4_5947321985926171898.pptx fgjhddjk;lldtyl

kjdr

1. Drug supply management (Phar3144) Dawit K umilachew ( Bpharm , MSc) [email protected] 1 UNIVERSITY OF GONDAR COLLEGE OF MEDICINE AND HEALTH SCIENCES SCHOOL OF PHARMACY Department of pharmaceutics and social pharmacy

2. 3.1 The procurement process 2

3. Objectives Define procurement Explain operational principles of good pharmaceutical procurement Explain procurement mechanisms Describe procurement methods Identify purchasing models 3

4. The logistics cycle 4

5. Procurement Definition Procurement is the process of acquiring drug product through purchase, manufacture or donation . Pharmaceutical procurement is a specialized professional activity that requires a combination of knowledge, skills and experience . It is a major determinant of drug availability and the total health cost . 5

6. Cont … Procurement encompasses all the steps needed to obtain goods and services from an external source. This include; Identification and specification of needs Market scan and supplier identification Supplier communication, maintenance and warranty Negotiation/ warranty Logistics management Performance monitoring Follow up actions in case of default complaint 6

7. Cont … Pharmaceutical procurement is a complex process which involves many steps, agencies , ministries and manufacturers . No matter what model is used to manage the procurement and distribution system, efficient procedures should be in place : to select the most cost-effective essential drugs to treat commonly encountered diseases; to quantify the needs ; to pre-select potential suppliers ; to manage procurement and delivery; to ensure good product quality ; and to monitor the performance of suppliers and the procurement system . 7

8. Cont … Failure in any of these areas leads to lack of access to appropriate drugs and to waste . An effective procurement process should: procure the right drug in the right time obtain the lowest possible purchase price ensures that all drugs procured meet recognized standard quality arrange timely delivery to avoid shortage and stock out ensure supplier reliability with respect to service and quality 8

9. Cont … set the purchasing schedule, formulas for order quantities and safety stock levels to achieve the lowest total cost of each level of the system achieve these objectives in the most efficient manner possible. 9

10. Points to remember in the procurement of pharmaceuticals 1. Procure the most cost-effective drugs in the right quantities The first strategic objective is to develop an essential drugs list to make sure that only the most cost-effective drugs are purchased. Procedures must also be in place that accurately estimate procurement quantities in order to ensure continuous access to the products selected without accumulating excess stock. 10

11. Cont … 2. Select reliable suppliers of high-quality products The second objective is that reliable suppliers of high-quality products must be (pre-) selected, and that active quality assurance programs involving both surveillance and testing must be implemented wherever possible . 11

12. Cont … 3. Ensure timely delivery The third strategic objective is that the procurement and distribution systems must ensure timely delivery of appropriate quantities to central stores and adequate distribution to health facilities where the products are needed . 12

13. Cont … 4. Achieve the lowest possible total cost The fourth objective is that the procurement and distribution systems must achieve the lowest possible total cost . Every program can minimize the total purchasing costs by choosing the optimal purchasing model for their particular situation (e.g. annual or quarterly), taking into consideration order interval, safety stock and the re-order formula used. 13

14. Cont … The quality of the drugs purchased should not be compromised under any circumstances . Unlike other commodities, drugs must always be purchased using VFM (Value For Money) criteria instead of Low Bid criteria . 14

15. Cont … Drugs that are ordered for use in the health centre must be approved for use in the centre. Drugs in the health centre should be relevant to the pattern of endemic diseases as well as the type of services being provided in the health centre. It is advisable to request drugs on a regular basis to prevent shortages. 15

16. Cont … If drugs are not always available, patients may lose confidence in the health centre and will be discouraged from visiting it. It is important to make requests on a regular basis , as drugs will only be delivered when requested . The delivery time should be taken into consideration in ensuring that drugs are not in short supply. 16

17. 17 Figure: Drug procurement cycle Collect Consumption Data Choose Procurement Method Locate and Select Suppliers Specify Contract Terms Receive and Check drugs Make Payment Distribute Drugs Monitor Order Status Reconcile Needs and Funds Review Drug Selection Determine Quantities Needed

18. Operational Principles of Good P harmaceutical P rocurement There are twelve operational principles for good pharmaceutical procurement clustered in to four: Efficient and transparent management Financing and competition Drug selection and quantification Supplier selection and quality assurance 18

19. Efficient and transparent management Separation of key procurement functions and responsibilities that require different expertise . Transparency, written procedures and using explicit criteria to award contracts . Procurement should be planned properly and procurement performance should be monitored regularly ; monitoring should include an annual external audit. 19

20. Drug Selection and Quantification Public sector procurement should be limited to an essential drugs list or national/local formulary list . Procurement and tender documents should list drugs by their International Nonproprietary Name (INN), or generic name . Order quantities should be based on a reliable estimate of actual need. 20

21. Financing and Competition Mechanisms should be put in place to ensure reliable financing for procurement . Procurement in bulk . Competitive procurement methods, except for very small or emergency orders . Purchasing groups should purchase all contracted items from the supplier(s) which hold(s) the contract (sole-source commitment). 21

22. Supplier Selection and Quality Assurance Prospective suppliers should be pre-qualified, and selected suppliers should be monitored Criteria : Price and quality of products Delivery times Regulations Reliability Reputation Guaranties Product quality assurance program 22

23. Procurement Mechanisms Based on the responsible body for procurement and distribution: Central store system Autonomous supply agency system Direct delivery system Prime vendor system Fully private supply 23

24. Cont … 1. Central stores system It is conventional central medical stores (CMS) approach Drugs are procured and distributed by a centralized government unit One of the main drawbacks of the CMS model is the potential for political interference and the lack of accountability and performance resulting from high staff turnover. The following are some of the functions and services of this model: procurement, warehousing, and distribution of medicines and medical supplies; quality assurance of medicines; drug information services; and training in materials management. 24

25. Cont … 2. Autonomous supply agency system (ASA) Bulk procurement, storage and distribution managed by an autonomous or semi-autonomous supply agency not directly managed by the government . An ASA is a central store managed by an autonomous agency that reports to the government or is managed by a private firm under government contract. The ASA model is similar to the CMS model but usually operates with different financing mechanisms, such as a revolving drug fund (RDF) and different governance structures. 25

26. Cont … 3. Direct delivery system non CMS approach Tenders establish prices and suppliers for each essential drugs Suppliers are delivering to individual districts and major facilities 4. Prime vendor system Contracts for drug pricing negotiated with suppliers, and separate contract negotiated with a single prime vendor to warehouse and distribute drugs for districts and major health facilities 26

27. Cont … 5. Fully private supply Public sector patients obtain pharmaceuticals from private drug retail outlets Government may or may not reimburse the cost of those services 27

28. Based on the level demand is determined 1 . Push system (allocation/ration system) Supply sources at some level determine what type and quantities of drugs will be delivered to the lower levels. Conditions: Lower staff-not competent Demand greatly exceeds supply (ration necessary) Limited number of products are being handled Disaster relief is needed 28

29. Cont … 2 . Pull system (independent demand/ requisition system) Each level of the system determines what types and quantities are needed and place orders with the supply source. Conditions: Lower level staff-competent Sufficient supply is available Large range of products are managed There is regular supervision and performance monitoring 29

30. Procurement Methods All pharmaceutical procurement methods fall into one of the following four basic categories: Open tender Restricted tender Competitive negotiation Direct procurement 30

31. Cont … 1. Open tender Open tendering is a formal procedure by which quotations are invited from any supplier’s representative on a local or worldwide basis, subject to the terms and conditions specified in the tender invitation. Commonly contrary to expectations, suppliers respond to tenders even for relatively small quantities. 31

32. Cont … 2. Restricted tender This method of bidding is well suited to situations when lead times must be kept to a minimum, and for specific categories of commodities, such as pharmaceuticals or products with short shelf lives, or those with specific quality or quantity requirements. Because potential suppliers are prequalified, purchasers know that the supplier can meet the specific requirements in the tender documents. 32

33. Cont … Also termed as a closed bid or selective tender Open only to prequalified suppliers Product quality may be more easily assure through a restricted tender Drug Suppliers prequalification process can consider the following Adherence to good manufacturing practices Past supply performance Financial viability and related factors 33

34. Cont … E-procurement and reverse auction: E-procurement is Internet-based tendering. In the reverse auction approach (which is a variation of restricted tenders), qualified bidders submit an initial offer; the lowest offer received is posted publicly without naming the bidder after the first round; and then qualified bidders are invited to offer lower prices than that posted low price. The process continues round-by-round until no more prices are submitted ; then the lowest posted bid wins the contract. 34

35. Cont … This approach has rarely been used for pharmaceutical procurement; however, it may gain attraction as global Internet capacity and use increase. Pharmaceutical quality assurance requirements and related factors may limit the use of this model, at least in its current form . 3. Competitive negotiations Also termed as negotiated procurement The buyer approaches a limited number of selected suppliers (typically at least three) for price quotations. 35

36. Cont … Buyers may also bargain with these suppliers to achieve specific price or service arrangements. This procurement method is used primarily in the private sector, because public-sector procurement organizations are generally forbidden from negotiating or bargaining with suppliers . International or local shopping: As with competitive negotiation , in international or local shopping, the buyer obtains at least three quotes from suppliers; however, bargaining or negotiation of any kind are generally not permitted. 36

37. Cont … 4. Direct procurement The simplest but perhaps the most expensive procurement method of all It involves direct purchase from a single supplier either at quoted prices or negotiated prices Well suited for emergency situations 37

38. Table : Advantages and disadvantages of different procurement methods 38 Method Advantages Disadvantages Open tender Many bids, some with low prices New suppliers can be identified High workload is required in evaluation of bids and selection of suppliers Restricted tender Fewer bids (less workload than open tender Quality easier to ensure More limited options System for prequalification must be set Competitive negotiation Suppliers are generally well known Less evaluation work Higher price Direct procurement Easy and quick Higher price

39. Purchasing Models Procurement may proceed under different models : 1.Annual purchasing A one level periodic review model, with the interval set at once a year 2. Scheduled purchasing A periodic review model in which orders are placed at prescribed intervals, such as monthly, quarterly, biannually . 39

40. Cont … 3. Perpetual purchasing A two level model in which stock levels are reviewed each time stock is issued (or at least weekly) and orders are placed whenever stock falls below a minimum level. 40

41. Selection of suppliers The selection of suppliers have a profound effect on the quality and cost of pharmaceuticals acquired. Inadequate safeguards in supplier selection may result in purchase of medicines that are ineffective, unsafe or even deadly. Common problems with unreliable suppliers such as; hidden costs resulting from late deliveries, complete default on confirmed orders, losses caused by poor packaging, or short expiration dates may raise the actual medicine cost to several times the original contract cost. 41

42. Types of potential suppliers Government pharmaceutical factories, local private manufacturers, and foreign manufacturers are primary sources of pharmaceuticals, because these companies do the manufacturing by themselves. Donors, international procurement services, independent foreign exporters, and local importers and distributors are secondary sources ; they obtain pharmaceuticals from manufacturers for resale. 42

43. Cont … Potential suppliers include Wholesalers and retailers, Manufacturers, Central medical stores, and Non-profit supply organizations, for example: European suppliers such as Action Medeor , ECHO International Health Services, and IDA. 43

44. Cont … Criteria for selecting a supplier include: Price Quality Delivery times Guarantees and warranties Guaranty- a collateral agreement to answer for the debt of another in case that person defaults Warrant- a written assurance that some product or service will be provided or will meet certain specifications Reputation Reliability 44

45. Cont … 1. Pharmaceutical manufacturers Classified as: A. research based producers - their profitability depend on new pharmaceu- ticals developed through research - are patented and vigorously promoted by brand name - also produce line of pharmaceuticals which they sell by generic name B . Non-research based producers - market pharmaceuticals only by their INN names 45

46. Cont … 2. International procurement services Are sometimes non-profit companies or arms of international agencies, and Sometimes these services operate as private, for-profit entities. They provide services from one or more warehouses, and they vary with regard to selection of medicines , prices , means of quality assurance , payment terms , restrictions placed on the buyer , and nature and timeliness of service provided. 46

47. Cont … These agencies can play a valuable role in international tenders, providing competitive international prices for a range of products and access to small quantities of pharmaceuticals-sales that may not interest primary manufacturers. Their proposals should be evaluated by the same criteria used for other sources of supply, and they should specify the name of the manufacturer and the mechanism for quality assurance, like any commercial distributor. 47

48. Cont … 3. Independent international wholesale exporters Sometimes known as “jobbers”. Purchase pharmaceuticals from a variety of manufactu-rer’s for resale. Many of these companies around the world specialize in exports to developing countries. 48

49. Cont … It is essential to get the name of the primary manufacturer and make sure that the distributor provides bona fide quality assurance documents and certifications from the exporting-country regulatory agency with each registration request, tender offer and shipment . WHO has developed prequalification procedures related specifically to wholesalers. Procurement offices should consider adapting the WHO procedures when qualifying wholesalers as suppliers. 49

50. Cont … 4. Local importers and distributors Also known as “wholesalers”. Are often major forces in the local pharmaceutical market, both financially and politically. Like foreign distributors, these companies may not closely examine the quality of the products supplied by the manufacturers with which they work. 50

51. Cont … In may countries, these companies have exclusive rights to represent certain manufacturers , and tender offers for these manufacturers’ products come to the local distributor. Again, the procurement office may wish to adapt and apply the WHO wholesaler prequalification criteria when qualifying these type of supplier. 51

52. Supply of drugs from medical stores 1. Stores requisition/delivery (issue) form A stores requisition/delivery (issue) form should accompany any supply made from the medical stores . Health center's normally receive their drug supplies from central, regional or health services area medical stores . In very rare cases they may obtain drugs from other sources . 52

53. Cont … The records of requisition and receipt of drugs from the medical store are kept in the health center in an approved manner . The delivery note from the central medical store should indicate what has been supplied as indicated in the stores requisition/delivery (issue) form. 53

54. Cont … 2. Receipt of drugs at dispensary The consignment must come with two copies of the stores requisition/delivery (issue ) form . Check that the quantity issued actually corresponds to the quantity indicated on the stores requisition/delivery (issue) form. Check off each drug after receiving. Take note of the unit price of each drug and compare it to the previous unit price . 63

55. Cont … Check that all original boxes, tins or bottles are unopened and are in good condition . Check the labels and ensure that there are no expired drugs being received . Any drugs already expired or soon to expire that cannot be consumed before expiration or drugs not in good condition should be returned for destruction or redistribution to other center's . Sign two copies of the stores requisition/delivery (issue) forms if the above procedure have been completed. 64

56. Cont … Return one copy of the signed stores requisition/delivery (issue) form to the medical stores, and place another copy in the “drug order” file . Place drugs with shorter expiration dates in front of the shelf so that they can be reached and used first (FEFO). Remember to record the new stock on the respective stock (bin) cards and appropriate forms. 65

57. Cont … 3. Discrepancies when receiving drugs Where there is a difference in the quantities of drugs issued and the quantities actually received, request the delivery team to give an immediate explanation and make the necessary correction on the stores requisition/delivery (issue) form. If there are broken bottles or leaking packages, hand these over to the delivery team along with an internal drug return (IDR) form . Discrepancies should always be recorded in the Remarks column on the stores requisition/delivery (issue ) form. 66

58. Cont … 4. Transfer voucher or internal drug return (IDR) form The transfer voucher effects the movement of the following items to the medical store: ■ Expiring drugs, ■ Damaged or spoiled drugs, ■ Drugs soon to expire, ■ Excess stock resulting from low consumption or other reasons The following rules should be kept in mind: 67

59. Cont … It is important that drugs are not allowed to expire in the health center because of changes in disease pattern or for any other reasons . Items that can be used elsewhere should be transferred immediately using an IDR form to the medical stores for subsequent redistribution. Expired or spoiled items should be transferred immediately using the IDR form to the medical stores for destruction. 68

60. Cont … Excess stock should normally be transferred at least 3 months before expiration to the medical store using the IDR form . An internal transfer directly from one dispensary to another without involving the central store is not permitted for accounting purposes . The IDR form should be filled in triplicate. The triplicate copy is retained in the health center while the original and duplicate copies accompany the returned drugs. 69

61. Cont … 5. Procedure for supplying drugs to health center store Some health centers have lying in-wards and outpatient clinics to which drugs are supplied. The health center store will supply the drugs in accordance with the following : A request is made from the ward/clinic in an approved manner . Supplies are made on the basis of the request, and quantities of drugs supplied are recorded in an approved manner. 70

62. Cont … Entries of quantities of drugs supplied are made on bin cards as well as the drug register maintained (in the store) for drugs received and supplied . Normally, drugs are supplied from the health centre (dispensary) store to the dispensing area. Entries of such entries are also made on bin cards or the drug register maintained in the store bin an approved manner . 71

63. Cont … 6. Drug donations Donated drugs should be screened and separated into expired or poor-quality drugs, those approved for use at the health centre and those not approved. Those approved for use at the health centre should be retained and entered into the stock. The rest must be sent to the central store with an IDR form. 72

64. R eceiving and inspecting health commodities When you receive health commodities: 1. Ensure there is sufficient storage space (before the shipment arrives). 2. Prepare and clean the areas used for receiving and storing the products. 3. Count the number of boxes received and separate damaged and unsealed boxes from intact and sealed boxes. 4. Inspect all boxes for damaged or expired products. Damaged and unsealed boxes should be checked immediately and in the presence of the transporter. 73

65. Cont … 5 . Complete and sign the Delivery Note and release the transporter . 6. Send all necessary documents to Finance for prompt payment. 7. If appropriately trained personnel are available, take product samples to check for labeling, packaging and product appearance using the checklist below. 8. Arrange all products on shelves or pallets and record entries in stock records . 74

66. Inspection Checklist for Drugs Received in the Warehouse Labeling: 1. Labeling should be in English and preferably one other official language of WHO . 2. All labels should display at least the following information : International Nonproprietary Name (INN) of the active ingredients Dosage form Quantity of active ingredient(s) in the dosage form (e.g. tablet, ampoule ) and the number of units per package Batch number 75

67. Date of manufacture Expiry date (in clear language, not in code) Pharmacopoeia standard (e.g. BP, USP,) Instructions for storage Name and address of the manufacturer 3 . A printed label on each ampoule should contain the following : INN of the active ingredient(s) Quantity of the active ingredient Batch number Name of the manufacturer Expiry date The full label should again appear on the collective package. 76

68. Cont … 4. Directions for use, warnings and precautions may be given in leaflets (package inserts). However, such leaflets should be considered as a supplement to labeling and not as an alternative . 5. For articles requiring reconstitution prior to use (e.g. powders for injection ) a suitable beyond-use time for the constituted product should be indicated. 77

69. Packaging: 1. Tablets and capsules should be packed in sealed waterproof containers with replaceable lid, protecting the contents against light and humidity . 2. Liquids should be packed in unbreakable leak-proof bottles or containers. 3. Containers for all pharmaceutical preparations must conform to the latest edition of internationally recognized pharmacopoeia standards. 4. Ampoules must have either break-off necks, or sufficient files must be provided. 78

70. Cont … Expiry date: At time of shipment the product shall have at least 75% of its shelf life . Write expiry date on the box in large letters and numbers, also on single containers put on the shelf. In case that the expiry date is unsatisfactory ( calculate consumption until expiry date), return to supplier. 79

71. Appearance of the product : All shipments: Compare the goods with the supplier’s invoice and original purchase order or contract . Note discrepancies on the Delivery Report . Check that: Number of containers delivered is correct Number of packages in each container is correct Quantity in each package is correct Drug is correct Dosage form is correct (tablet, liquid, other form) Strength is correct (milligrams, percentage concentration,) There is no visible evidence of damage (describe ) Take a sample for testing if required. 80

72. Cont … Tablets: For each shipment, tablets of the same drug and dose should be consistent. Check that: Tablets are identical in size Tablets are identical in shape Tablets are identical in color (shade of color may vary from batch to batch ) Tablet markings are identical (scoring, lettering, numbering) There are no defects (check for spots, pits, chips, breaks, uneven edges, cracks , embedded or adherent foreign matter, stickiness) There is no abnormal odor when a sealed bottle is opened 81

73. Cont … Capsules: For each shipment, capsules of the same drug and dose should be consistent. Check that: Capsules are identical in size Capsules are identical in shape Capsules are identical in color (shade of color may vary from batch to batch ) Capsule markings are identical There are no defects (check for holes, pits, chips, breaks, uneven edges, cracks , embedded or adherent foreign matter, stickiness) There are no empty capsules There are no open or broken capsules 82

74. Cont … Parenterals: Parenterals are all products for injection (IV liquids, ampoules, dry solids, suspensions for injection). Check that: Solutions are clear (solutions should be free from undissolved particles, within permitted limits) Dry solids for use in injections are entirely free from visible foreign particles There are no leaking containers (bottles, ampoules) 83

75. Common Procurement Challenges Absence of a comprehensive procurement policy Inadequate rules, regulations, and structures Public sector staff with little experience and training to respond to market situations Government funding that is insufficient and/or released at irregular intervals Donor agencies with conflicting procurement regulations 84

76. Cont … Fragmented drug procurement at provincial or district level Lack of unbiased market information Corruption and lack of transparency 85

77. 3.4 DRUG DISTRIBUTION 86

78. Objectives Explain drug distribution cycle Discuss the concept and principles of stock management 87

79. Drug distribution is a continuous process of receiving drugs from the supplier and moving them safely/securely , expeditiously to the many point in the health care system at which the drugs will be dispensed to patients . The primary goal of distribution system is to maintain a steady supply of drugs and supplies to facilities where they are needed. 88

80. Cont … A well-run distribution system should: Maintain a constant supply of drugs Keep drugs in good condition Minimize drug loses due to spoilage and expiry Rationalize drug storage costs Use available transport as efficiently as possible Reduce theft and fraud Provide information for forecasting drug needs 89

81. The distribution cycle It begins when drugs are dispatched by the manufacturer or supplier and It ends when drug consumption information is reported back to the procurement unit. 90

82. 91

83. 3.5.3 . Drug Distribution System Design Designing a distribution system requires systematic cost effectiveness analysis and operational planning. Drug supply systems can be operated under a push or a pull system There are four major elements into consideration in order to have an efficient drug supply system 92

84. 93

85. Table: The Four major elements of a distribution system Elements of a distribution system Points to consider 1. System design Geographical or population coverage Degree of centralization Number of storage levels in the system Push versus pull system 2. Storage Selection of sites Facility design Materials handling systems Stock selection 3. Delivery Collection vs. delivery Maintenance of vehicles Routing of deliveries Scheduling of deliveries Selection/acquisition of conveyances 4. Information system Inventory control Requisition forms and procedures Consumptions reporting Information flow 94

86. Some guiding principles in designing drug distribution system Managing and evaluating distribution and logistics as an integrated activity Ensuring distribution system operations are linked to the overall objectives of the medical stores and the broader public health system Ensuring customer service needs are understood and accommodated Balancing the trade-offs between costs and service Keeping stock moving Minimizing lead times, inventory and costs Analyzing ways to improve effectiveness as well as efficiency Minimizing the steps in storage and handling, which decreases the opportunity for damage and loss 95

87. Distribution channel types Physical distribution channel Trading/ transaction channel

88. Cont … Physical distribution channel -the method and means by which a product or a group of products are physically transferred, or distributed, from their point of production to the point at which they are made available to the final customer. In general, this end point is a retail outlet, shop or factory, but it may also be the customer’s house, because some channels bypass the shop and go direct to the consumer.

89. Cont … The trading channel is also concerned with the product, and with the fact that it is being transferred from the point of production to the point of consumption. The trading channel, however, is concerned with the non-physical aspects of this transfer. These aspects concern the sequence of negotiation, the buying and selling of the product, and the ownership of the goods as they are transferred through the various distribution systems.

90. Cont … One of the more fundamental issues of distribution planning is regarding the choice and selection of these channels. The question that arises, for both physical and trading channels, is whether the producer should transfer the product directly to the consumer, or whether intermediaries should be used. These intermediaries are, at the final stage, very likely to be retailers, but for some of the other links in the supply chain it is now very usual to outsource to a third-party operator to undertake the operation.

91. Physical distribution channel types and structures Channel alternatives: manufacturer-to-retail There are several alternative physical channels of distribution that can be used, and a combination of these may be incorporated within a channel structure. The following diagram illustrates the main alternative channels for a single consumer product being transferred from a manufacturer’s production point to a retail store.

92. Physical distribution channel types and structures Channel alternative for a single product

93. Cont…d Manufacturer direct to retail store. The manufacturer or supplier delivers direct from the production point to the retail store, using its own vehicles. As a general rule, this channel is only used when full vehicle loads are being delivered, thus it is quite unusual in today’s logistics environment. Manufacturer via manufacturer’s distribution operation to retail store. This used to be one of the classic physical distribution channels and was the most common channel for many years. Here, the manufacturer or supplier holds its products in a finished goods warehouse, a central distribution centre (CDC) or a series of regional distribution centres (RDCs). The products are trunked (line-hauled) in large vehicles to the sites, where they are stored and then broken down into individual orders that are delivered to retail stores on the supplier’s retail delivery vehicles. All of the logistics resources are owned by the manufacturer.

94. Cont…d Manufacturer via retailer distribution centre to retail store. This channel consists of manufacturers either supplying their products to national distribution centres (NDCs) or RDCs for final delivery to stores, or supplying them to consolidation centres , where goods from the various manufacturers and suppliers are consolidated and then transported to either an NDC or RDC for final delivery. These centres are run by the retail organizations or, as is often the case, by their third-party contractors. The retailers then use their own or third-party delivery vehicles to deliver full vehicle loads to their stores. This type of distribution channel grew in importance during the 1980s as a direct result of the growth of the large multiple retail organizations

95. Cont…d Manufacturer to wholesaler to retail shop. Wholesalers have acted as the intermediaries in distribution chains for many years, providing the link between the manufacturer and the small retailers’ shops. Manufacturer to cash-and-carry wholesaler to retail shop. Another important development in wholesaling has been the introduction of cash-and-carry businesses. These are usually built around a wholesale organization and consist of small independent shops collecting their orders from regional wholesalers, rather than having them delivered. The increase in cash-and-carry facilities has arisen as many suppliers will not deliver direct to small shops because the order quantities are very small.

96. Cont…d Manufacturer via third-party distribution service to retail store. Third-party distribution, or the distribution service industry, has grown very rapidly indeed in recent years, mainly due to the extensive rise in distribution costs and the constantly changing and more restrictive distribution legislation that has occurred. Thus, a number of companies have developed a particular expertise in logistics operations. These companies can be general distribution services but may also provide a ‘specialist’ service for one type of product or for one client company.

97. Cont…d Manufacturer via small parcels carrier to retail shop. This channel is very similar to the previous physical distribution channel, as these companies provide a ‘specialist’ distribution service where the ‘product’ is any small parcel. There was an explosion in the 1980s and 1990s of small parcels companies, specializing particularly in next-day delivery. The competition generated by these companies has been quite fierce. Small parcels carriers also undertake many home deliveries,

98. Cont…d Manufacturer via broker to retail store. This is a relatively rare type of channel, and may sometimes be a trading channel and not a physical distribution channel. A broker is similar to a wholesaler in that it acts as intermediary between manufacturer and retailer. Its role is different, however, because it is often more concerned with the marketing of a series of products, and not necessarily with their physical distribution. Thus, a broker may use third-party distributors, or it may have its own warehouse and delivery system.

99. 3.5.4 . Drug Storage and Stock Management A. Medical Storage The goals of medical stores management are: To protect stored items from loss, damage, theft or wastage and To ensure that the potency is maintained To ensure/maintain physical integrity To ascertain that the quality and safety is maintained throughout their shelf life To manage the reliable movements of supplies from sources to user in the least expensive way 108

100. Cont … Characteristics of a well managed stores operation: Store should be divided into zones Stocks should be arranged with in each zone in some order system Stocks should be stored on pallets on the floor or pallet racks or on shelves Good housekeeping- cleaning and inspection Clearly defined management structure Staff should be appropriately qualified, trained, disciplined and rewarded 109

101. Cont … B. Location and design of the store Location In area where trees can be planted around the store On raised foundation In a place where supplies are easily carried and distributed In a place with adequate security from thieves, fire and other accidents/hazards Design Size- adequate size to house the anticipated drug supplies and free movement 110

102. Cont … Height of the wall - high enough to allow good ventilation, walls with perforated or bored bricks Roofs- should be constructed in such away that sunlight can not reach the floor area or foundation; double ceiling; slanting roofs. Storage conditions There are two main types of storage conditions: Normal storage condition Special storage condition Cold storage condition Separate storage 111

103. Storage temperature and environment Dry place Protect from heat At room temperature Cool place Cold place ( refrigeration) In deep freezer A. 15 o C – 30 o C B. -20 o C – 0 o C C. not > 30 o C D. <5 % relative humidity E. 8 o C – 15 o C F. not >8 o C (usually 2-8 o C ) 112

104. Storage temperature and environment Dry place ……………………. <5% relative humidity Protect from heat ……………. not > 30 o C At room temperature ………… 15 o C – 30 o C Cool place …………………… 8 o C – 15 o C Cold place ( refrigeration)-not >8 o C (usually 2-8 o C ) In deep freezer ………………. -20 o C – 0 o C 113

105. SN Description 1 Products that are ready for distribution are arranged so that identification labels and expiry dates and/or manufacturing dates are visible. 2 Products are stored and organized in a manner accessible for first-to-expire, first-out (FEFO) counting and general management. 3 Cartons and products are in good condition, not crushed due to mishandling. If cartons are open, determine if products are wet or cracked due to heat/radiation (fluorescent lights in the case of condoms, cartons right-side up for Depo-Provera®). 4 The facility makes it a practice to separate damaged and/or expired products from usable products and removes them from inventory. 5 Products are protected from direct sunlight at all times of the day and during all seasons. 6 Cartons and products are protected from water and humidity during all seasons. 7 Storage area is visually free from harmful insects and rodents. (Check the storage area for traces of rodents [droppings or insects].)

106. 10 Roof is always maintained in good condition to avoid sunlight and water penetration. 11 Storeroom is maintained in good condition (clean, all trash removed, sturdy shelves, organized boxes). 12 The current space and organization is sufficient for existing products and reasonable expansion (i.e., receipt of expected product deliveries for foreseeable future). 13 Products are stacked at least 10 cm off the floor. 14 Products are stacked at least 30 cm away from the walls and other stacks. 15 Products are stacked no more than 2.5 meters high. 16 Fire safety equipment is available and accessible (any item identified as being used to promote fire safety should be considered). 17 Products are stored separately from insecticides and chemicals. 8 Storage area is secured with a lock and key, but is accessible during normal working hours; access is limited to authorized personnel. 9 Products are stored at the appropriate temperature during all seasons according to product temperature specifications.

107. Cont … C. Organization of drug stocks in store Medical stores must have a system for classifying or organizing medicines, and must ensure that all employees know the system being used. Arranging drugs properly enables to control shelf life and simplify accessibility. Most commonly used arrangements are: Pharmaco -therapeutic order Alphabetical order by generic name Pharmaceutical order (dosage form) 116

108. Cont … System level (level of use) Frequency of use Random bin -is a unique storage space identified by code. Commodity coding-is an abstract organizational system. It offers maximum flexibility. This system is based on a unique article code combined with a unique location code 117

109. Cont … D. Stock rotation Stock rotation means arranging stocks in a way that ensures drugs which expiry early are issued first. Those that expire later should be placed at the back. Stocks can be rotated in two ways: FIFO System LIFO/FEFO System 118

110. E. Inventory control What is inventory? Inventory is the stock on hand at any given time. It is like money in the bank. Inventory control is the process of maintaining of stock properly at all times. It is a process of assuring that the right volume and movement are secured in order to ensure that the obtained drugs have reached to the final consumer correctly. 119

111. Cont … Why do we hold stock? To ensure availability (reduce the risk of stock outs) To maintain confidence in the system To reduce the unit cost of drugs (bulk purchase) To avoid shortage costs (avoid expensive emergency orders) To minimize ordering costs To minimize transport costs To allow for fluctuations in demand 120

112. Purpose of an inventory control process 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, avoiding shortages, expiry and oversupply. 121

113. Cont … Inventory control helps to: Maintain appropriate stock Avoid over stocking Monitor shortage of drugs Check the movement of stocks Prevent expiry of drug before being used Balance the merits and demerits of inventory keeping 122

114. Assessing stock status The purpose of assessing stock status is to determine how long supplies will last. 123 This Is the same as… Amount we have Stock on hand Amount we use Rate of consumption/ average monthly consumption How long it lasts Months of stock

115. Cont … Stock on hand and average monthly consumption , therefore, are the data items we need to assess stock status. 124

116. Cont … Stock on hand Stock on hand data can be found on stock keeping records ( inventory control card, bin card, stores ledger; or, perhaps, in a computerized system). The most accurate source is a physical inventory. A physical inventory is the process of counting, by hand, the total number of units of each commodity in the store or a health facility , at any given time. 125

117. Cont … Average monthly consumption AMC is the average of the quantities of product dispensed to users or patients in the most recent three months , as appropriate. 126

118. Key inventory control terms Max stock level/max quantity: The max stock level is the level of stock above which inventory levels should not rise, under normal conditions. The max stock level is set as a number of months of stock (for example, the max level may be set at four months of stock). It indicates how long supplies will last. The max stock level can be converted to the max quantity (for example, the max quantity could be 120,000 units). 127

119. Cont … The max stock level is fixed, whereas the max stock quantity varies as consumption changes!? The max quantity is calculated by multiplying the average monthly consumption (which can change) by the max level (number of months). For example, 100 bed nets (AMC) × 6 months = 600 bed nets—the max quantity. 128

120. Cont … Min stock level/min quantity: This is the level of stock at which actions to replenish inventory should occur under normal conditions. As with the max, the min stock level should be expressed in months of stock (for example, the min level is one month of stock); it can then be converted to a quantity (for example, the min quantity is 30,000 units). The min stock level is fixed, whereas the quantity varies as consumption changes. 129

121. Cont … Depending on the design of the max-min system, reaching the min may be the trigger for placing an order (often called the reorder level or reorder point). In some systems, reaching the min may be an indicator to monitor stocks carefully until the next order is placed, or the emergency order point is reached 130

122. Cont … Review period/review period stock: This is the routine interval of time between assessments of stock levels to determine if additional stock is needed . This term is also called the order interval or resupply interval , but review period is preferred because in some max-min systems, a review does not always result in an order being placed. Review period stock is the quantity of stock dispensed during the review period. 131

123. Cont … Safety stock level. This is the additional buffer, cushion, or reserve stock kept on hand to protect against stock outs caused by delayed deliveries, markedly increased demand, or other unexpected events. The safety stock is expressed in number of months of supply, which can also be converted into a quantity. L ead time stock level. This is the level of stock used between the time new stock is ordered and when it is received and available for use. 132

124. Cont … The lead time stock level is expressed in number of months of supply, or as a quantity. Emergency order point (EOP). This is the level of stock that triggers an emergency order; it can be reached at any point during the review period. The EOP must be lower than the min. 133

125. Maximum-minimum inventory control systems A max-min inventory control system is designed to ensure that the quantities in stock fall within an established range. Most successful inventory control systems used for managing health commodities are max-min systems of one type or another. Three types of a max-min inventory control system are applicable to health commodity logistics systems: forced-ordering, continuous review, and standard. 134

126. Cont … For each of the systems, the same formula is used to determine how much to order or issue. The basic difference between the systems is the trigger for ordering or issuing, i.e., when the order should be placed or an issue made. In a Forced-ordering system , the trigger for ordering is the end of the review period. In a Continuous review system , the trigger for ordering is when the facility reaches the minimum level. In a Standard system , the trigger for ordering is the end of the review period for the commodities that are at the minimum level. 135

127. Cont … No matter which inventory control system is used, the formula for calculating the order, or issue quantity, is the same. This is true whether the system is an allocation (push) system or a requisition (pull) system. In an allocation (push) system, the quantity to issue is calculated; in a requisition (pull) system, the quantity to order is calculated. 136

128. Cont … Where… Max stock quantity = average monthly consumption × max stock level Average monthly consumption = average of the quantities of product dispensed to users or patients in the most recent three months, as appropriate. Q. Should quantities on order be included when calculating order quantities ? 137

129. Cont … With a well-designed and well-functioning system, the facility should receive resupply before placing the next order, or before the next stock is issued. However , 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. In this case, the formula for ordering should be: Max stock quantity − stock on hand − quantity on order = order quantity 138

130. Determining when to place an order or issue The difference between the three inventory control systems is the trigger for placing an order or issuing resupply. 1. Forced-ordering max-min system This type of max-min system can be used in either a pull (requisition) or a push (allocation) system. In either a system, the forced-ordering max-min system action is done at the end of each and every review period either a requisition is made by the facility, or a facility sends a report with data to help their supply source determine how much to allocate to that facility. 139

131. Cont … Store keeper decision rule 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. 140

132. Advantages and disadvantages of forced-ordering max-min system The storekeeper’s decision rule is simple: order/issue every item at the end of the period. Because orders are placed at regular intervals (i.e., the end of each review period), transportation can be scheduled for specific times, making it easier to ensure the availability of transport resources. Every facility orders or is resupplied at the end of every review period. 141

133. Cont … Because all items are ordered/issued at the end of every review period, storekeepers do not need to constantly assess stock status, unless they think a potential stock out is possible. One disadvantage of a forced-ordering system is that orders for some items may be for small quantities; because all items are ordered, regardless of the stock on hand. N.B: The inventory control system for the IPLS is a Forced Ordering Maximum/Minimum inventory control system. 142

134. 1.1 Forced-ordering variation: delivery truck system One variation of a forced-ordering max-min system is the delivery truck system, sometimes called a topping up or bread truck system . It can also be called Vendor Managed Inventory (VMI) system. The rules for the storekeeper and the considerations for the designer are the same as for a regular forced-ordering system. The difference between a regular forced-ordering system and a delivery truck system is the way the deliveries are made. 143

135. Cont … In a delivery truck system, 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, and leave (top up) an amount of each product that is sufficient to bring stock levels up to the max at that location. Delivery truck systems can be either pull or push system. In the former, the truck arrives, and the storekeeper completes the report/transaction record and orders from the truck. 144

136. Cont … In the latter, the supervisor on the truck calculates the quantity to be issued and issues it from the truck. The supervisor may or may not complete the facility’s report. In some cases, the supervisor and storekeeper complete the order form together. 145

137. Advantages and disadvantages of the forced-ordering delivery truck system The order is filled on the spot, so the facility does not have to hold quantities of stock while waiting for the next delivery. The lead time is zero , which lowers the lead time stock to zero. This lowers the min and, consequently, the max stock levels. Damaged or expired products can be put back on the truck for disposal (if this is the procedure for handling these products), taking advantage of space on the truck. The truck can be sent out with a full load of supplies, eliminating multiple small orders. 146

138. Cont … The LMIS report can be completed and collected at the time of delivery. This is especially advantageous when reporting is delayed because of poor mail service , or when reporting is spotty because facilities lack postage funds . The training requirements are significantly less; only delivery team leaders need training, rather than all the facility staff. If a supervisor goes on the truck for deliveries, he or she can provide on-the-job training and supervision at the various stops. This is helpful when transport for supervision alone is difficult and higher-level managers want to ensure routine supervision. 147

139. Cont … Disadvantages : All types of max-min systems rely on their delivery trucks. However, the delivery truck system is particularly vulnerable to breakdowns . If the truck breaks down, the whole system breaks down. Alternate transport for emergency orders must be available. A sufficient number of staff must be available in the office to complete logistics management and other duties while team leaders are away making deliveries. The system may require larger trucks, as trucks always carry more stock then they will actually deliver. 148

140. Cont … 2. Continuous review max-min system Of the three types of inventory control, continuous review max-min inventory control is probably the least appropriate for most health programs; but when it is appropriate, it can be very effective. Comparing continuous review with forced-ordering max-min systems shows how small variations in design can change the way an entire system functions. 149

141. Cont … 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. In a continuous review system: The review period is not fixed; a decision about whether to order is made each time a product is issued. The storekeeper must know both the max and min stock levels. The storekeeper does not need an emergency order point, because an order can be placed any time stock is needed. 150

142. Cont … The storekeeper must assess stock status each time an issue is made. In a system with many items , this means that the storekeeper’s workload increases ; in a forced-ordering system, the storekeeper needs to assess stock status only when levels appear low enough to warrant an emergency order. The storekeeper must be able to order (pull) stock from the higher level, because the storekeeper is the only one who can determine whether the min stock level has been reached. A continuous review system must be a pull system. 151

143. Advantages and disadvantages of continuous review max-min system Advantages: The storekeeper’s decision rule is simple. The system is more responsive and flexible because orders can be placed at any time. Small orders are eliminated because stock levels are at the min when an order is placed. Disadvantages: Transportation resources are harder to schedule because orders can be placed at any time; a single facility can order pills one day, condoms the next, and HIV test kits the following week. 152

144. Cont … In facilities with a large number of products, or a great deal of activity, the storekeeper’s job is harder because the stock status must be assessed every time stock is issued. 2.1 Continuous review system variation: two bin One variation of continuous review max-min systems is the two bin system. In this case, the rules for the storekeeper and considerations for the designer are the same as for any other continuous review system. 153

145. Cont … The difference between a regular continuous review system and a two bin system is the way the storekeeper determines when the min has been reached . In the two bin system, the storekeeper has two equal-sized bins (containers, boxes, cartons, sacks, or other receptacles) of each individual product (i.e., not a kit of products). When the first bin is empty, the min has been reached. An order is placed for another bin (i.e., a bin’s worth of stock), and the storekeeper begins issuing from the remaining bin. The arrival of a new bin brings the stock level up to the max. 154

146. Advantages and disadvantages of continuous review two bin max-min system Advantages : A two bin-system require less training than a normal pull systems because the only trigger to order is an empty bin. No calculations are required and paperwork is minimal. Disadvantages: If consumption for products is not stable, the bin size must be continually reviewed to ensure that CBDs are not overstocked or under stocked on commodities. 155

147. Cont … 3. Standard max-min system Theoretically , the standard version of the max-min system is the most effective because it combines the decision rules of both forced-ordering and continuous review and, therefore, shares the advantages of both. However , it also has disadvantages. 156

148. Cont … Store keeper decision rule Review all stock levels at the end of each review period. for products that are at or have fallen below the min, order/issue stock quantities up to their max levels. In a standard system: When to make an order or issue new stock is based on the min stock level and the review period. This means that the storekeeper must know the min, max, and review period. The storekeeper will need an emergency order point to ensure that a stock out does not occur between review periods. 157

149. Cont … The storekeeper must assess the stock status at the end of each review period and at any time levels appear to be low enough to warrant an emergency order. Advantages and disadvantages of standard max-min system: Advantages : Small orders are eliminated because an order is placed only when stock levels are at or below the min. 158

150. Cont … In programs with many products, standard systems eliminate the need to assess stock status continually (as in continuous review) and to reduce the number of calculations that must be made because fewer products will be ordered or issued than in forced-ordering. Because orders are placed at regular intervals (i.e., at the end of each review period), transportation can be scheduled for specific times, making it easier to ensure the availability of transport resources. 159

151. Cont … Disadvantages : The primary disadvantage of a standard system is that the min stock level is higher, increasing the likelihood of expiry and requiring more storage capacity, both of which mean increased costs. Storekeepers must learn the max, min, and EOP; know how to assess stock status; and be able to calculate the order or issue quantity. More training for the storekeepers may be required because their decision rules are more complex. 160

152. Setting max-min levels Step.1 .. Determine the lead time Lead time: is the time between when stock is ordered or issued and when it is delivered and available for use. The lead time stock level, therefore, is the number of months of stock used after an order is placed, or an issue determined, and before you receive the new order. 161

153. Cont … Step 2. Set the review period A review period is the routine interval of time between assessments of stock levels to determine if an order should be placed or an issue of resupply made. In designing a max-min system, it is recommended to use reporting periods as the review periods. N.B: Always set the lead time as shorter than the review period. Why? 162

154. Cont … Step 3. Set the safety stock Safety stock is the buffer, cushion, or reserve stock kept on hand to protect against stock outs that are caused by delay in deliveries, increased consumption, or product losses. Safety stock ≥ ½ review period Step 4. Set the minimum Min level formula (forced ordering and continuous review) Min stock level = lead time stock level + safety stock level 163

155. Cont … In the standard system, orders are placed at the end of the review period, but only for products that have reached the min. If a store is just above min, you would not place an order at the end of the review period, and you would not have another chance to order until the end of the following review period. Consequently , the min must be set higher. Min level formula (standard) Min stock level = lead time stock level + safety stock level + review period stock level 164

156. Cont … Step 5. Set the maximum Max Level Formula Max stock level ≥ min stock level + review period stock level Step 5. Set the emergency order point Emergency order points for all three max-min systems should be greater than or equal to the longest emergency lead time, but should not be equal to the min. Emergency order point > longest emergency lead time 165

157. II - Fixed Order Quantity System Group assignment/ reading assignment 166

158. IPLS max-min levels 167

159. Benefits of successful inventory control system at facility level Patients receive drugs promptly and stock outs can be prevented even when deliveries are delayed; Supplies can be replenished at scheduled intervals, saving on administrative cost and transport time; Patient have confidence in the facility and seek help when they are ill. In many countries, poor inventory management in the public drug supply system leads to waste of financial resources, shortage of essential drugs and a decrease in the quality of patient care. 168

160. Problems of poor inventory control A patient’s condition may worsen because of a delay in treatment; a patient may even die if a life saving drug is out of stock; If drug are not available in rural facilities, patients may have to make long and expensive journeys to obtain treatment; When a drug is out of stock, a less suitable alternative may be prescribed; Frequent stock outs may establish or reinforce poor prescribing habits 169

161. Cont … Emergency orders which are expensive for the purchaser and inconvenient for the supplier may be required. Staff commonly resist the implementation of inventory control systems, Common reasons for resistance are A perceived lack of time for record-keeping Feeling that “this is not my job” Lack of appropriate training on inventory control 170

162. Cont … Inventory control stock records The minimal information that should be collected on stock records for medicines and other health products includes: product name/description including the form and strength stock on hand/beginning stock balance receipts issues losses/adjustments closing/ending balance transaction reference (e.g., issue voucher number or name of supplier or recipient). 171

163. Cont … Depending on the system, stock records might also include additional product information such as: special storage conditions (e.g., 2°–8°C) unit prices lot numbers/bin locations item codes expiry dates. Stock records might also include certain calculated data items. Calculated data items include: consumption data, such as average monthly consumption (AMC) lead times for ordering/requisition maximum and minimum stock levels emergency order point. 172

164. Cont … Standard forms used for inventory control include: stock cards bin cards requisition/issue vouchers receiving forms (packing slip/freight bill) delivery/issue vouchers expired stock disposal forms physical inventory forms list of approved medicines and prices. 173

165. Cont … Physical Inventory A physical inventory is the process of counting by hand the number of each type of product in your store at any given time. A physical inventory helps ensure that the stock on hand balances recorded on stock keeping records match the quantities of products actually in the store. 174

166. Physical Inventory There are two kinds of physical inventory: 1. Complete physical inventory: All products are counted at the same time. A complete inventory should be taken at least once a year. More frequent inventory (quarterly or monthly) is recommended. For large warehouses, this may require closing the storage facility for a day or longer. It is easier to conduct regularly at facilities that manage smaller quantities of products. 175

167. Cont … 2. Cyclic or random physical inventory: Selected products are counted and checked against the stock keeping records on a rotating or regular basis throughout the year. It is usually appropriate at facilities that manage larger quantities of products. 176

168. Cost of maintaining stock Efficient inventory control system saves money Poor inventory control leads to wastage or increased costs Overstocking of certain items tie up a substantial portion of the drug budget, leaving insufficient funds for other lifesaving drugs; Overstocked drugs often expire; Poor storage condition may result in spoiled stock; Poor stock records and poor security make theft easier; 177

169. Inventory costs Capital cost Storage space cost Inventory service cost Inventory risk cost Order costs 178

170. 3.5.2. Drug Financing Drug financing is among key components of national drug policy Financing mechanisms include Public financing, Health insurance, User fees, Donor financing Development loans 179

171. *Source: WHO/DAP (1997). Public-Private Roles in the Pharmaceutical Sector - Implications for Equitable Access and Rational Drug Use Figure: Consumers, payers and health care providers relationships* 180

172. Cont … A separation between financing and distribution functions is illuminating in the pharmaceutical sector 181 Public Private Drug financing Government budgets (central, regional and local) and Compulsory social health insurance programs out-of-pocket payments by individuals and households, private health insurance, community drug schemes, cooperative schemes, employers' schemes, and financing through other nongovernmental entities Drug distribution Wholesale distribution and retail dispensing by government-managed drug supply and health services Distribution through state-owned enterprises (state corporations). Private for-profit wholesalers and retailers, and Not-for-profit essential drugs supply services.

173. Cont … 182 Table : Systems for financing and distributing drugs** ** Source: WHO/DAP (1997). Public-Private Roles in the Pharmaceutical Sector - Implications for Equitable Access and Rational Drug Use Financing Distribution Public Private Public (Model 1) Government CMS to government providers (Model 2) Many social health insurance reimbursement systems and contracted-out drug supply systems Private (Model 3) User fees at government health services (Model 4) Fully private systems

174. Cont … Fully public centralized system (model 1) Drugs are financed, procured and distributed by a centralized government unit. This has been the standard approach in many countries in Africa, Asia, Europe and Latin America . Advantages Government involvement in both financing and distribution fully public systems can potentially be very equitable ones and Monopsony (“single buyer”) power in purchasing helps procure drugs at low cost. 183

175. Cont … Disadvantages This approach may offer insufficient incentives for technically efficient behavior by the distributor The total amount spent on drugs is constrained by the government budget Social health insurance reimbursement system (model 2) Public funding from central budgets and social health insurance premiums is used to reimburse pharmacies or patients themselves for drugs provided through private pharmacies. 184

176. Cont … Publicly funded drug supply systems which are largely contracted-out to the private sector also fit into this quadrant. Advantages better efficiency in drug distribution of the private sector, Disadvantages higher administrative expenditures. Limited finance 185

177. Cont … User fees at government health services (model 3) Drugs are supplied by government medical stores or state-owned wholesalers and dispensed by government health facilities, but paid for (in whole or in part) by patient fees. Disadvantages Adverse implications for equity Special concern on the impact of rational drug use If providers have a direct financial incentive to prescribe more drugs, or to prescribe more expensive drugs 186

178. Cont … Fully private (model 4) Patients pay the entire cost of drugs, purchasing from private retail pharmacies It probably accounts for the majority of non-prescription drug sales. In outside market economies (higher levels health insurance), it probably represents the major source of payment for prescription drugs It may be technically efficient, but it is therapeutically inefficient . 187

179. Cont … Mixed systems Most countries have a combination of two or more models in operation. With the current pluralistic approach that many countries are taking in the provision and financing of health care, different models may be found for different groups in the population. For example, Fully public financing and supply may be used for the poor and for the treatment of communicable diseases, social health insurance for civil servants and those in formal employment, and 188

180. Cont … The fully private model for populations and categories of drugs not covered by the other systems . Reading assignment Drug revolving fund Health insurance system 189

181. 3.6. Rational Drug Use 190

182. 3.6.1. Introduction WHO Definition: Rational use of drugs requires that patients receive medicines 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. 191

183. Cont … Rational use of drugs requires that a particular patient with a specific health problem receives drugs with: Appropriate dose, Appropriate dosage form, Appropriate route of administration, Appropriate frequency of administration, Appropriate duration of treatment, Appropriate information to the patient, Adequate follow up 192

184. 193

185. 3.6.2 . Criteria for rational drug use An effective use of drugs in a health care system depends on: 1. Rational prescribing: Appropriate indication Appropriate drug Appropriate patient 2. Correct dispensing Provide appropriation drug information to patient Drugs are dispensed in a safe and hygienic manner 3. Adherence to treatment by the patients 194

186. a. Rational Prescribing Requires: Making accurate diagnosis Deciding whether or not the diagnosis requires drug treatment Selecting the best drug among available Prescribing in accordance with the standard course of treatment Following correct prescription writing Counseling the patient 5/31/2019 195 Drug use

187. What roles can you play as a pharmacist to promote rational prescribing? 5/31/2019 196 Drug use

188. b. Rational dispensing Dispensing: refers to the process of preparing drugs and distributing them to their users with provision of appropriate information. It may be based on a prescription or an oral request of users (patients or care providers) depending on the type of drugs to be dispensed 5/31/2019 197 Drug use

189. Cont … The dispensing of prescriptions involves both interpretation of the prescriber’s instructions and the technical knowledge required to carry out these instructions with accuracy and safety to the patient. There are a considerable variety of factors that require close attention in dispensing, and proficiency requires the establishment of a routine system which can be followed safely even under stress.

190. Cont … In general there are four major steps to be performed in the dispensing cycle during the dispensing process: Receiving and validating a prescription Interpreting a prescription Preparing medication/s to be dispensed Issue medication/s with the provision of appropriate and complete instruction

191. Steps/tasks Cases Welcome the patient and Validate the prescription Greet the patient respectfully and receive the prescription       Introduce self       Identify the patient and check with the name on the prescription       Check the sex, age, address, card number, diagnosis on the prescription       Check drug name, strength, dose, frequency/dosing interval, dosage form, course of treatment on the prescription       Check the prescriber name, qualification, signature address on the prescription       Check date of the prescription       Check whether appropriate prescription form is issued or not (e.g. for controlled drugs)       Check seal of the health institution, if available.      

192. Interpret the prescription and patient information Correctly interpret any abbreviations used by the prescriber       Ask the pregnancy and/or lactation status of the patient, if female       Ask the patient for any history of allergic reaction to the medication/s prescribed.       Ask the patient whether he/she is currently taking other medications including OTC drugs and past medication historyS       Ask the patient whether he/she has co-morbidity       Identify common drug- drug interaction(s) within the prescription as well as with any other OTC medications, and drug-disease interactions       Confirm whether the medication/s, dosage regimens and dosage forms are appropriate for that patient       With the prescriber’s consent (by consulting the prescriber) make necessary corrections, if there is any problem      

193. Ask patient if he or she will have a problem taking the medication as prescribed       Tailor medication regimen to patient’s daily routine         Emphasize benefits of the medication and supports its use before talking about side effects and barriers       Discuss major side effects of the drug and how to manage them (whether they will go away in time and what to do if side effect does not go away and becomes intolerable)       Discuss common drug-drug interaction and/or tell the patient not to take another medication without consulting the nearby pharmacist/physician         Discuss drug-food interactions and/or tell the patient any food/beverage that should be avoided during the course of treatment       Explain to patient in precise terms what to do if he/she misses a dose         Tell the patient to take the drug throughout the course of treatment (e.g. not to stop taking if the symptoms persist or go away without consulting the prescriber or pharmacist)       Tell the patient to use the drug for self only(without sharing)      

194. Prepare the medication/s to be dispensed Correctly perform any calculations of dose and the quantity to be issued       Select the stock container (bottle, strip, tin etc…) of the drug/s to be dispensed, read the label/s, cross match the drug name and strength against the prescription at least two times       Check whether the medication/s is/are fit for use (check expiry date)       Use clean and appropriate dispensing aids for counting or measuring the medication/s , if needed       Prepare a clear and legible label for the drug/s to be dispensed       Issue drug/s to the patient with clear instructions/ information Ask patient what he/she knows or the prescriber told him/her about medication and disease       Ask patient if he/she has any concerns prior to information provision       Show the medication/s to be dispensed to the patient while counseling       Tell the patient the name, strength, route of administration, dose, frequency of administration/dosing interval, course of treatment, and indication of the drug       Tell the patient other auxiliary instructions (e.g. before or after meal, chew before swallowing, shake before use, refrigerate) and activities to avoid, which are specific to the drug/s      

195. Check for understanding by asking patient to repeat back key information (e.g. how to take, how much to take, how often to take, how long to take, side effects, what to do about missed doses) and clarify any misunderstanding       Tell the patient to consult for any problem/concern       Pack the drug/s       Issue the drug/s with the respective label       Use appropriate communication skills throughout the session (questioning skill, empathic responding, active listening, use non-verbal communications appropriately (good eye contact, good facial expression, open posture, use gesture appropriately), use good tone of voice, use the language that the patient understands)      

196. Dispensing over the counter (OTC) medications (responding to symptoms ) Prescription only medicines are increasingly being re-regulated and becoming available as over the counter (OTC) drug. Hence the role of the pharmacist to ensure that these are dispensed for appropriate indications and used safely is becoming increasingly important. General steps to be followed in responding to symptoms and hence dispensing OTC drugs are: Identifying the patient and observation Questioning on symptoms Questioning on current medical conditions and medication

197. Cont … Further questions to confirm diagnosis E.g. possible triggers for the symptom Decision making The most important task is to distinguish between symptoms of minor illness that can be reasonably treated and those that may indicate more serious illness. Then the pharmacist will choose between non-drug treatment, treatment using a suitable non-prescription medicine or advice to visit a physician (referring) If the decision is to treat with OTC, then dispense an appropriate medication with the provision of drug information.

198. Step / task Cases Patient information/history and decision making Greet the patient respectfully       Introduce self       Ask what can you help him/her       Ask whether he/she need help for self or for someone else       Ask information like age, sex, pregnancy status if female, history of allergic reaction, history of renal or hepatic disease and any history of other disease       Ask the exact nature, site and severity of symptom/s       Ask for how long the symptom/s persist       Ask if the patient is taking any medication to relief from the existing complication or for any other purpose       Based on the above information decide whether the symptom/s are minor or are indication of major illness       Decide whether the patient need non-drug management, OTC drug or referring       If the decision is to give OTC drug/s select an appropriate OTC drug considering the above relevant information      

199. Issue drug/s to the patient with clear instructions/ information Ask patient what he/she knows about the OTC medication/s       Ask patient if he or she has any concerns prior to information provision       Show the medication/s to be dispensed to the patient while counseling       Discuss all important information concerning the medication/s       Ask patient if he or she will have a problem taking the medication as instructed       Tailor medication regimen to patient’s daily routine       Check for understanding by asking patient to repeat back key information (e.g. how to take, how much to take, how often to take, how long to take, side effects, what to do about missed doses) and clarify any misunderstanding       Tell the patient to consult for any problem/concern       Prepare label for the drug/s      

200. Pack the drug/s       Issue the drug/s with the respective label       Use appropriate communication skills throughout the session (questioning skill, empathic responding, active listening, use non-verbal communications appropriately (good eye contact, good facial expression, open posture, use gesture appropriately), use good tone of voice, use the language that the patient understands)      

201. c. Appropriate patient use Proper handling of medications Adherence to treatment 5/31/2019 210 Drug use

202. Irrational drug use Is the use of medicines in a way that is not compliant with rational use Common types: Use of drug when not needed Use of too many drugs (polypharmacy) Inappropriate use of antibiotics Over-use of injections Under dosing/over dosing Overuse of relatively safe medicines Use of non-essential combination drugs

203. C ont … Use of needlessly expensive medicines Medicine use not in the way intended by prescriber/dispenser Self-medication with prescription only medicines Unsafe use of herbal medicines Impact of irrational drug use Decrease in quality of health care Impact on cost Psychosocial impact

204. Factors underlying irrational drug use a. Health care provider (prescriber and dispenser) Inadequate pre-service training Lack of continuing education Financial interest Lack of role models who practice rationally Patient load and pressure on treatment choice Unethical promotional activities by pharmaceutical companies 5/31/2019 213 Drug use

205. b. Health system Pharmaceutical supply system and availability of facilities Poor quantification and forecasting Inadequate inventory management Unreliable supplies Inadequate distribution system Inefficient management of procurement process Lack of adequate laboratory facilities Lack of facilities for dispensing 5/31/2019 214 Drug use

206. Legal and regulatory framework Non-formal prescribers/dispensers Out of date or no-existent standard treatment guideline (STG), drug list, formulary… No drug and therapeutics committee (DTC) encouragement No pharmacovigilance program Inadequate medicine registration and quality assurance system 5/31/2019 215 Drug use

207. Lack of system for continuing medical education Lack of financing and reimbursement mechanisms Lack of regulation on drug promotion Even in the presence of regulations, there may be lack of enforcement 5/31/2019 216 Drug use

208. c. Patient/client and community Perceived need for medicines Perceived need for consulting health workers Ideas about efficacy and safety Uncertainty resulting in polytherapy Cost of medicines Absence of social support 5/31/2019 217 Drug use

209. Inability to take time off work Low literacy level Medicine use culture Medicine supply system Quality of prescribing and dispensing Therapy related factors 5/31/2019 218 Drug use

210. Impact of Inappropriate Use of Drugs Reduction in the quality of drug therapy and overall quality of health care leading to increased morbidity and mortality. Waste of resources leading to reduced availability of other vital drugs and increased costs. Increased risk of unwanted effects such as adverse drug reactions and the emergence of drug resistance, e.g., malaria or multi-drug resistant tuberculosis. Psychosocial impacts, such as when patients come to believe that there is “ a pill for every ill .” This may cause an apparent increased demand for drugs. 219

211. Stepwise approach for promotion of rational drug use Assess current patterns of drug use, identify any problem and recognize the need for action Identify underlying causes and motivating factors List possible interventions Assess resources available for action Choose and carryout interventions Monitor the impact and restructure the intervention 5/31/2019 220 Drug use

212. 5/31/2019 221 Drug use

213. 3.6.3 . Strategies to improve drug use There are four strategies to improve drug use Educational strategies: TO PERSUADE Managerial strategies: TO GUIDE Economic strategies Regulatory strategies: TO ENFORCE 222

214. Educational strategies: TO PERSUADE Training of Prescribers Continuing education (in-service) Supervisory visits Group lectures, seminars and workshops Printed Materials Clinical literature and newsletters Treatment guidelines and drug formularies Illustrated materials (flyers, leaflets) Approaches Based on Face-to-Face Contact Educational outreach Patient education Influencing opinion leaders 223

215. Managerial Strategies: TO GUIDE Monitoring, supervision and feedback Hospital drug and therapeutic committees District health teams Government inspectorate Professional organizations Self-assessment Selection, Procurement and Distribution Limited procurement lists Drug utilization review and feedback Drug committees Providing cost information on order forms 224

216. Cont … Prescribing and Dispensing Approaches Structured drug order forms Standard diagnostic and treatment guidelines Course-of-therapy packaging 225

217. Economic Strategies Price setting Capitation-based budgeting Reimbursement and user fees Insurance 226 Capitation- A tax levied on the basis of a fixed amount per person

218. Regulatory Strategies: TO ENFORCE Drug selection Banning unsafe or ineffective drugs Prescribing and Dispensing Controls Level-of-use prescribing restrictions (health post, health center, hospital) Restrictions on who can prescribe or dispense Limits on number of different drugs per patient (e.g., “3-drug rule”) Limit on quantities of each drug (e.g., “3-Day Rule”) Requirements for generic prescribing 227

219. Characteristics of effective interventions: Identify key influence factors Target individuals or groups with the worst practice Use credible information sources Use credible communication channels Use personal contact whenever possible Limit the number of messages using different media Provide better alternatives 5/31/2019 228 Drug use

220. Chapter 4 . Tools to investigate the use of medicines 229

221. Presentation Outline 4.1.Introduction to investigate the use of medicines and identifying problems 4.2.Stepwise approach to investigate the use of medicines 4.3. WHO/INRUD Drug Use Indicators Reference 4.4. Methods for assessing drug use Quantitative methods Qualitative methods 230

222. 4.1. Introduction to investigate the use of medicines and identifying problems Inappropriate drug use results in poor patient outcomes and wastes significant amounts of money and resources. The impact on the health care system of inappropriate drug use is dramatic Reduction in the quality of drug therapy leading to increased morbidity and mortality Increased cost as a result of using the wrong drug, dose, route, amount, etc., and because of treatment failures Increased risk of unwanted effects such as adverse drug reactions and emergence of antimicrobial resistance 231

223. Cont … Studies to measure drug use will vary from setting to setting. The nature and design of such studies will depend on many factors, which include: The specific information needs of health mana gers; The types of record-keeping systems available in health facilities; The types of providers whose behavior is to be characterized; and The resources available to carry out the work. 232

224. Cont … In general, however, drug use studies by means of indicators will fall into four broad categories: Describing current treatment practices: Such a cross-sectional survey is done by taking specific measures of treatment practices from carefully selected groups of facilities and patients . Comparing the performance of individual facilities or prescribers: Rather than being primarily concerned with summarizing the treatment practices of the group as a whole, such a study seeks to compare practices between individual facilities or prescribers, or between groups . 233

225. Cont … Periodic monitoring and supervision of specific drug use behaviors: After the broad outlines of drug use behavior are known, the indicators can be used to identify facilities or providers whose performance falls below a specific standard of quality, so that they can be targeted for intensive supervision. Assessing the impact of an intervention: Specific indicators can be used to evaluate the effectiveness of an intervention designed to change prescribing practices, by providing the capability for reliably measuring practices both before and after the intervention, and in both an intervention and a control group. 234

226. 4.2. Stepwise approach to investigate the use of medicines Performing an indicator study involves planning, logistics, time, and funding. The indicator study will involve — Determining objectives, priorities of the study, indicators, and indicator recording forms Determine study design according to objectives Monitor over time, comparing facilities (cross sectional survey, time series) Evaluation of interventions (randomized controlled trial) Define indicators and data collection procedures Pilot test procedures 235

227. Cont … Training data collectors Randomly selecting facilities in the region from which to collect data Analyzing data Report results to the DTC for evaluation and follow-up 236

228. 4.3. WHO/INRUD Drug Use Indicators Reference Purpose of Drug use indicators Objective measures (indicators) that can describe the drug use situation in a country/region/health facility. Will allow health planners, managers and researchers, to make basic comparisons between situations in different areas or at different times. Can be used to measure the impact of the interventions undertaken. Can serve as simple supervisory tools to detect problems in performance of individual providers or health facilities. Can be used as "first line measures" to stimulate further questioning and to guide subsequent action. 237

229. 4.3. WHO/INRUD Drug Use Indicators Reference Type of Indicators : Indicators are developed to be used as measures of performance related to the Rational Use of Drugs(RUDs) in Primary care in three general areas: Prescribing practices by Health providers Patient care including both clinical consultation and pharmaceutical dispensing. Facility specific factors which support RUD These indicators are broadly classified into two: 238

230. Cont … 239

231. Core Indicators 240 4.3. WHO/INRUD Drug Use Indicators

232. Cont … 1. The average number of drugs prescribed per encounter is calculated to measure the degree of poly pharmacy. It is calculated by dividing the total number of different drug products prescribed by the number of encounters surveyed. 2. Percentage of drugs prescribed by generic name is calculated to measure the tendency of prescribing by generic name. It is calculated by dividing the number of drugs prescribed by generic name by total number of drugs prescribed, multiplied by 100. 3. Percentage of encounters in which an antibiotic was prescribed is calculated to measure the overall use of commonly overused and costly forms of drug therapy. It is calculated by dividing the number of patient encounters in which an antibiotic was prescribed by the total number of encounters surveyed, multiplied by 100.

233. Cont … 4. Percentage of encounters with an injection prescribed is calculated to measure the overall level use of commonly overused and costly forms of drug therapy. It is calculated by dividing the number of patient encounters in which an injection was prescribed by the total number of encounters surveyed, multiplied by 100. 5. Percentage of drugs prescribed from an essential drug list (EDL) is calculated to measure the degree to which practices conform to a national drug policy as indicated in the Essential drug list. Percentage is calculated by dividing number of products prescribed which are in essential drug list by the total number of drugs prescribed, multiplied by 100.

234. These indicators are of activity based measures, Meant to describe practices in a representative sample of health facilities. The drug use indicators can be collected at one time in a cross sectional survey, or otherwise. For a basic cross sectional survey about 20 health facilities can be selected to represent a larger group of facilities. The prescribing indicators can be based on either Retrospective or prospective data. Retrospective data describe the drug use during patient list that took place in the past. These data can be collected from medical records kept in the Health facilities. Prospective data describes the drug use during patient visits that takes place on the day of the indicator survey. 243 Core Indicators 4.3. WHO/INRUD Drug Use Indicators

235. Recommended sample size: There should be at least 600 encounters included in a cross sectional survey. If 20 Health facilities are included, then there should be 30 encounters per facility . The Retrospective data collection should be over the past one year which should be used for prescribing indicators. To obtain a more reliable result in one facility, a sample of 100 prescriptions should be examined to minimize the margin of error and to obtain an estimate with a 95% confidence interval of plus or minus 10%. 244 Core Indicators 4.3. WHO/INRUD Drug Use Indicators

236. Complementary drug use indicators 245 4.3. WHO/INRUD Drug Use Indicators

237. These indicators represent measures of performance that can be used in addition to the core indicators and this are no less important than the core indicators, but the data to measure them may often be more difficult to obtain, or their interpretation may be highly sensitive to the local context . Are medicine use indicators with less standardization and less experience in actual use The required data can be collected in a drug use survey with core indications. The complementary indication are suggested as additional measures of drug use. 246 Complementary drug use indicators

238. 4.4. Methods to Investigate Problems of Drug Use Quantitative methods: WHO drug use indicators Drug use studies based on aggregate data (DDD, ABC, VEN) Other drug use studies Qualitative methods: Focused Group Discussion (FGD) In-depth Interview Structured Observation 247

239. 4.4. Methods to Investigate Problems of Drug Use Quantitative methods: Quantitative methods of data collection using aggregate data, health facility indicators or drug utilization evaluation can tell us if there is a medicine use problem, the nature of the problem and its size . Defined Daily Dose ABC analysis VEN analysis Other drug use studies Health-problem based Drug-specific studies 248

240. 1. Defined Daily Dose (DDD) methodology Defined daily dose : Is the assumed average maintenance dose for the medication’s main indication. It converts and standardizes readily available product quantity data such as packages, tablets, injections vials etc in to number of daily doses. It is used to directly compare consumption of drugs irrespective of price and type of formulation 5/31/2019 investigating drug use 249

241. DDD… Consumption report expressions: DDDs/1000inhabitant/day DDDs/inhabitant/year DDDs/100 bed/day 5/31/2019 investigating drug use 250

242. Interpretation DDD per 1000 inhabitants per day : Sales or prescription data presented in DDDs per 1000 inhabitants per day may provide a rough estimate of the proportion of the study population treated daily with a particular drug or group of drugs. The figure 10 DDDs per 1000 inhabitants per day can be interpreted as follows: in a representative group of 1000 inhabitants, 10 DDDs of the drug are utilized on average, on any given day of the year analysed . Alternatively this can be expressed as 10/1000 (1%) of the population are receiving this drug each day in that year. This estimate is most useful for drugs used chronically and when there is good agreement between the average prescribed daily dose (PDD) and the DDD.

243. Cont … DDD per 100 bed days: The DDDs per 100 bed days may be applied when drug use by inpatients is considered. The definition of a bed day may differ between hospitals or countries. A common definition is: A bed day is a day during which a person is confined to a bed and in which the patient stays overnight in a hospital. Day cases (patients admitted for a medical procedure or surgery in the morning and released before the evening ) are sometimes included as one bed day and sometimes excluded . The same definition of bed days should always be chosen when performing comparative studies. The figure 70 DDDs per 100 bed days of hypnotics provides an estimate of the therapeutic intensity and estimates that 70% of the inpatients receive one DDD of a hypnotic every day . This measure is applied in analyses of in-hospital drug use. This indicator is quite useful for benchmarking in and between hospitals.

244. Cont … DDD/patient: This indicator is often calculated in pharmacoepidemiological databases and expresses the treatment intensity/total exposure according to a defined study period. If the actual dose used is equivalent to the DDD, the DDD/patient would also express the number of treatment days in a specific period. Drug utilization data presented in DDDs give a rough estimate of consumption and not an exact picture of the actual drug use, and the estimates described above are only true if there is good agreement between the actually prescribed dose and the DDD

245. Cont … District hospital and clinics use of captopril with 2,700,000 population 22,500,000 tablets yearly of captopril 25 mg 3,000,000 tablets yearly of captopril 50 mg Quantity of medicine used in 1 year multiplied by strength of the product = (22,500,000 × 25 mg) + (3,000,000 × 50 mg) = 712,500,000 mg Divide total quantity by assigned DDD for that medicine (captopril = 50 mg ) = 712,500,000 / 50 mg = 14,250,000 DDDs Divide total quantity by 2,700,000 population and multiply by 1,000 (this is the population denominator for this method) = (14,250,000 / 2,700,000 ) x 1,000 inhabitants = 5,278 DDD / 1,000 inhabitants / year 5,278 / 365 = 14.5 DDD / 1,000 inhabitants / day

246. DDD… Example: interpretations: 4 DDDs/1000 inhabitants/day (DDD of the drug is 1 gm) 2 DDDs/100 bed-days (DDD of the drug is 250 mg) 2. A district hospital and health centers use 25,000 tablets yearly of methyldopa 250mg and 3, 000 tablets yearly of methyldopa 500mg. This drug usage is for a total population of 2,000,000 people. Calculate consumption in DDD/inhabitant/year 5/31/2019 investigating drug use 255

247. DDD… 2. In a region where 50 million people are said to live, it was reported that 400 million 10 mg tablets of drug A were sold in the past fiscal year. If on the average 4.38% of the people will be using DDD per day, then what is the DDD of drug A? 5/31/2019 investigating drug use 256