with different unit
of measure and packing size), purchased at different
times with different price to one. After doing so for
every item purchased,

Step 9
• Sort the list in descending order by total value.

11/30/2024 Nanati L 143

Step 10
 Calculate the percentage of total value for each
aggregated item
 (Percentage = Total value of each item divided by the
total budget spent for procurement during the analysis
period multiplied by 100).

◦ This value tells us the amount of each

items that took from total budget.

11/30/2024 Nanati L 144

 Step 11
Calculate the cumulative percentage of total value
for each item
E.g. Cumulative percentage for item one = percentage of
itself;
Cumulative percentage for item two = percentage of
item one + percentage of itself;
Cumulative percentage for item three = percentage of
item one + percentage of item two + percentage of itself
and it can continue like this for all items in the list
11/30/2024 Nanati L 145
Step 12
• Choose cutoff points for A (70-80%), B (15-20%), and C (5-10%)
class medicines based on the drug category table.

100%
90%
Cumulative Items Value (%)

80%
70%
60%
50% 8
40%
30%
20%
10%
0%
0%

5%

%
10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95
Cumulative No. of Items (%)
11/30/2024 Nanati L 146
 Quiz 2
1. Write the core management supports
important in drug management cycle?
2. What is the importance of selecting drugs by
their generic name?

11/30/2024 Nanati L 147

3.3 Quantification
3.3 Quantification of drug requirements
• Quantification- how much product is required
for purchasing
– Estimates the required finance
• To estimate needs, consider
– Available funds
– Storage space capacity
– Human resource
– Capacity to deliver services

11/30/2024 Nanati L 149

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
11/30/2024 Nanati L 150
• 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

11/30/2024 Nanati L 151

 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.

11/30/2024 Nanati L 152

• This method is used if
i) The health facility is adequately funded.
ii) The health facility has acceptable patterns of
prescribing
iii) The health facility has adequate and uninterrupted
drug supply.
iv) The health facility has reasonable good stock
management, complete and accurate consumption
and stock out information
v) The health facility has low level of wastage and
losses
11/30/2024 Nanati L 153
 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
– The number of the days in which the drug was out of
stock
– The lead time for the last procurement
• average from last several procurements
11/30/2024 Nanati L 154
NB! Sources of data:
• stock records, and/or distribution report
(central/regional /district distribution point)
• invoices from supplier, dispensing records,

11/30/2024 Nanati L 155

 Consumption Method
4.Calculate average monthly consumption
CA= CT/(RM - (DOS/30.5) ………..equation 1
Where
CA =average monthly consumption, adjusted for stock out
CT = total consumption during the review period, in BU
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
11/30/2024 Nanati L 156
 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
11/30/2024 So= stock now on order,
Nanati Lin BU 157
 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.
11/30/2024 Nanati L 158
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%
11/30/2024 Nanati L 159
 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
11/30/2024 Nanati L 160
 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

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 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.
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 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.
N.B:- morbidity method is estimation of required drug to treat
common disease based on standard treatment protocols and
epidemiological data.
11/30/2024 Nanati L 163
 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.

11/30/2024 Nanati L 164

 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
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
11/30/2024 Nanati L 165
 Morbidity method
4)Collect morbidity data for each health problems
treated
Estimate expected number of contacts
CE= C+(C x AU)
• Where, C- past total no. of contacts
AU- Use adjustment
CE-expected total no. of contacts

11/30/2024 Nanati L 166

 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
11/30/2024 Nanati L 167
 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.
11/30/2024 Nanati L 168
 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
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

11/30/2024 Nanati L 169

 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)
11/30/2024 Nanati L 170
 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
11/30/2024 Nanati L 171
 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
11/30/2024 Nanati L 172
 Morbidity method
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
11/30/2024 Nanati L 173
 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
11/30/2024 – 13,905,412 Nanati L 174
 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
11/30/2024 Nanati L should resemble in terms of
175
 Proxy consumption method
– 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

11/30/2024 Nanati L 176

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

11/30/2024 Nanati L 177

 Proxy consumption method
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
11/30/2024 Nanati L 178
 Proxy consumption method
Example
• Estimate Ampicillin 250mg required from the standard
to the target system based on the following information
• 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

11/30/2024 Nanati L 179

 Proxy consumption method
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

11/30/2024 Nanati L 180

 Proxy consumption method
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

11/30/2024 Nanati L 181

 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.

11/30/2024 Nanati L 182

 Service level projection of budget
requirements
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
11/30/2024 Nanati L 183
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
11/30/2024 Nanati L 184
 Service level projection of budget
requirements
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

11/30/2024 Nanati L 185

Summary question
☺Identify the four quantification methods and
enumerate the pros and cons of these
quantification methods?

11/30/2024 Nanati L 186

3.4 Managing Procurement
 Good Procurement Practice
Procurement
– is the process of acquiring supplies from private or
public supplier or through purchasing from
manufacturer or agencies or bilateral aids program.
• Good Procurement Practice
– Generic name
– Limited to EML list or formulary list
– Bulk purchases
– Formal supplier qualification and monitoring
– Competitive bidding process
11/30/2024 Nanati L 188
 Good Procurement Practice
– Commitment to a sole source
– Order quantities based on reliable estimate of
actual need
– Reliable payment and good financial management
– Transparency and written procedures
– Separation of key functions
– Product quality assurance program
– Annual audit with published results
– Regular reporting on performance

11/30/2024 Nanati L 189

11/30/2024 Nanati L 190
 Procurement Challenges
Accurate quantification and forecast data
Lengthy procurement process
Delays in funding allocation and release
Product quality assurance
Transparency

11/30/2024 Nanati L 191

 Factors influencing pharmaceutical prices
and total costs
 Unit price
– Competition among supplier
• number of products and generic version
– Rule of five
• Gov’t policy
– registration, licensing, prescribing, dispensing
• Procurement method
 Reorder frequency and the total cost of
pharmaceutical purchasing
– Total cost = Drug acquisition price + inventory holding
cost + purchase operating cost + shortage cost
11/30/2024 Nanati L 192
 Factors influencing pharmaceutical prices
and total costs
– Cost minimized by Reorder frequency
• Interval b/n order (annual, scheduled,
perpetual)
• The interval for a system is guided by Safety
stock, target- lead time, consumption pattern,
service level objectives
Visible and hidden costs
– Total cost= Hidden cost + visible cost

11/30/2024 Nanati L 193

11/30/2024 Nanati L 194
 Procurement Methods
Open tender
– is a formal procedure by which quotation are invited
from any manufacturer or its representative on a local or
worldwide basis
– Subject to the term and conditions specified in tender
invitation
Restricted tender (closed bid or selective tender)
– interested supplier must be approved in advance
– Prequalification process e.g Adhering to GMP, past
supply performance, financial viability and related factor

11/30/2024 Nanati L 195

 Procurement Methods
Reverse auction
☞ Variation of restricted tender
☞ Qualified bidders submit an official offer
☞ the lowest offer received is posted publicly
without naming the bidder in the first round
☞ qualified bidders are invited to offer lower
prices than posted low price.
☞ The process continues round by round until no
more prices are submitted.
11/30/2024 Nanati L 196
 Procurement Methods
Competitive negotiation or negotiated
procurement
• buyer approaches a limited number of selected
supplier (at least three) for price quotation.
• Possible to bargain specific price or service
arrangements
E.g. reduced price for ARV
• Mainly used in private sector

11/30/2024 Nanati L 197

 Procurement Methods
Direct procurement
• direct purchase from single supplier either at
the quoted or negotiated price
• Simplest, most expensive method of
procurement
• For single source drugs (has 3 options)
– negotiated or direct procurement
– selection of alternative drugs

11/30/2024 Nanati L 198

E- procurement
E- procurement is internet based tendering

11/30/2024 Nanati L 199

 Inventory Management

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• inventory Management is the process and
maintaining of stock properly at all levels and
at all times.

• It is the management of the routine ordering

process.

11/30/2024 Nanati L 201

 Inventory Management
Purpose of an Inventory Control System
– To determine when stock should be ordered/issued
– To determine how much stock should be
ordered/issued
– To maintain an appropriate stock level of all products
• A well designed and well operated inventory
control system
prevents shortages, oversupply, and expiry of
pharmaceuticals

11/30/2024 Nanati L 202

Issues to be considered during designing or
upgrading IM
1. Defining the context of IM system must function
– Independent demand system vs Dependent demand system
– Pull or push distribution system
2. Determination of the type of stock records and
inventory reports needed
• Stock records
– Primary source of information
– Can be manual or computerized
– Commonly used manual records
• Vertical file records, Kardex system, Ledger system

11/30/2024 Nanati L 203

 stock keeping records
Purpose of stock keeping records?
– to record information about items in storage.
• What essential data items do stock keeping
records contain?
– the quantity of stock on hand
– the quantity of losses and adjustments.
– Products stored in a storeroom and generally are not
distributed (dispensed) directly from the storeroom to
the customer.
11/30/2024 Nanati L 204
 stock keeping records
When are entries to stock keeping records made?

– whenever products are received or issued.

– when stock is counted during a physical inventory.

When the stock keeping record is full, a new

record is started using the ending balance from
the previous record.

11/30/2024 Nanati L 205

 stock keeping records
How are the data on a stock keeping record
organized?
– Stock keeping records are organized by date.
– They record receipts, issues, losses and
adjustments, and the balance on hand.
– They also record the results of physical inventories
(when items are counted to verify the quantity in
storage).

11/30/2024 Nanati L 206

• In what formats are stock keeping records
printed?
– Two stock keeping records are used in the
inventory management
– the Bin Card and the Stock Record Card.

11/30/2024 Nanati L 207

 stock keeping records

11/30/2024 Nanati L 208

Inventory Control/Management system

Bin card
• Is an individual stock keeping card that keeps
information about a single lot of a product.
• One bin card should be maintained for each:
– Pack size, form or presentation or dosage form of
each commodity.
• Bin cards are usually displayed at the bins (or
shelf) where the product is found.

11/30/2024 Nanati L 209

• Good to maintain stock records for each item
– To improve accuracy and accountability
• Typically, bin card is combined with ledger,
kardex or computer system
• Computerized
Efficient to manage inventory with perpetual or
periodic purchasing
Easy to retrieve information
Easy for reporting

11/30/2024 Nanati L 210

NB! Stock records (manual or computerized)
- Must be current and accurate
• Stock count is important:-
– Reordering purpose
– Determining inventory value
• Stock count can be done
– Annually
– Cyclic counting → best
• No shut down of warehousing and distribution
• Relatively easy to trace discrepancy if it arise

11/30/2024 Nanati L 211

• Methods of cyclic counting
– Assign counting frequency and timing e.g. ABC
category
– A system of rotating d/t staff members
Activity report and performance monitoring
• The information from the stock records should
be compiled in reports for use for management
decisions, for purchasing activity etc.
– Periodic vs Routine

11/30/2024 Nanati L 212

Report from storage facilities:-
– Stock position (on hand, on order)
– Beginning and ending inventory value, average
inventory holding cost
– Value of Supplies issued and received
– Change in inventory value and any discrepancy noted
during stock count
– Consumption pattern
– Service level (from supplier to medical store to health
facility)
– Medicines at risk of expiry
11/30/2024 Nanati L 213
Report from Purchasing & financial departments:
– Budget status
• year to date expenditure vs. target
• amount remaining
– Purchase and expenditure by supplier and operating
unit
– Summaries of account payable to supplier
– Status of outstanding order
– Comparison
• Actual vs expected lead time
• Actual price vs projected cost
• Item purchased and need of projection

11/30/2024 Nanati L 214

3.Selection of items to be stocked as standard items
Reason to hold a stock
– To ensure availability
– To maintain confidence in the system
– To reduce the unit cost of medicine
– To avoid shortage cost
– To minimize ordering cost
– To minimize transport cost
– To allow fluctuation in demand
Disadvantage of holding high stock
– Capital can be tied up in inventory → unavailable for other purpose
– Cost (personnel, utilities, insurance, storage facilities and other
– Loss (spoilage, expiry, obsolescence, theft)
11/30/2024 Nanati L 215
Which item to be stocked?
• Stock versus non stock – items are decided
based on
Stock movement (high vs low)
ABC analysis
VEN system
Level of use
Aspirin, Anticancer ( all level vs tertiary care
hospital)
Local availability
11/30/2024 Nanati L 216
4.Maintenance of appropriate level for different
class of items
• Service level:
– percentage of individual items ordered from a supplier
or warehouse that is issued from stock on hand
• Service level= (# items issued/# items requested) x
100
5.Adoption of a decision rule or a model for
determining when to order and determining how
much to reorder
11/30/2024 Nanati L 217
 ``
• To help maintain adequate stock levels for each health facility in
the system, one needs to know:
– the maximum months of stock
– minimum months of stock
– emergency order point
• The maximum months of stock
– is the largest amount of each pharmaceutical a facility should hold at
any one time.
• overstocked and expired
• The minimum months of stock
– is the approximate level of stock on hand at the end of the reporting
period when an order is placed.
• The emergency order point
– is the level where the risk of stocking out is likely, and an emergency
order should be placed immediately.
11/30/2024 Nanati L 218
 Example: Health logistics system of Ethiopia
Level Review Maximum Minimum Emergency
Period Months of Months of Order Point
Stock Stock

HC and Every other 4 months 2 months 0.5 months

Hospitals month (= 2 wks)

Health Monthly 2 months 1 months 0.25

Posts months
(= 1 wk)

11/30/2024
Nanati L 219
 Types of Max-Min inventory Control
Systems
Determining How Much to Order or Issue
• Stock Status
– Purpose of assessing stock status is to determine how
long supplies will last.
• How much we have of a certain product = How
long that product will last(in # of periods How
much we use during a given period

11/30/2024 Nanati L 220

Calculating Order or Issue Quantities
– Order/issue quantity = Max stock quantity − stock
on hand
• If a facility, for some reason, has not received the
previous order or issue, but is positive that stock
will arrive, they should subtract the quantities
expected from the next resupply quantity.
– Order/issue quantity = Max stock quantity − stock
on hand − quantity on order

11/30/2024 Nanati L 221

Example on Forced ordering ICS.
– calculate the quantity of Chloroquine to order
if the maximum stock level for Chloroquine is 4
months and an emergency order point of 1
month. One case of 300 Chloroquine was
ordered and has not yet been received. Use an
average of the last 6 months data for your
calculations.

11/30/2024 Nanati L 222

 Types of Max-Min………….cont’d
Chloroquine Dispensed to Users
October 11 178
November 11 552
December 11 540
January 12 846
February 12 630
March 12 578
April 12 812
May 12 508
Balance of Chloroquine on hand May 30, 2012 is 756 tablets

11/30/2024 Nanati L 223

 Types of Max-Min………….cont’d
Step 1: Calculate average monthly quantity of
Chloroquine consumed
– AMC = Total Chloroquine tabs/6 months = 3914/6=652
tabs per month
Step 2: Calculate reorder quantity
– Max stock Qty = Average monthly Consumption(652) X
MAX months (4) = (2608 )
• Order Quantity =max Qty(2608)-SOH (756)-SOO(300)
=1552
• Order Quantity =1552
11/30/2024 Nanati L 224
 Types of Max-Min Inventory Control Systems
Three Types of Max-Min Inventory Control Systems
– The same formula is used to determine how much to order or
issue for each of the systems
– The basic difference b/n the systems
• is the trigger for ordering or issuing
• In a forced-ordering system
– end of the review period
• In a continuous review system
– when the facility reaches the minimum level.
• In a standard system
– end of the review period for the commodities that are at the
minimum level.
11/30/2024 Nanati L 225
1.Forced-ordering max-min system
– The inventory control system of Ethiopia.
– all facilities are required to report on a fixed schedule for all
products
• Health Posts – monthly
• Health Centers and Hospitals – every other month
• Storekeeper decision rule to resupply
– At the end of each review period, review all stock levels and
order or issue enough stock to bring the levels up to the
max.
– Place an emergency order if the stock level for any item falls
below the emergency order point before the end of the
review period.
– all products are re-supplied each time a report is completed
11/30/2024 Nanati L 226
 Types of Max-Min Inventory Control Systems
Advantages of forced-ordering max-min system
– rule for resupply is simple
• order/issue every item at the end of the period.
– easier to ensure the availability of transport resources
• b/c orders are placed at regular intervals
– Every facility orders or is resupplied at the end of every
review period
– No need of storekeepers constantly assess stock status,
unless they think a potential stock out is possible
Disadvantage of a forced-ordering system
– orders for some items may be for small quantities
• B/c all items are ordered regardless of the stock on hand.
11/30/2024 Nanati L 227
Types of Max-Min Inventory Control Systems
Forced –ordering variation: delivery truck system
• also called a topping up or bread truck system
or Vendor Managed Inventory (VMI) system.
• difference b/n regular vs delivery truck forced-
ordering system
– the way the deliveries are made
– a truck is loaded with supplies at the end of the
review period.
– The truck and a delivery team travel to each facility
– assess the stock & leave (top up) an amount of
11/30/2024
each product Nanati L 228
Advantages of the forced-ordering delivery truck system
 The order is filled on the spot
– the lead time is zero
– lowers the min and the max stock levels.
 Damaged or expired products can be put back on the truck for
disposal
 The truck can be sent out with a full load of supplies,
eliminating multiple small orders.
 The LMIS report can be completed and collected at the time of
delivery.
– Avoid delayed reporting
• The training requirements are significantly less for the
facility staff.
• If a supervisor goes on the truck for deliveries, on-the-
job training and supervision
11/30/2024
at the various stops.
Nanati L 229
Disadvantages of the forced-ordering delivery truck
system
 All types of max-min systems rely on their delivery
trucks.
– system is vulnerable to breakdowns
– the whole system breaks down
 A sufficient number of staff must be available in the
office
– team leaders are away making deliveries.
 Require larger trucks
– always carry more stock than they will actually
deliver.
11/30/2024 Nanati L 230
 Types of Max-Min Inventory Control Systems
2.Continuous review max-min system
• Store keeper decision rule
– Review the stock level of each item every time you
make an issue.
– If the stock level is at the min, or has fallen below
the min, order enough stock to bring the level up to
the max.
• The least appropriate for most health
programs...why????

11/30/2024 Nanati L 231

 Types of Max-Min Inventory Control Systems
In a continuous review system—
• The review period is not fixed
• The storekeeper must know both the max and min stock
levels.
• The storekeeper does not need an emergency order point
– an order can be placed any time stock is needed.
• The storekeeper must assess stock status each time an issue
is made.
– storekeeper’s workload increases if there is many item
• The storekeeper must be able to order – pull system
– b/c only the storekeeper determine stock level (min or not)
• A continuous review system must be a pull system.
11/30/2024 Nanati L 232
Types of Max-Min Inventory Control Systems
Advantages of continuous review max-min system
 rule for resupply is simple: reaching minimum
 The system is more responsive and flexible
– orders can be placed at any time.
 Small orders are eliminated
– stock levels are at the min when an order is placed.
Disadvantages of a continuous review system
 Transportation resources are harder to schedule.
 Overload storekeepers in large facilities with a large
number of products
11/30/2024 Nanati L 233
 Types of Max-Min Inventory Control
Systems
Continuous review system variation:
two bin
• Resupply rule is the same
• The difference
– the way of determining when the
min has been reached.
• two equal-sized bins of each
individual product
• When the first bin is empty, the
min has been reached.
11/30/2024 Nanati L 234
 Types of Max-Min Inventory Control Systems
Advantages continuous review system variation: two bin.
• Require less training than a normal pull systems
– empty bin
• No calculations are required and paperwork is minimal.
Disadvantages:
• bin size must be continually reviewed
– If consumption for products is not stable

3. Standard max-min system

• Resupply (when to and how much to order) is based on
– Reviewing all stock levels at the end of each review period.
– Falling below the min
11/30/2024 Nanati L 235
 Types of Max-Min Inventory Control Systems
In a standard system—
 Ordering/issuing new stock is based on the min stock level and the
review period.
 the storekeeper must know the min, max, and review period.
 an emergency order point is needed
– to ensure that a stock out does not occur between review
periods.
 the stock status must be assessed at the end of each review period
Advantages of standard max-min system
Eliminate small orders
Avoid the need to assess stock status continually
Reduce the number of calculations
Transportation can be scheduled for specific times
11/30/2024 Nanati L 236
 Types of Max-Min Inventory Control
Systems
Disadvantages:
• Higher min stock level
– Increase the likelihood of expiry
– Require more storage capacity,
– Increased costs.
• More training for the storekeepers may be
required
– b/c of their decision rules are more complex.

11/30/2024 Nanati L 237

Question
– Identify the different types of purchasing model,
their limitations and the recommended situation
for applying the model

11/30/2024 Nanati L 238

Quality Assurance for Drug Procurement
Drug quality
• Quality of the final drug product is determined by
– Raw material (ingredient)
– Equipment
– Technical knowhow
– Packaging
– storage
• Defining assessing drug quality
– Establish quality standards:
• e.g. BP, USP, EP,IP
– Identity, Purity, Uniformity of dosage form, Bioavailability,
Bioequivalent, Stability etc
– Analytical methods
• for newly marketed drug when the standards are not established
11/30/2024 Nanati L 239
 Quality Assurance for Drug Procurement
Consequence of poor drug quality
• Lack of therapeutic effect may lead to prolonged illness
• may induce toxic or adverse reactions
• wastes money
• may affect program credibility
Practical approaches to quality assurance
 Careful product selection
– Powders for reconstitution instead of injectable liquids
– Powders for reconstitution instead of oral suspensions
– Tablets instead of capsules
 Careful supplier selection
– Certification, supplier reliability, product quality
– inspecting product sample
11/30/2024 Nanati L 240
 Quality Assurance for Drug Procurement
 Certification of good manufacturing practice
– cGMP certificate
 Batch certification
 Inclusion of detailed specification in the contract
– Name of the pharmacopeia reference standard to assess drug
quality
– Language for the product label
– Minimum information required on the label
– Additional information such as product registration
– Standard for packaging
• Withstand storage and transport conditions
 Procedures to verify that the shipped good meet the specification.
– Pre and post shipment inspection
– Analytical drug testing
11/30/2024 Nanati L 241
 Quality Assurance for Drug Procurement

Procedures to monitor and maintain the

quality of drug
– Proper storage and distribution procedures
– Appropriate dispensing
– Instructions to the patient on proper use of
medications
– Product defect reporting programs

11/30/2024 Nanati L 242

 Drug Donation
• Disaster and suffering
– Donation of medicines
• Problems with drug donations
– Donated drugs are often not relevant for the emergency
situation or for the level of care that is available
– Health workers are not always familiar with donated
drugs
– The drugs are often not registered for use in the
recipient country
– may not comply with local treatment guidelines

11/30/2024 Nanati L 243

 Drug Donation
– The drugs that arrive are frequently unsorted, difficult
to identify, unknown in the recipient country, labeled
with brand names or a labeled in a language that is not
locally understood
– The quality of the drugs does not always comply with
standard in the donor country. Donated drugs may
have expired or may expire before they reach the
patient, or they may be returned drugs (half finished
packages that have been returned to the pharmacy)
– The distribution plan often ignores normal
administrative procedures.
– Donation of returned drugs
11/30/2024 Nanati L 244
 Drug Donation
Core principles of donation
 Donation should be intended only to assist the recipient and
all efforts should be made to maximize its positive effect.
 Donation should be given with full respect of the authority
of the recipient and be supportive of existing government
policies and administrative arrangements.
 No double standard should be applied: if the quality of an
items is an acceptable in the donor country, it is also
acceptable as a donation
 Effective communication must be maintained between the
donor and the recipient: donation should be based on
expressed need and should be sent unannounced.

11/30/2024 Nanati L 245

3.6 Distribution

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• Drug Distribution is a continuous process of
receiving drugs from the suppliers and moving
them safely/securely to the many point in the
health care system at which the drugs will be
dispensed to patients.

11/30/2024 Nanati L 247

 Distribution
Goal of good distribution system
Maintain a constant supply of medicines
Keep medicines in good condition (storage)
Minimize medicines losses caused by spoilage and
expiry
Rationalize pharmaceutical storage points
Use available transports as efficiently as possible
Reduce theft and fraud
Provide information for forecasting medication needs
Incorporate a quality assurance program
11/30/2024 Nanati L 248
 Distribution cycle

11/30/2024 Nanati L 249

 Distribution….cont’d
Push vs pull system
Pull system
• Each level of the system determines what types
and quantities of medicines are needed and
places orders with the supply source
Push system
• Supply source at some level of the system
determine what types and quantities of
medicines will be delivered to lower levels
11/30/2024 Nanati L 250
 Distribution….cont’d
Conditions favouring a pull system
– Lower level staff members are competent in
assessing needs and managing inventory
– Sufficient supplies are available at a source to
meet all program needs
– A large range of products is being handled
– Field staff members are regularly supervised
and performance is monitored

11/30/2024 Nanati L 251

 Distribution….cont’d
Conditions favouring a push system
– Lower level staff are not competent in inventory
control
– Demand greatly exceeds supply, making
rationing necessary
– A limited number of products is being handled
– Disaster relief is needed, or the situation that
calls for short term supply through prepacked
kits
11/30/2024 Nanati L 252
 Distribution….cont’d
• Collection vs Delivery
• Transport
– Using private sector alternatives
– Evaluating fleet capacity
– Planning transport system improvements
– Acquiring and disposing vehicles
– Managing vehicle use
– Maintaining vehicles
– Maintaining medicines quality during transport
11/30/2024 Nanati L 253
 Good storage practices
• Storage condition based on temperature
– information directly from the manufacturer.
– In a deep freeze (-15°C)
– In a refrigerator/cold 2°C -8°C
– Cool temperature 8°C-15°C
– Room temperature 15°C - 25°C

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 Good storage practices
• Clean and disinfect storeroom regularly
– Rodents and insects
– Avoid food and drink
• Store supplies in a dry, well-lit, well-ventilated
storeroom out of direct sunlight.
– extreme heat and exposure
– E.g Latex condom (> 40 oC )
– air conditioning
– ceiling fans and forced ventilation.
– Avoid direct sunlight( dark colored or opaque bottle
11/30/2024 Nanati L 256
 Storage Guidelines……….cont’d
Secure storeroom from water penetration.
– Destroy supplies and packaging
– Repair leaky roofs and windows
– Use dehumidifiers
– Stack supplies off the floor on pallets
• 10 cm high and 30 cm away from walls
• Store condoms and other latex products away from
electric motors and fluorescent lights.
– Emit ozone → rapidly deteriorate condoms
– proper packaging (i.e., boxes and cartons)
– Keep away from light and motors
11/30/2024 Nanati L 257
 Storage Guidelines……….cont’d
• Ensure that fire safety equipment is available
and accessible and personnel are trained to
use it.
– Strictly prohibit smoking in the store.
– Place smoke detectors
– Check smoke detectors every 2–3 months to
ensure that they are working properly.
• Stopping the fire

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 Storage Guidelines……….cont’d
– fire extinguishers
– water douses wood and paper fires
– use buckets of sand
– Train staff in the use of the available fire safety
equipment
– Flammables
• Must be stored in special buildings or rooms.
• well ventilated and fireproof.

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 Storage Guidelines……….cont’d
• Maintain cold storage, including a cold chain,
for commodities that require it.
– Ex. Insulin, Oxytocin, vaccines
– Damage if the cold chain is broken
– Refrigeration (electric or kerosene powered)
– Cold boxes or insulated coolers

11/30/2024 Nanati L 260

 Storage Guidelines……….cont’d

11/30/2024 Nanati L 261

 Storage Guidelines……….cont’d
• Keep narcotics and other controlled substances
in a locked place.
– Dangerous when misused
– Stolen for sale on the black market
Limit access to the storeroom
Track the movement of products.
Physical inventories

11/30/2024 Nanati L 262

 Storage Guidelines……….cont’d
• Store flammable products separately from
other products.
– bottled gas or kerosene powers
– Refrigerators
– Alcohol
– mineral spirits power
– Bunsen burner
Store away from other products
Fire extinguisher.

11/30/2024 Nanati L 263

 Storage Guidelines……….cont’d
• Stack cartons at least 10 cm off the floor, 30
cm away from the walls and other stacks, and
not more than 2.5 m high.
– promote air circulation
– facilitate the movement of stock
– cleaning and inspection
– Pallets - pest, water, and dirt
– Stocked pallet, Pallet racking, Shelves

11/30/2024 Nanati L 264

 Shelves: Basic Rules
Shelves and cupboards, are used to
store smaller products; if possible
Batch No: Batch No: Batch No:
shelves must be adjustable to allow Expiry: Expiry: Expiry:

• Heavy and for packages of different sizes Batch No:

Description
Batch No:
Description
Batch No:
Description
Expiry: Expiry: Expiry:
fragile items on Batch No: Description
Description
Expiry:
Batch No: Description
Expiry:
Batch No:
Expiry:
the lower Batch No:
Description
Batch No:
Description
Batch No:
Description

shelves Expiry:
Description
Expiry:
Description
Expiry:
Description

• Frequently Reserve Stock Reserve Stock

picked items at
waist height Batch No: Batch No: Batch No:
Expiry: Expiry: Expiry:
• Extra stock on Description Description Description
Batch No: Batch No:
Expiry: Expiry:
the upper Batch No: Batch No: Batch No:
Description Description
shelves (if it is
Expiry: Expiry: Expiry:
Description Description Description

not too heavy)

• Boxes tidy and Batch No:
Batch No: Expiry:
closed as much Expiry:

as possible Description
Description

Fragile Items Fragile Items Heavy Items Heavy Items

11/30/2024 Nanati L 265

 Pallets: Basic Rules
Stack cartons on pallets
m At least 10 cm off the floor
c
30 At least 30 cm away from the walls and other stacks
No more than 2.5 m high (general rule)

• Pallets are used to

Description: Description: Description: Batch No:
Expiry: store bulk items and
Description larger cartons
Description: Description: Description:
Batch No:

Batch No:
Expiry:
Description
• They keep things off
Description: Description: Description: Expiry: the floor and can be
Description
used with forklifts to
Batch No: Batch No:
move around groups
Description:
Batch No: Batch No: Batch No:
Expiry:
Expiry: Expiry:
Expiry: Expiry:
Description: Description: Description: Description:
Description: Description:
Description: Description: of larger items
Batch No:
Batch No: Batch No: Batch No: • arrows point up and
Expiry:
Expiry: Expiry: Expiry:
Description: Description: Description: Description:
Description: Description: Description: identification labels,
Description:
Batch No: Batch No:
Batch No: Batch No:
Batch No:
expiry dates, and
Description: Description: Description:
Expiry:
Description:
Expiry:
Expiry:
Description:
Expiry:
Expiry:
Description: Description:
Description:
manufacturing dates
30 cm are visible
• Light goods
Block-stacked pallets • Items without expiry dates
• Items with very high turnover
11/30/2024 Nanati L 266
 Floor pallet

11/30/2024 Nanati L 267

 Block-Stacked Pallets

11/30/2024 Nanati L 268

 Pallet racking

11/30/2024 Nanati L 269

 Shelves

11/30/2024 Nanati L 270

 Storage Guidelines……….cont’d
• Store medical supplies away from insecticides,
chemicals, old files, office supplies, and other
materials.
– shelf life
– Reduce space
– Make products less accessible

11/30/2024 Nanati L 271

 Storage Guidelines……….cont’d
• Arrange cartons so that arrows point up.
• Ensure visibility of
– Labels
– Expiry dates
– Manufacturing dates
• First expire first out (FEFO)

11/30/2024 Nanati L 272

 Storage Guidelines……….cont’d

• Store supplies in a manner accessible for

FEFO, counting, and general management.
• Separate and dispose of damaged or expired
products immediately.
• Ensure Security

11/30/2024 Nanati L 273

 Health Care Waste Management
• Health care waste (HCW) products:-
Sharps (including used needles), used gauze,
blood/IV lines, gloves, infusion sets, scalpels,
blades, and broken glass
Expired drugs, laboratory reagents, and cleaning
solvents are also HCW products.
Non-hazardous waste— paper and packaging,
bottles, cans, and glass for general use.

11/30/2024 Nanati L 274

Health Care Waste Management….cont’d

• HCW is a major health and environmental

concern
– to protect HWs and facility staff, the community,
and the environment.
– adequate storage, handling, and transport from
the originating facility to the final HCW disposal.

11/30/2024 Nanati L 275

 HCW storage and handling
• Follow any existing SOPs
– Separate expired pharmaceuticals from unexpired
– separate HCW generated as
infectious hazardous
non-hazardous waste
non-infectious but hazardous
general waste.

11/30/2024 Nanati L 276

 HCW transportation and disposal
• Separate hazardous waste from regular waste
– To avoid contamination during transport

11/30/2024 Nanati L 277

HCW transportation and disposal cont’d

• The disposal of HCW uses different methods

☞ Autoclaving

☞ Incineration

☞ Burial in a protected pit

☞ Burial and fill for disposal.

11/30/2024 Nanati L 278

 Rational use of drugs
• The rational use of drugs
– requires that patients receive medications
appropriate to their clinical needs, in doses that
meet their own individual requirements for an
adequate period of time, and at the lowest cost to
them and their community.
WHO conference of experts
Nairobi 1985
11/30/2024 Nanati L 279
 Rational use of drugs
 Correct drug
 Appropriate indication
 Appropriate drug considering efficacy, safety,
suitability for the patient, and cost
 Appropriate dosage, administration, duration
 No contraindications
 Correct dispensing, including appropriate information
for patients
 Patient adherence to treatment
11/30/2024 Nanati L 280
5-55% of PHC patients receive injections -
90% may be medically unnecessary

11/30/2024 Nanati L 282

Rational drug use:
– Promotes quality of care and cost-effective
therapy.
– Improves patient compliance,
– Prevents unnecessary exposure to side effects,
– Maximize therapeutic benefits.

11/30/2024 Nanati L 283

A. Common Types of Irrational Prescribing

• Extravagant prescribing

• Over-prescribing

• In-correct prescribing

• Multiple- prescribing

• Under-prescribing
11/30/2024 Nanati L 284
B. Commonly Observed Irrational
Dispensing Practices

• Poor prescription review / interpretation

• Occasional dispensing of drug to wrong patient

• Substitution of prescribed drug (of different

chemical entity/ dosage form) without the

consent of the prescriber.

11/30/2024 Nanati L 285

 Commonly Observed Irrational Dispensing
Practices ….. Cont’d
• Dispensing without clear verbal, written information
and inadequate counseling time
• Bulk dispensing practice or dispensing inadequate
dose for patients
• Dispensing of prescription drugs without
prescription

11/30/2024 Nanati L 286

C. Irrational use of Drugs by Patient

Compliance:
Compliance is defined as the degree to which
patients behaviors (e.g., attending follow-up
appointments, engaging in preventive care,
following recommended medical regimens)
correspond with the professional medical
advice prescribed.

11/30/2024 Nanati L 287

Common Irrational use of Drugs by Patient

• Failure to take medication as prescribed:

– Not taking prescribed drugs at all
– Reducing the dose, Taking extra dose
– Premature discontinuation
• Inappropriate storage and disposal of
medication

11/30/2024 Nanati L 288

 Types of irrational drug use
• Misuse of drugs
– Self medication with prescription drugs
– Misuse of antibiotics
– Overuse of injection
– Taking medication whenever they feel ill
– Reserving medication for self medication even
antibiotics
– Sharing of drug prescribed for others
– Using expired drugs
11/30/2024 Nanati L 289
☎ Non – compliance could be intentional or non –
intentional
Unintentional non – compliance
Poor understanding of instructions
 Poor patient and health professional interaction
 Inability to read,
 Hearing difficulty & poor eyesight as the ink too faint,
writing may be too small
 Poor instruction. Example:- choice of language, use of
technical language
 Confusion and misunderstanding. E.g.:- due to vague
11/30/2024 and ambiguous instruction
Nanati L 290
Poor medicine management
 Multiple drug therapy,
 Complexity of the regimen, (Frequency, duration
times of a day to be taken)
 Forgetfulness and confusion - Lifestyle

Physical limitations
 Obtaining medicine distance, shift workers, rural
people
 Dysphasia: - difficulty in swallowing in stroke and
parkinsonism
11/30/2024 Nanati L 291
Intentional non-compliances
when patients make a conscious decision to deviate
from the prescribed regimen.
• Social and psychological factors
 Beliefs about medicine
 Religious observances
 the level of confidence the patient has on the medicine
 Expectations of treatment
 Cost of prescriptions
 The patient may see no advantage in taking a medicine
with its associated risks.

11/30/2024 Nanati L 292

Factors contributing to irrational drug use

11/30/2024 Nanati L 293

 Changing a Drug Use Problem:
An Overview of the Process

11/30/2024 Nanati L 294

Strategies to Improve Use of Drugs

11/30/2024 Nanati L 295

 Educational Strategies
Goal: to inform or persuade

• Training for Providers

– Undergraduate education
– Continuing in-service medical education (seminars, workshops)
– Face-to-face persuasive outreach e.g. academic detailing
– Clinical supervision or consultation
• Printed Materials
– Clinical literature and newsletters
– Formularies or therapeutics manuals
– Persuasive print materials
• Media-Based Approaches
– Posters, Audio tapes, plays, Radio, television

11/30/2024 Nanati L 296

 Managerial strategies
Goal: to structure or guide decisions

• Changes in selection, procurement, distribution to

ensure availability of essential drugs
– Essential Drug Lists, morbidity-based quantification, kit
systems
• Strategies aimed at prescribers
– targeted face-to-face supervision with audit, peer group
monitoring, structured order forms, evidence-based
standard treatment guidelines
• Dispensing strategies
– course of treatment packaging, labeling, generic
substitution
11/30/2024 Nanati L 297
 Economic strategies
Goal: to offer incentives to providers and consumers

• Avoid perverse financial incentives

– prescribers’ salaries from drug sales
– insurance policies that reimburse non-essential
drugs or incorrect doses
– flat prescription fees that encourage
Polypharmacy by charging the same amount
irrespective of number of drug items or quantity
of each item

11/30/2024 Nanati L 298

 Regulatory strategies
Goal: to restrict or limit decisions
 Drug registration
 Banning unsafe drugs
 Regulating the use of different drugs to different
levels of the health sector e.g.
– licensing prescribers and drug outlets
– scheduling drugs into prescription-only & over-the-
counter
 Regulating pharmaceutical promotional activities

Only work if the regulations are enforced

11/30/2024 Nanati L 299
 Tools to investigate the use of medicines

• Drug Use- is a process of prescribing, dispensing

and patient use of drugs.
• Irrational use of medicine
– reduces quality of care
– wastes resources
– may cause harm to patients.
• To address the problems
– Measure, analyze and understand the cause of the
problem
11/30/2024 Nanati L 300
 Stepwise approach to investigate the use of
medicines
STEP 1 - General investigation to identify problem
areas inappropriate use of medicines.
STEP 2 In-depth investigations of specific problems
– determine the size, nature and reasons underlying the
problem.
• Prescription audit, Qualitative methods, Drug utilization review
STEP 3 Develop, implement and evaluate strategies to
correct the problem
– e.g. Strategies to promote more rational use of
medicines.

11/30/2024 Nanati L 301

 Reasons to investigate drug use
• To describe current pattern of drug use
– Measure consumption of drugs
– Compare use by individual health facilities or prescriber
– Decide whether drug use is clinically justified or cost
effective
– Learn the influence of prescribing on pharmaceutical
costs
• To correct specific drug use problems
– Find and identify factors, and correct problems
• prescribing, dispensing or patient use

11/30/2024 Nanati L 302

 Reasons………cont’d
• To monitor drug use over time
– Monitor quality of care within a health facility
/geographic area
– Monitor the efficiency and cost effectiveness of
prescribing
 Data Required
– Quantitative and qualitative methods.

11/30/2024 Nanati L 303

Quantitative methods
– answer the question what is happening?
– describe the nature and extent of drug use practice
– create rate, average, or other summary measure
Qualitative methods
– answer why is it happening?
– Describe beliefs and motivation that underlie
particular practices.
– Observation, description, opinion or discussions
11/30/2024 Nanati L 304
 WHO/INRUD Drug Use Indicators
Drug use indicators
describe drug use at a given point in time or to
monitor changes over time.
Developed to measure performance in three general
areas
– Pharmaceutical prescribing practice by health provider
– Patient care, (both consultation and pharmaceutical
dispensing)
– Availability of facility specific factors which support
rational use
Core and supplementary drug use indicator
11/30/2024 Nanati L 305
 WHO/INRUD Drug Use……cont’d
Core drug use indicator
 Highly standardized
 do not need adaptation
 recommended for inclusion in drug use study using
indicators
 They do not measure all important aspects of drug
utilization
 Provide a simple tool for quickly and reliably assessing
a few critical aspects of pharmaceutical health in
primary health care
11/30/2024 Nanati L 306
 WHO/INRUD Drug Use……cont’d
Complimentary or supplementary indicator
difficult to measure
cannot be collected reliably in some settings.
less standardized
have to be defined before the indicator can be
used depending on local variables

11/30/2024 Nanati L 307

 WHO/INRUD Drug Use……cont’d
Core drug use indicator (12)
• Prescribing indicator (5)→
retrospective/prospective data
– Average number of drugs per encounter
– Percentage of drugs prescribed by generic name
– Percentage of encounter with an antibiotic prescribed
– Percentage of encounter with an injection prescribed
– Percentage of drugs prescribed from EDL or formulary

11/30/2024 Nanati L 308

 WHO/INRUD Drug Use……cont’d
• Patient care indicators (5) → Only prospective
data
– Average consultation time
– Average dispensing time
– Percentage of drugs actually dispensed
– Percentage of drugs adequately labeled
– Patients’ knowledge of correct dosage
• Facility indicators (2) → Only prospective data
– Availability of copy of EDL or formulary
– Availability of key drugs
11/30/2024 Nanati L 309
 WHO/INRUD Drug Use……cont’d
Complementary drug use indicator (7)
– Percentage of patients treated without drugs
– Average drug cost per encounter
– Percentage of drug costs spent on antibiotics
– Percentage of drug costs spent on injection
– Prescription in accordance with treatment guidelines
– Percentage of patients satisfied with the care they
received
– Percentage of health facilities with access to impartial
pharmaceutical Info.
11/30/2024 Nanati L 310
 Qualitative methods to investigate
problems of drug use
Quantitative methods of data collection
– do not tell us why there is a problem.
Qualitative methods
– used to investigate ‘why’ of prescriber, dispenser
and patient behavior.

11/30/2024 Nanati L 320

 Qualitative methods……cont’d
1. Focus Group Discussion (FGD)
– < 2-hour recorded discussion
– 6 - 12 non-random respondents population
– 2 - 4 discussions for each significant
– Moderator leads discussion
– Homogeneous respondents e.g. age, sex,
– Discussion topics pre-defined
– Reveals beliefs, opinions and motives

11/30/2024 Nanati L 321

 Qualitative methods……cont’d
Advantages of FGD
 good at eliciting the beliefs and opinions of a group
 Inexpensive, Quick, Easy to organize, Identifies a range of beliefs
Disadvantages of FGD
 Groups may not represent the larger population
 Successful outcome is very dependent on the skills of the
moderator who must balance outspoken participants against
shy ones.
 Tape recorders may inhibit participants but a note-taker may
miss some data
 Potential bias in analysis

11/30/2024 Nanati L 322

 Qualitative methods……cont’d
2. In-depth Interviews, Key informant interview
– One-to-one extended interview
– Questions are pre-determined but open-ended
– Often covers up to 30 topics
– Reveals beliefs, attitudes, and knowledge
– 5 to 10 interview enough to explore important
issues
– If target group is diverse, 5 to 10 held with each
subgroup
11/30/2024 Nanati L 323
 Qualitative methods……cont’d
Advantages In-depth Interviews, Key informant interview
 Can reveal unsought but significant data
 Less intrusive than questionnaire (if it is unclear, you can ask)
 Useful with illiterate respondents
Disadvantage
 Data analysis can be difficult b/c may generate lots of data
 Time-consuming and expensive
 Bias due to respondent saying things to please the
interviewer
 need for well trained interviewer

11/30/2024 Nanati L 324

 Qualitative methods……cont’d
3. Structured Observation
– Data can be coded indicators or scales, list of events or
behaviors or diaries
– Data collection instrument is structured
– Observers are trained to record what they actually see
– Useful for recording provider – patient interactions
– Assesses actual behavior
– count frequency of behaviors at least 30 cases per group
– To understand typical features , a few cases in 5-6
settings may be enough

11/30/2024 Nanati L 325

 Qualitative methods……cont’d
Advantages Structured Observation
 Observes actual behavior as opposed to stated behavior
 Best way to study provider patient interactions
 Opportunity to learn about provider behavior in its natural
setting
Disadvantages
 time consuming, expensive and may cause change in the
behavior of HWs
 Different observers may observe differently, Threatening to
those observed
 Behavior may not be natural, Need for skilled, patient
observers
11/30/2024 Nanati L 326
 Qualitative methods……cont’d
4. Structured Questionnaires
– Questions are standardized with a fixed set of
responses or options
– Respondents are selected so as to represent the
larger population
– Sample size depends on a sampling methods,
desired accuracy and available resources
– Useful for a large sample respondents
– Measures the frequency of attitudes, beliefs,
knowledge, and behavior
11/30/2024 Nanati L 327
 Qualitative methods……cont’d
5. Simulated patient survey
– Details of the condition are standardized
– Simulated patient purchase what is recommended
– Each facility should be visited by at least 5 simulated patients
– At least 20 facilities should be visited
Advantage Simulated patient survey
 Useful to compare knowledge and practice
 Identification of different practices for rich/poor, male/female,
rural/urban etc
Disadvantage
 Ethical issues, Need for simulators (speak local language,
purchase)
11/30/2024 Nanati L 330
11/30/2024 Nanati L 331
 6. Monitoring and evaluation
• Integral part of drug management cycle
• Provide a link between planning and
implementation
Monitoring
– refers to reviewing on continuous basis the
degree to which program activities are completed.

11/30/2024 Nanati L 332

 Monitoring………cont’d
• Monitoring is intended to
– Determine weather activities are being carried out
as planned
– Measure achievement targets
– Identify implementation problem to initiate
corrective action
– Identify and reinforce good performance

11/30/2024 Nanati L 333

 Designing monitoring system
• A practical strategy for developing a monitoring
– Use supervisory visit
– Establish a streamlined routine reporting system
– Identify sentinel sites
• for more detailed recording and reporting
– Plan and conduct special studies
• is not available through either routine reporting or sentinel
sites.
 No monitoring system is complete without
feedback.
11/30/2024 Nanati L 335
 Designing monitoring….contd
 Effective monitoring system requires prompt follow
up action.
 There are five types of action that a manager can take
– Provide positive feedback
– Provide corrective feedback
– Reallocate resources or reassign staff
– Adjust plans and targets to be more realistic on the basis
of actual experience
– Request additional information to further define a specific
performance problem and reason for the problem

11/30/2024 Nanati L 336

Evaluation
– refers to analyzing progress towards meeting
objectives & goals.
• Evaluation type
– Needs assessment (situation analysis)
• Design
• Assess current situation,
• develop program/project plan, acquire baseline for
comparison

11/30/2024 Nanati L 337

Formative evaluation (midterm review)
– Implementation
– Focus on implementation progress towards goals and
objectives
– improve program/project implementation
Summative evaluation (final evaluation)
– Follow up
– Assess program/project outputs
– measure impact of program / project impact to donor
– recommend future action
11/30/2024 Nanati L 338
Pharmaceutical Management
Information System
• The PMIS integrates p’cal data collection, the
processing and presentation of information
that helps staff at all levels of a country’s
health system make evidence based decisions
to manage p’cal service.

11/30/2024 Nanati L 340

 Functions of PMIS
• Converts pharmaceutical data into information
for use in:-
 Planning activities
 Estimating demands
 Allocating resources
 Monitoring and evaluation
• Improve accountability

11/30/2024 Nanati L 341

 The information systems pyramid

11/30/2024 Nanati L 342

 The features that distinguish a PMIS from LMIS

 The incorporation of patient specific data in

addition to product centered data
 Focus on decision making for p’cal services( not
just resupply)
 Information on outcomes related to medicine
use, ADR, &pharmacovigilance that affect p’cal
policy and selection decision
 Ability to triangulate consumption data with
clinical and patient specific data
11/30/2024 Nanati L 343
• The documents that form the basis of the information system can
be grouped into three
1. Record- keeping documents
• A combination of registers, ledgers, and filling systems (manual,
computerized, or both) is used to maintain data about the
activities of a specific organizational unit.
2. Data reporting forms
• Designed for transmission to other parts of an organization. E.g
requisition/issue vouchers, periodic status reports (monthly or
annual reports)
3. Feedback reports
• The reports are usually feedback to the units that first collected
and provided the data.

11/30/2024 Nanati L 344

 Key issues in designing or revising PMIS
• Involve users in design and pilot testing
• Be selective in choosing indicators
• Strive for representativeness
• Choose appropriate data collection method
• Integrate PMIS with other information systems
• Develop practical analysis methods for data
interpretation and use

11/30/2024 Nanati L 345

 PMIS information stage

11/30/2024 Nanati L 346

Pharmaceutical Marketing
• Marketing is a proven approach for
stimulating consumers to purchase new
services.
• “Marketing is the business function that
– identifies customer needs and wants,
– determines which target markets the organization
can serve best, and
– designs appropriate products, services, and
programs to serve these markets.”
11/30/2024 Nanati L 349
• As pharmacists work to expand their role by
providing new services, marketing can be used
to create demand for these services.

11/30/2024 Nanati L 350

 MARKETING MANAGEMENT PROCESS
• A marketing management process should
include three primary steps:
(1) evaluating a market,
(2) planning marketing strategies and tactics,
(3) implementing and controlling marketing
effort.

11/30/2024 Nanati L 351

1. Evaluating a market
entails consideration of both a macro
environment and a microenvironment.

A macro environment refers to forces that affect

the parties in a market, and encompasses
five sectors: economic, competitive,
technological, social, and regulatory.

11/30/2024 Nanati L 352

• Microenvironment evaluation involves
identification and appraisal of important
stakeholders.
• Such an assessment can result in identification
of parties that will facilitate, hinder, or not
affect the pharmacy's marketing efforts.

11/30/2024 Nanati L 353

• One way to assess a pharmacy's micro
environment is to perform a SWOT analysis
that can be used to assess the internal
strengths and weaknesses of the pharmacy in
context with the opportunities and threats
that may exist in its external environment

11/30/2024 Nanati L 354

• A stakeholder analysis can be part of the
SWOT analysis.
• A stakeholder is anyone who can affect the
success of the practice.
• They include other health-care providers,
community resources such as hospitals and
clinics, community leaders, public agencies,
employers, and third-party payers.

11/30/2024 Nanati L 355

2. Planning of marketing strategies and tactics
• A marketing plan should contain key elements
that are essential for successful implementation.
• The key elements of a marketing plan include
SWOT analysis
Goal and objective
Target markets
Marketing mix
Control processes

11/30/2024 Nanati L 356

• After the SWOT analysis is written, a set of
goal statements can be prepared.
• Goal statements are general and provide
direction for the practice to meet the mission
of the pharmacy.
• Each goal statement has its own specific
objectives that are the outcomes needed to
meet the goals

11/30/2024 Nanati L 357

• Target markets are those customers who
behave in similar patterns and can benefit
from the pharmacy care services offered by
the practice.
• It is important to identify key targets for the
marketing efforts so that it can be efficient
and cost effective.

11/30/2024 Nanati L 358

• The term for the variables that are under the
pharmacists' control is marketing mix.
• The elements of the marketing mix, also called
the 4 P's of marketing include;
1. Product
2. Price
3. Promotion.
4. Place

11/30/2024 Nanati L 359

3. Implementing and controlling marketing activities
• Two components of implementing and controlling of
marketing activities can be considered:
rollout of the service
 identifying the activities to be performed, when each
activity will occur, and who will be responsible for getting
it done
 It includes workflow and staffing, staff training, materials
and systems for service provision and documentation,
pharmacy layout, and marketing materials
monitoring of activities

11/30/2024 Nanati L 361