Unit Two

The Logistics Cycle.

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 Concepts of essential medicines
• Essential medicines - “indispensable and necessary for the health
needs of the population. They should be available at all times, in the
proper dosage forms, to all segments of society.” (WHO)

Essential medicines safe lives, reduce suffering and improve health,

but only when they are:
Good quality
Safe
Effective
Available and
Properly used by providers and patients.
01/20/2025 By;Yasin U. 2
cont...
• According to WHO, Essential medicines are those that
satisfy the priority health care needs of the population.
• They are selected because of
 Public health relevance
 Evidence on efficacy and safety
Comparative cost-effectiveness.

• The appropriate use of essential medicines is one of the most cost-

effective strategies a country can endorse.
01/20/2025 By;Yasin U. 3
cont...
Essential medicines are intended to be available within the context of
functioning health systems
At all times in adequate amounts,
In the appropriate dosage forms, with assured quality and adequate

information and
At a price the individual and the community can afford.

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cont...
• The implementation of the concept of essential medicines is intended
to be flexible and adaptable to many different situations.
• The responsibility of determining exactly which medicines are
regarded as essential is left to the decision of the adopting nations
based on their requirements.
• National EML should be revised periodically to reveal emerging
health priorities, and to reflect updates in the evidence.

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Basic steps for determining essential medicine list
 It include the following steps:-

1. Established drug selection committee

2. Determine the prevalent health problems and patient
characteristics (age, sex, etc…)
3. Decide which health problem may be treated at the level of drug
selection

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cont...
4. Choose the drugs
5. Structure the list of drug products
- pharmacotherapeutically/ alphabetically
- by level of health care
- by level of importance (VEN)
6. Introduce the list of drugs
7. Update the list of drugs

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Usage of essential medicine lists
• The Model list serves as a baseline for further modification (addition
and deletion of new medicines)
• Selection of correct dosage strength, and form depending upon
the national priority and available evidence.
• It can assist national decision-makers in managing costs by helping
them identify priority medicines to meet their country’s health needs.

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cont...
• EML guides the selection, procurement, production, distribution, and
storage of medicines.
• It can also serve as an informational and educational tool for
healthcare professionals involved in the diagnosis and treatment of
diseases as well as dispensing of medicines.
• Furthermore, it can improve availability and promote rational use of
medicines.

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 National drug policy
Outline
Definition
Rationale for national drug policy
Characteristics & Objectives of NDP
Components of NDP

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Definition
• A national drug policy is:- A promise and a guide for action that
indicates how the government will ensure that efficacious and safe
medicines of good quality are affordable, available, and rationally used.
• It provides a framework for coordinating the activities of all the
parties involved, Such as
The public and private sectors
NGOs, donors, and
Other interested stakeholders.

01/20/2025 By;Yasin U. 11
Why is a national drug policy needed?

• To present a formal record of values, aspirations, aims, decisions, and

medium- to long-term government commitments
• To define the national goals and objectives for the
pharmaceutical sector, and set priorities
• To identify the strategies needed to meet those objectives, and identify
the various actors responsible for implementing the main components
of the policy
• To create a forum for national discussions on these issues.

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Characteristics of a National drug Policy

• Essential part of health policy, must fit within the framework of

a particular health care system.
• Goals should be consistent with broader health objectives
• Implementation of an effective drug policy confidence in use of
health services.

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Objectives of national drug policy

General
Access: equitable availability and affordability of essential
medicines
Quality: The quality, safety and efficacy of all medicines
Rational use: the promotion of therapeutically sound and cost-
effective use of medicines by health professionals and consumers.

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cont...
• The more specific goals and objectives of a national policy will
depend upon
a. The country situation
b. The national health policy
c. Political priorities set by the government
d. Economic goals. For example, an additional objective may be to
increase national pharmaceutical production capacity.

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cont...
Access
•The national drug policy and its implementation plan focused on two
strategies to improve access to essential medicines
(1) Appropriate selection and use of generic drugs, and
(2) Improved drug procurement and management (through
movement channel and in the health facility)

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cont...
 The four components of the
“access framework” is essential
but not sufficient in itself to
ensure access.

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cont...
• Similarly, rational drug use depends on many factors, such as rational
selection, regulatory measures, financial factors, prescribers, and
dispensers factors.
• Improving access to essential medicines is perhaps the most complex
challenge for all health sectors involved in the field of medicines
supply.

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T.able: the key components of a national drug policy

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X = direct link; (X) By;Yasin
= indirect
U.
link 19
1.Rational selection of essential medicines
• No health system in the world offers unlimited access to all medicines
• Rational selection of essential medicines is one of the core principles of a NDP.
Rational selection can be approached through various tools

1. National treatment guidelines

2. National lists of essential medicines

3. National drug formulary

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2. Affordability of essential medicine

• Affordable prices are an important precondition for ensuring access to

essential drugs in the health sectors
Key policy issues are
• Government commitment to ensuring access through increased
affordability;
I. For all drugs: reduction of drug taxes, tariffs, distribution margins, pricing
policy.
II. For multi-source products: promotion of competition through generic
policies, generic substitution, and good procurement practices
III. For single-source products: priceBy;Yasin
01/20/2025
negotiations,
U.
therapeutic substitutions 21
3. Drug financing

• Drug financing is an essential component of drug policies to

improve access to essential drugs.
Key policy issues are:
a) Commitment to measures to improve efficiency and reduce waste
b) Increased government funding for priority diseases, and the poor and
disadvantaged group
c) Promotion of drug compensation as part of public and private health
insurance schemes
d) Guidelines for drug donations.
01/20/2025 By;Yasin U. 22
4.Realiable health and Supply System

• To ensure that high-quality medicines are available to all.

• The governments not only need to select their priority
medicines, but also to define policies in
Production, procurement, distribution, as well as to provide a
mechanism for financing, which can be a key limitation.

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5. Regulation and quality assurance

• The drug regulatory authority is the agency that develops and

implements most of the legislation and regulations on pharmaceuticals
to ensure:
 The quality, safety, and efficacy of medicines
 The accuracy of product information
• Drug regulation is a complex task, with many stakeholders and vested
interests involved.

01/20/2025 By;Yasin U. 24
Cont…
Key polices:-
• Government commitment to drug regulation
• Independence and transparency of the drug regulatory authority
• Relations between the drug regulatory authority and the Ministry
of Health
• Stepwise approach to drug evaluation and registration; definition of
current and medium-term registration procedures

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Cont…
• commitment to good manufacturing practices, inspection, and law
enforcement.
• Commitment to the regulation of drug promotion
• Potential for systems of adverse drug reaction monitoring
• International exchange of information.

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6.Rational use of medicine

• Irrational drug use by prescribers and consumers is a very complex

problem, which calls for the implementation of many different
interventions at the same time.
• Efforts to promote rational drug use should also cover the use of
traditional and herbal medicines.

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Cont…
Key policy issues are:
Development of evidence-based clinical guidelines, as the basis for training,
prescribing, drug utilization review, drug supply and drug compensation
 Establishment and support of drugs and therapeutics committees
 Promotion of the concepts of essential drugs
Rational drug use and generic prescribing in basic and in-service
training of health professionals

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7. Research

• Research facilitates the implementation, monitoring, and evaluation

of different aspects of drug policy
• Research is an essential tool in assessing the drug policy’s impact on
national health service systems and delivery

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8. Human resources development

• Human resources development includes the policies and strategies

chosen to ensure that there are
Enough trained and motivated personnel available to implement the
components of the NDP
Lack of motivation and appropriate expertise has been a decisive
factor in the failure to achieve NDP objectives

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Cont…
• Key policy issues are
• Government responsibility for planning and overseeing the
development and training of the human resources needed for the
pharmaceutical sector
• Definition of minimum education and training requirements for each
category of staff
• Career planning and team building in government service
• The need for external assistance (national and international).
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9. Monitoring and evaluation

• Monitoring and evaluation are essential components of an NDP, and the necessary
provisions need to be included in the policy
Key policy issues are
Explicit government commitment to the principles of monitoring and evaluation
monitoring of the pharmaceutical sector through regular indicator-based
surveys
Independent external evaluation of the impact of the national drug policy on all
sectors of the community and the economy.

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 Pharmaceutical financing strategies
1. Financing medicines through taxation

• Tax-based health systems receive their funding from general tax

revenues.
• Thus, the quantity collected and the proportion of the total amount
allocated to health is largely outside the control of the MoH.
• Significant donor financing of health activities outside government
budgets may motivate ministries of finance to allocate domestic
resources to uses other than health and medicines, thereby
reducing the additionally of health funding.
• As the tax and revenue system is outside the control of the MoH, it has
little ability to affect the equity aspects of revenue generation.
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2. Health insurance financing

• Health insurance is a mechanism of spreading the risks of

incurring health care costs over a group of individuals or
households protecting the individuals from catastrophic
financial losses in the event of a serious illness.
• Insurance, therefore spreads the burden of payment over all
groups of the members of the scheme whether they are ill or
healthy rich or poor.
• By their nature insurance scheme financing agencies, receive
funds from employees, households, and the government and
use this fund to purchase health care for the beneficiaries.
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 2.1. Social Health Insurance (SHI)
• Social health insurance (SHI) is quite distinct from systems where
health insurance is largely voluntary and from those dominated by out-
of-pocket payments.
• Overall, SHI contributions are obligatory, and, importantly, can pool
health risks plus financial risks over time and across individuals.
• This pooling decreases the uncertainty linked with health and health
costs.
• Furthermore, separating contributions from health status promotes
the financing goal of equity of access based on health needs rather
than the ability to pay.

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 2.2. Community health insurance
• The schemes are a not-for-profit type of health insurance that has been
used by poor people to protect themselves against the high costs of
seeking medical care and treatment for illness.
• It is mainly financed by the contributions/premium regularly collected
from its members.
• CBHI has the potential to Provide financial protection for underserved
segments within the population, minimizing the equity gap and
reducing out-of-pocket spending.

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 2.3. Private health insurance and medical savings
accounts
Levels of public finance are often low in resource-poor countries,
prompting interest in private forms of prepayment.
In recent years the role of private health insurance and medical
savings accounts (MSAs) in financing health care and medicines has
emerged as a key policy issue in different parts of the world.
Private insurance premiums are largely regressive, even when
premiums are subsidized, as health history and risks are attached to
contributions.
Health care is often supplied based on the ability to pay rather than an
evaluation of health needs, penalizing the unhealthy.

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2.4. Charging systems
• Raising funds by charging fees for services, consultations or
medicines is very common; yet such systems tend to be regressive for
several reasons.
• First, the sick, particularly the chronically ill, incur greater penalties
compared to those enjoying good health.
• Second, the poor may pay more as they are statistically at greater risk
for illness.
• Third, the poor are likely to incur even greater financial penalties if
flat payment rates are in place,
• Fourth, potential clients are excluded from the system by their
inability to pay.
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2.5. Medicines sales and revolving drug funds (RDF)
• Revolving funds seem to be successful in improving drug availability
when certain guidelines are followed.
• They cannot, however, be expected to support other areas of health care,
such as training of community health workers, immunization programs or
preventive activities.
• In addition, high weight on profit would detract from the aim of making
essential drugs available at low cost.
• Moreover, they could result in irrational medicine prescription practices.
• Health care delivery is based on the ability to pay rather than health
care need

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What Is Logistics?
According to the Council of Supply Chain Management Professionals (CSCMP)—
“Supply chain management encompasses the planning and management of all
activities involved in sourcing and procurement…and all logistics management
activities. Importantly, it also includes coordination and collaboration with
channel partners, which can be suppliers, intermediaries, third party service
providers, and customers. In essence, supply chain management integrates
supply and demand management within and across companies.”

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Con’t…
The CSCMP also defnes logistics management as— “[Te] part of supply chain
management that plans, implements, and controls the efcient, efective forward
and reverses flow and storage of goods, services and related information
between the point of origin and the point of consumption in order to meet
customers’ requirement… Logistics management is an integrating function, which
coordinates and optimizes all logistics activities, as well as integrates logistics
activities with other functions including marketing, sales manufacturing, finance,
and information technology.” (CSCMP 2011)

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Con’t…
logistics activities are the operational component of supply chain management.

Supply chain management includes the logistics activities plus the coordination
and collaboration of staf, levels, and functions.

The supply chain includes global manufacturers and supply and demand
dynamics.

 logistics tends to focus more on specifc tasks within a particular program health
system.

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Why Logistics ?

Storekeepers were the custodians of supplies stored in small storerooms and

large warehouses.

Ultimately, the goal of every public health logistics system is to help ensure that
every customer has commodity security.

Commodity security exists when every person is able to obtain and use quality
essential health supplies whenever he or she needs them.

A properly functioning supply chain is a critical part of ensuring commodity

security—fnancing, policies, and commitment are also necessary.

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 Con’t…
Well-functioning supply chains beneft public health programs in important ways
by—
increasing program impact ( No product? No program! )

 enhancing quality of care

 Well-supplied health programs can provide superior service, while poorly supplied
programs cannot
 . Motivated staf are more likely to deliver a higher quality of service.

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 Con’t…
 improving cost efectiveness and efciency.

Strengthening and maintaining the logistics system is an investment

that pays of in three ways.
(1) It reduces losses due to overstock, waste, expiry, damage, pilferage, and
inefciency;

(2) it protects other major program investments; and

(3) it maximizes the potential for cost recovery.

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 Logistics System
• The customer expectations defne the purpose of a logistics system.

What is the right cost of a donated

good?

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 Logistics Cycle: Organizing Logistics System Activities
Logistics management includes a number of activities that support the six rights.
Over the years, logisticians have developed a model to illustrate the relationship
between the activities in a logistics system; they call it the logistics cycle .

Figure.1:.The.Logistics.Cycle

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Major activities in the logistics cycle
serving customers
Storekeepers do not store drugs just for the purpose of storing; they
store products to ensure that commodity security exists for every
customer to obtain and use the health commodities when they need
them.
In addition to serving the needs of the end customer—the customer
seeking health services
Te logistics system ensures customer service by fulflling the six rights.
Each activity in the logistics cycle, therefore, contributes to excellent
customer service and to ensuring commodity security.

01/20/2025 By;Yasin U. 48
Activities….
product selection.

In any health logistics system, health programs must select products.

Most countries have developed essential medicine lists patterned on the World
Health Organization (WHO) Model List.

Products selected for use will impact the logistics system, so the logistics
requirements must be considered during the product selection.

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Activities…
• quantifcation.
 After products have been selected, the required quantity and cost of each
product must be determined.

Quantifcation is the process of estimating the quantity and cost of the products
required for a specifc health program (or service), and, to ensure an
uninterrupted supply for the program, determining when the products should be
procured and distributed.

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 activities
 procurement

 After a supply plan has been developed as part of the quantifcation process, quantities of

products must be procured. Health systems or programs can procure from international, regional,
or local sources of supply; or they can use a procurement agent for this logistics activity.

 inventory management:

 storage and distribution. After an item has been procured and received by the health system or

program, it must be transported to the service delivery level where the client will receive the
products. During this process, the products must be stored until they are sent to the next lower
level, or until the customer needs them.

 Almost all businesses store a quantity of stock for future customer needs.

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Heart of the logistics system
Information is the engine that drives the logistics cycle; without information, the
logistics system would not run smoothly. (LMIS)

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Other activities at the heart of the logistics cycle

• organization and stafng.

• Budget.

• Supervision

• monitoring and evaluation

01/20/2025 By;Yasin U. 53
 Con’t…
 Quality monitoring
It is important to understand the role of quality monitoring in ensuring an efcient
and efective logistics system.

In the logistics cycle, notice how quality monitoring appears between each
activity of the logistics cycle.

Quality monitoring refers not only to the quality of the product, but also to the
quality of the work.

Quality monitoring appears four times in the logistics cycle

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Policy and adaptability
Policy
 Government regulations and procedures afect all elements of the logistics system.

 Many country governments have established policies on the selection of medical products

(usually based on essential medicine lists), how items are procured (for example,

international competitive bidding or using prequalifed manufacturers); when items are

distributed; where and how items are stored; and the quantities customers receive (often

called dispensing protocols).

 Fiscal and budget policies are often some of the most infuential policies afecting a logistics

system, whether related to securing funding for product procurement; or to pay for critical

infrastructure, such as storerooms and transportation.

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adaptability
Adaptability is a characteristic of all successful logistics systems.

Logistics systems must be designed to be fexible and adapt to constantly

changing circumstances, such as changes in demand for a product, or changes in
funding policies for logistics activities

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Key Logistics Terms
• supplies, commodities, goods, materials, products, and stock.

These items flow through a logistics system.

• users, clients, patients, and customers.

The people who receive or use supplies

• consumption, dispensed, dispensed to user, usage data.

Data on the quantity of goods given to or used by customers

01/20/2025 By;Yasin U. 57
 Con’t…
• service delivery point. Any facility where users receive supplies related to health
services. Service delivery points (SDPs) are usually hospitals and health centers, but may
also include mobile units, community-based distributors, laboratories, and health posts

• pipeline. The entire chain of physical storage facilities and transportation links through
which supplies move from the manufacturer to the user, including port facilities, central
warehouse, regional warehouses, district warehouses, all SDPs, and transport vehicles,
including community-based distribution networks.

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 lead time.

• The time between when new stock is ordered and when it is received and
available for use.

• When logistics managers evaluate how well a logistics system is meeting the six
rights, they measure the lead time and try to reduce it

• Goods should be available to customers at the right time—before the customer

asks for the product

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 Figure.1-2:.Typical Public Sector In-Country Supply Pipeline

01/20/2025 By;Yasin U. 60
More Logistics Terms
Allocation (push) versus requisition (pull)?
• In a requisition system, the person who receives the supplies calculates the
quantities of supplies required.

• In an allocation system, the person who issues the supplies calculates the
quantities of supplies required.

01/20/2025 By;Yasin U. 61
 Push and Pull systems…
Conditions favoring push systems

• Whether a push system is more appropriate than a pull system

depends on product features, manufacturing process
characteristics, as well as demand volume, and variability.
• Lower levels of staff are not competent in inventory control
• Demand greatly exceeds supply, making rationing necessary
• A limited number of the product is being handled
• Disaster relief is needed, or the situation calls for short-term
supply through pre-packed kits.

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 Push and Pull systems…
Conditions favoring a pull system
• MTO systems are more suitable whenever lead times are
short, products are costly, and demand is low and highly
variable.
• Lower-level staff are competent in assessing needs and
managing inventory
• Sufficient supplies are available at the supply source to
meet all program needs
• A large range of products is being handled
• Field Staff are regularly supervised, and performance is
monitored
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01/20/2025 By;Yasin U. 64
• Consumed versus issued?
 After a customer receives a product, we say that it is consumed; even if it is
wasted or discarded, the logistics system will still need to resupply the item,
regardless of its ultimate use

Information about the quantity of products given to customers is called

dispensed-to-user data, often abbreviated as dispensed data or consumption

data.

Because an SDP is the only place where supplies are given directly to customers,

this is the only level where we can collect dispensed-to-user data.

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 Con’t…

Usage data is another term with a meaning similar to dispensed to user, except
that it is used by the consumer but is not dispensed directly to them (i.e.,
laboratory reagents, HIV test kits, etc.).

The supply pipeline includes all intermediate storage facilities.

The term for information on the movement of products between any two storage
facilities is issues data.

01/20/2025 By;Yasin U. 66
Cont….
Product integration
• Many countries have several parallel logistics systems for selecting, procuring,
and distributing diferent types of supplies to clients. Often health programs—
family planning, maternal and child health, malaria control, TB control, or HIV and
AIDS—each manage and distribute supplies for their programs.

• These programs are called disease-specifc programs (sometimes called vertical

programs); because, historically, they often have separate standard operating
procedures and distribution channels and may be managed by separate
management units at the central level.

01/20/2025 By;Yasin U. 67
 Cont…
• Recently, however, many countries have moved toward product integration, i.e.,
combining the management of some or all logistics functions for diferent
commodity categories (i.e., family planning, HIV, malaria, and TB) into a shared
supply chain. For example, a system that manages contraceptives for the family
planning program might also manage oral rehydration salts (ORS), vitamin A, and

other products for the maternal and child health program.

01/20/2025 By;Yasin U. 68
Cont…
Supply chain integration
• supply chain integration mean a performance-improving approach that
develops seamless linkages between the various actors, levels, and
functions within a given supply chain to maximize customer service.
• The objectives of supply chain integration are to improve efciency and
reduce redundancy, thus improving product availability and, often,
reducing costs.
• Performance-enhancing measures can take many forms: logistics
management units, joint strategic plans, information sharing
mechanisms, and technical working groups.

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 Drug selection
⚫ Drug selection: is a process of deciding the type of needed drug
products for prevalent diseases.
⚫ Drug selection involves
⚫ Reviewing the prevalent health problems
⚫ Identifying treatments of choice
⚫ Choosing individual drugs and dosages forms and
⚫ Deciding which drugs will be available at each level of
healthcare

70
01/20/2025 Yasin…
 Drug selection…
Rationale:
⚫ Determine the type of drug products relevant for the
prevalent diseases
⚫ Leads to
⚫ Better supply
⚫ More rational use and
⚫ Lower costs

71
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 Why do we need to select drugs?
⚫ About 70% of the pharmaceuticals on the world market are
duplicative or non-essential
⚫ Some drugs show high toxicity relative to their therapeutic
benefit
⚫ Some drugs are newly released with insufficient information
on the efficacy or toxicity
⚫ Many new products for therapeutic indications are not
relevant to the basic needs of the population and are more
expensive than existing drugs

72
01/20/2025 yasin.
 Why do we need to
select…
⚫ With so many drugs available, it is impossible for Prescribers to
be up to date and to compare alternatives
 Variety of available products may also contribute to inconsistent
prescribing within the same health care system or health facility
⚫ Funds are limited: essential drugs are usually available from multiple
suppliers - making possible the negotiation of favorable prices
⚫ Purchasing power is significantly lessened by the large number of
duplicate and non-essential drug products.

73
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 Criteria for drug selection
⚫ Relevance to the pattern of prevalent diseases
⚫ Treatment facilities
⚫ Training and experience of available personnel
⚫ Financial resource
⚫ Genetic, demographic, and environmental factors
⚫ Drug products with adequate scientific data on efficacy, safety,
quality, bioavailability, and stability be selected
⚫ Possibilities of easy and prompt procurement, local manufacture
⚫ Drug products with the widest possible coverage for the
prevailing health problems (broad spectrum)
74 Yasin
01/20/2025
.
 Criteria for drug selection…
⚫ Physical facilities for proper distribution and storage could be
assured
⚫ Drug products with affordable cost by considering the total cost
of treatment not only the unit cost of drug(s)
⚫ Single-ingredient drug products
⚫ Combination drug products (fixed ratio) are acceptable, if
⚫Better therapeutic effect and safety
⚫The cost of the combination product is less than the sum of
individual products
⚫Better patient compliance
75
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 Criteria for drug selection…
⚫ When two or more drugs seem similar in the
above respect, select
⚫ The most thoroughly investigated drug
⚫ Drug(s) which offer better patient
compliance
⚫ Drug product(s) which is locally available
⚫ Relatively safe, effective, quality, low
price, and available

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 Basic steps in drug selection
A. Establish a Drug Selection Committee
⚫ Also called Drug and Therapeutic
Committee (DTC)
⚫ Composed of prescriber, pharmacy
personnel, and other concerned health
personnel
⚫ Determine the prevalent health problems and
patient characteristics:
⚫ Morbidity Registration Book or
⚫ Patient Prescription Registration Book
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 Basic steps in drug selection…
B. Decide which health problems may be
treated at the level of drug selection
⚫ Determine the level of health care unit by
determining the
⚫ Level of training of prescriber
⚫ Level of training of dispenser, etc. and
⚫ Available diagnostic facilities
C. Choose the drugs to be used for the
health problems (1st, 2nd, or 3rd choices)
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 Basic steps in drug selection…
D. Structure the list of drug products: it could be
⚫ Pharmaco-therapeutically and /or alphabetically; e.g. the National
list of drugs
⚫ By level of health care; e.g. the list of Essential drugs for Ethiopia.
⚫ By level of importance (VEN system):
⚫ All the drugs included in the list may not be equally important
⚫ They should be categorized by level of importance into three
categories
E. Introducing the list of drugs to health professionals of institutions
and other concerned bodies
F. Updating the list of drugs
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 Basic steps in drug selection…
I. (V) Vital
⚫ Drugs that are potentially life-saving (very essential)
e.g. Antimalarials, ORS, Vaccines, etc.
II. (E) Essential
⚫ Drugs that are effective against less life-threatening, but
significant health problems; e.g. Antibiotics
III. (N) Normal usage or Less-essential
⚫ Drugs used for minor or self-limiting health problems or
⚫ Drugs that have a high cost for small extra effectiveness;
e.g. Cough Syrups, Antacid tablets, or Suspension.

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 Advantages of drug selectio
⚫ Supply ⚫ Prescribing
⚫ Easier to procure, ⚫ Training more focused and therefore
store, and distribution easier
⚫ Lower stocks ⚫ More experience with fewer drugs

⚫ Better quality ⚫ No irrational treatment alternative is

assurance available
⚫ Focused drug information
⚫ Easier dispensing
⚫ Better recognition of adverse drug
reactions

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 Advantages of drug
selection…
⚫ Cost
⚫ Lower prices, more competition.
⚫ Patient use
⚫ Focused education efforts
⚫ Reduced confusion and increased adherence
to treatments
⚫ Improved drug availability
⚫ Cost-effective treatments are provided.

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 Drug Quantification
 Is the process of determining/calculating the amount of drugs/
products needed.
• The management of the drug supply works best when products are
available.
• Supplies are more likely to be available if ordered regularly.
• Supplies should be ordered based on their use (consumption).

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 Symptoms of poor quantification
The most commonly encountered symptoms of poor quantification of drug
requirements are:

 Chronic and widespread shortages

 Surpluses or overstock

 Inadequate cost-effectiveness:- failure to use cheaper but equally effective drugs or

dosage forms is a widespread problem

 Irrational adjustments to budgetary constraints: - may lead to irrational order quantities

 Irrational and ineffective prescribing

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 Drug quantification methods
There are four drug quantification methods. These are:

1. Consumption method

2. Morbidity method

3. Adjusted consumption method

4. Service level projection budget requirement

However, the first two are the most commonly used methods of drug quantification in our country.

Consumption Method: uses records of past consumption of individual drugs.

Morbidity Method: estimates the need for specific drugs based on the expected number of
attendance, the incidence of common diseases, and the standard treatment patterns for the diseases
considered.
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Factors that influence the choice and quantity of drugs include:
• Catchment population which the health institution serves,

• Disease pattern and seasonal variation in disease pattern,

• Monthly (rate of) drug consumption,

• Knowledge of the quantity of each dosage form that is regularly consumed,

• Delivery (lead) time,

• Request indicator (re-order level):

• Quantity of drug product that serves as a signal for re-ordering.

The three factors—delivery (lead) time, monthly consumption, and request indicator—are
considered as the basis for calculating the appropriate quantity of a particular drug to be ordered.
So let us look at these three factors one by one.
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Delivery (lead) time
 It is the time lag between placing orders and receiving the orders.

 Delivery time may be days, weeks, or even months due to the following factors:

Poor road conditions, particularly in the rainy season,

Poor condition of delivery vehicles,

Increased workload at the issuing store (e.g. Pharmaceutical Fund and Supply
Agency)
Stock out of drugs at the central store (Pharmaceutical Fund and Supply
Agency),
Consumption rate of drugs at Health centers
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Monthly consumption
Is obtained by calculating the average consumption over a period of time (e.g. six months)or
dividing the total consumption over the period by the number of months the drug was consumed. It
is also known as average monthly consumption (AMC).

According to Ethiopian Integrated Pharmaceutical logistics System(IPLS) 3months period is used

to calculate average monthly consumption

Example 1:Average monthly consumption

• The first method of calculating monthly consumption; is to add the number of drugs in stock at the
beginning of a period (e.g., six months) to the quantity of drugs received during that same period
and then subtract the quantity of drugs remaining at the end of the period look at the following
transaction in X health center.

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Example 1…
• March 2017, quantity of paracetamol 1,000 x 500-mg tablet containers
in stock = 14
• June 2017, quantity of paracetamol 1,000 x 500-mg tablet containers
received = 8
• August 2017, quantity of paracetamol 1,000 x 500-mg tablet
containers, remaining stock= 6
Therefore, the total quantity of paracetamol 1,000 x 500-mg tablet
containers consumed over a six-month period = 14 + 8 – 6 = 16.
• AMC= Total consumption/Number of months
• AMC = 16/6
• Average monthly consumption to the nearest container = 8/3
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Example 2: Average monthly consumption
A second method of calculating the average monthly consumption is to obtain data on
consumption from the bin card on a monthly basis and then find an average over a period
of time.
April 2000 2 x 1,000 tablets
May 2000 4 x 1,000 tablets
June 2000 2 x 1,000 tablets
July 2000 2 x 1,000 tablets
August 2000 3 x 1,000 tablets
September 2000 3 x 1,000 tablets
16 x 1,000 tablets
• Average monthly consumption is 16 x 1,000 tablets = 8/3 containers
6
• Average monthly consumption of container to the nearest container = 3
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Request indicator (re-order):-
 It is also known as safety stock. It is the level of drugs in stock.

 It is the quantity that is calculated to last between the period of placing the order
and the delivery of the new consignment.

• The stock should never reach “zero level” before a request is made, as there will
be a shortage of stock for some time.

• Calculating the RI once the monthly consumption is obtained is easy.

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Con’t….

For example:

• If the delivery time is three months and the monthly total consumption is
2633.3

• Then RI is: 2633.3 tablets x 3 months = 7,900 tablets

• Since the unit of issue is tins of 1,000 tablets, the above figure must be
brought to the nearest tin, which is 7,900 = 7.90 = approximately 8tins of
1000 tablets
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con’t…
 This means that when the stock of paracetamol is reduced to 8 tins, a
new request must be made. = (2 tins x 3 months) + 2 tins = 8 tins
(c.) RI = 6 tins; current stock balance = 0 tins
In this case, an extra quantity must be requested to cover the RI.
Request quantity = 2 tins x 3 months + 1 month consumption (2 tins) +
RI (6 tins) quantity = (2 x 3) + 2 + 6 = 14 tins
In each case above, if previous data show that the number of patients
would increase (e.g. malaria cases due to seasonal variations), then the
quantities should be increased proportionally.
- If the number of patients is expected to double, then the quantity should be
multiplied by 2.
- If the number of patients is expected to drop by half, then the quantity should
be multiplied by 1/2.
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General formulas

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Reconcile needs and funds
 The need for drugs should be reconciled with funds allocated for drug purchasing. This can be done
by using:

VEN analysis:

 The VEN system sets priorities for drug selection and drug procurement according to the potential
health impact of individual drugs.

- V (vital) – drugs, which have the potential of life-saving, are categorized as vital. This category of
drugs should be available all the time in health facilities. E.g. ORS, Vaccines, Antimalarials, etc.

- E (Essential) – drugs, which are effective against less life-threatening (common problems), are
categorized as essential E.g. Certain Antibiotics

- N (Normal uses) – drugs used for minor or self-limiting health problems. E.g. Cough syrup, antacid

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ABC analysis:
ABC analysis is an extremely powerful tool, with uses in the selection, procurement,
management of distribution, and promotion of rational drug use.

 Class A items (10 to 20% of items, 75 to 80% percent of expenditures are mostly
high-volume, fast-moving drugs.

 Class B items are usually 10 to 20% of items and 15 to 20% of expenditures

 Class C items often represent 60 to 80% of the items but only about 5 to 10% of
expenditures, these are the low–volume, slow-moving items.

Thus, Class C is a good place to look for items that might not be needed in stock at all
times.
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 THANK YOU!!

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