Introduction to Pharmaceutical Supply

Management

By Edao S ([Link], MSc.)

Session objectives
At the end of this session, students will able to: -
• Describe Essential Drug Concept
• Comprehend why worry about drugs?
• Lists challenges for drug managements
• Describe drug management cycle
• World situation of medicines supply
• National Drug policy

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 Definition of Essential Medicines
 Essential medicines are those that satisfy the
priority health care needs of the population.
 They are selected with due regard to:
• The public health relevance
• Evidence on efficacy and safety and
• Comparative cost-effectiveness

3 Concept of EMs June 21, 2010

 Essential Drug Concept

• The concept of EMs, developed in 1977,

– It cleared that the scarce financial resources
needed to be cautiously used to:
• contain the increasing drug costs and
• ensure sustained availability and
• accessibility of essential drugs.

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 Alma-Ata Declaration
• Health as a fundamental human right and
– which realization requires collaboration of
social and economic sectors in addition to
the health sector.
• The people have the right and duty to
participate in the planning and implementation
of their health care.
• Health for all by 2000 where PHC is the key to
attaining this target

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 Bamako Initiative

• Was launched to involve communities in

financing and managing their health care needs;
• The ED component became a core and
prominent issue of this initiative.
• The drugs, delivery system and service delivery
must be efficiently managed, supervised and
monitored

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Pharmaceutical Supply Management

• Most leading causes of death and disability in

developing countries can be prevented, treated or at
least alleviated with cost effective essential drugs
• Despite this fact, literally hundreds of millions of
people do not have regular access to EM
• Many of those who do have access are given the wrong
treatment, receive too little medicine for their illness or
do not use the drugs correctly

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Drug management supply is concerned with
practical
– gov’t policy makers, essential drugs program
managers, NGOs, donors and others can
work to close:
• the need and access to EM, and
• availability of drugs and their rational use
Ensure that high quality EMs are available,
affordable, and used rationally
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 Why worry about drugs?

 Accessible health services and qualified staff are

necessary components of any health care system, but
drugs have special importance for at least five reasons:
 Drugs save lives and improve health
 Drugs promote trust and participation in health
services
 Drugs are costly
 Drugs are d/t from other consumer products
 Substantive improvements in the supply use of drugs
are possible
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 Challenges for drug managements
• Major challenges for policy-makers and managers
include:
– achieving financial sustainability,
– improving efficiency in public drug supply
– changing the behavior of providers, patients
and public to promote effective, safe and
economical prescribing, dispensing and pts use
of drugs
– Reorienting the role of government
– Regulating safety, efficacy and quality
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 Challenges for drug managements cont’d
Achieving financial sustainability
• Financial sustainability is achieved only when
expenditures and financial resource are balanced
- To achieve financial sustainability policy makers and
manager of EMS must be familiar with economic
concepts and method related to:
- Cost containment
- Efficiency
- CEA
- Public expenditure decision, Roles of PP and
- Economic regulation
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 What?
• If demands for EM exceed the available
budget, the health care systems left with
four options:
– Improve efficiency,
– Increase financial resources,
– reduce demand and accepting low quality
services.
– Increasing efficiency, reducing demand,
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 …Challenges for drug managements cont’d

Improving efficiency in public drug supply .

• Public sector pharmaceutical supply is plagued by
ineffective management systems.
– Lack sufficient qualified HR and
– Characterized by systems that are not transparent and
accountable

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Changing behaviors of providers, patients, and
public
– Major problems include prescribing and
dispensing incorrect, harmful, unnecessary
drugs;
– failure by patients to use needed medications
correctly and wasteful of harmful self-medication
practices.

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Reorienting the role of government
• Access to health care, including essential drugs,
is a fundamental human right.
• The public health challenge is to work with the
private sector and NGOs to achieve universal
access to essential drugs and rational use of
drugs

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Regulation, safety, efficacy and quality
• Regulatory control is an indispensable foundation for
ensuring the safety, efficacy, and quality of drugs in a
country.
• It is difficult to obtain effective regulatory capacity in
developing countries
• As such capacity requires a firm legislative basis,
trained personnel; specific technical resources,
adequate funding, and perhaps most import-public
commitment to establishing and maintain basic
standards.
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 Pharmaceutical Supply Management cycle

• PSM involves four major functions:

– Selection, Procurement,
– Distribution, & Drug use.
• At the center the management support holds
the drug management cycle together in
coordination.
• The entire cycle frame work of a policy & legal
frame work that establishes and supports the
public

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 Product Selection

• Is the process of determining which medicines

and other products should be used for what
clinical indications.
• Done by a committee that includes clinicians,
policy makers and others.

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 Product Selection

• Three key considerations are:

1. Which products are to be used at which level of
the health care system
2. The capacity on those levels, and
3. The cost per treatment or per daily dosage.

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 Quantification

• Is the calculation of required quantities of:

– medicines,
– tests or services essential to correctly treat
patients for a certain period of time

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 Procurement

• Is the process of buying the selected products in

the determined quantities and quality—for
delivery at the right time.
• It is often done through an international tender
which contains, among many other things, the
exact specifications and quantities desired and
where and when the products are to be
delivered.

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 Inventory Management

• Are the processes involved in ensuring that adequate

stocks of products are:
– kept,
– quality maintained and that programmes and SDPs
have the products they need available and
accessible where and when they need them.

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 Distribution

• Involves arrangements for the physical transport of

products from:

– Central level to intermediary storage points to the

final SDPs.

– A particularly important element of this is a LMIS

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 Rational Use

• Refers to the monitoring of the dispensing of

medicines and other products,

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National drug policy & PHCS
 The world drug situation
• Medicine production is highly concentrated
– USA, Japan, Germany, France and the UK – account for
two-thirds of the value of all medicines produced.
• Large volume markets of lower-price medicines exist
in the highly competitive domestic markets of China
and India.
• A small number of transnational companies
dominate the global production, trade and sales of
medicines.
• Ten of these companies now account for almost half
of all sales.
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 The world drug situation cont’d

• Trade is dominated by imports and exports

among high-income countries.
• Major exporters among LMIC s export to other
LMICs.
• However China’s exports are mainly to
industrialized countries.
• Imports by LMICs come mainly from
industrialized countries.

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National drug policy

• Essential drugs are not used to their full

potential b/c of
– Lack of access to essential drugs (Drugs are not
available or not affordable)
– Poor quality ( substandard and counterfeit drugs)
– Irrational use of drugs
• A national drug policy as a common framework to
solve these problems in pharmaceuticals

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 What is a national drug policy?

• NDP is a commitment to a goal and a guide for

action.
• It expresses and prioritizes:
– the medium- to long-term goals set by the
government for the pharmaceutical sector, and
– identifies the main strategies for attaining them.
• It covers both the public and the private sectors

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 Objectives of a national drug policy
• In the broadest sense a NDP should promote equity and
sustainability of the pharmaceutical sector.
• The general objectives of a national drug policy are to
ensure:
– Access: equitable availability and affordability of
essential drugs
– Quality: the quality, safety and efficacy of all
medicines
– Rational use: the promotion of therapeutically sound
and cost-effective use of drugs by health professionals
and consumers.
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 Key components of a national drug policy

• NDP is a comprehensive framework in which each

component plays an important role in achieving one or
more of the general objectives of the policy.
• For example, access to essential drugs can only be achieved
through rational selection, affordable prices, sustainable
financing and reliable health and supply systems.
• Each of the four components of the “access framework” is
essential but not sufficient in itself to ensure access.

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 Key components of a NDP cont’d
Components of a national drug policy, linked to key policy
objectives
Objectives: Access Quality RDU
Components:
Selection of essential drugs X (X) X
Affordability X
Drug financing X
Supply systems X (X)
Regulation and quality assurance X X
Rational use X
Research X X X
Human resources X X X
Monitoring and evaluation X X X 34
 Key components of a NDP cont’d
1. Selection of essential drugs
• is a crucial step in ensuring access to EDs and in promoting
RDU
• Key policy issues are:
– the adoption of the ED concept
– procedures to define and update the national list(s) of
essential drugs;
– selection mechanisms for traditional and herbal
medicines.

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 Key components of a NDP cont’d

2. Affordability
• Affordable prices are an important prerequisite for
ensuring access to essential drugs in the public and private
sectors.
• Key policy issues are:
– for all drugs: reduction of drug taxes, tariffs and
distribution margins; pricing policy;
– for multi-source products: promotion of competition
through generic policies, generic substitution and good
procurement practices;
– for single-source products: price negotiations,
competition through price information and therapeutic
substitution 36
 Key components of a NDP cont’d
3. Drug financing
• is essential component of policies to improve access to
essential drugs.
• Key policy issues are:
– commitment to measures to improve efficiency and
reduce waste;
– increased government funding for priority diseases,
and the poor and disadvantaged;
– promotion of drug reimbursement as part of public
and private health insurance schemes;

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– use and scope of user charges as a drug financing
option;
– use of and limits of development loans for drug
financing;
– guidelines for drug donations.

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 Key components of a NDP cont’d
4. Supply systems
• The fourth essential component of strategies to increase
access to essential drugs is a reliable supply system.
• Key policy issues are:
– public–private mix in drug supply and distribution
systems;
– commitment to good pharmaceutical procurement
practices in the public sector;
– drug supply systems in acute emergencies;
– inventory control, and prevention of theft and waste;
– disposal of unwanted or expired drugs.
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 Key components of a NDP cont’d
5. Regulation and quality assurance
• To ensure the quality, safety and efficacy of drugs,
• Key policy issues are:
– independence and transparency of the drug
regulatory agency;
– stepwise approach to drug evaluation and
registration;
– commitment to GMP, inspection and law
enforcement;
– access to drug control facilities;
–
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 Key components of a NDP cont’d

6. Rational use
• The rational use of drugs means that:
– Patients receive medicines appropriate for
their clinical needs,
– In doses that meet their individual
requirements,
– For an adequate period of time, and
– At the lowest cost to them and their
community. 41
 Key components of a NDP cont’d
• Key policy issues are:
– Development of evidence-based clinical guidelines
– Establishment and support of DTC
– Promotion of the concepts of EDs, RDU and generic
prescribing in basic and in-service training of health
professionals;
– The need and potential for training informal drug sellers;
– Continuing education of health care providers and
independent, unbiased drug information;
– Consumer education, and ways to deliver it;
– Financial incentives to promote rational drug use;
– Regulatory and managerial strategies to promote rational
drug use.

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 Key components of a NDP cont’d
7. Research
• Operational research facilitates the implementation, monitoring
and evaluation of different aspects of drug policy.
• It is an essential tool:
– In assessing the drug policy‟s impact on national health
service systems and delivery,
– In studying the economics of drug supply,
– In identifying problems related to prescribing and dispensing,
and
– In understanding the socio cultural aspects of drug use.
• Key policy issues are:
– The need for operational research in drug access, quality and
rational use;
– The need and potential for involvement in clinical drug
research and development 43
 Key components of a NDP cont’d

8. 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 national drug policy.
• Key policy issues are:
– Government responsibility for planning and overseeing
the HR;
– 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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 Key components of a NDP cont’d
9. Monitoring and evaluation
• Are essential component of NDP
• 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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 National drug policy process

• A national drug policy involves a complex process of:

– development,
– implementation and
– monitoring.
• Throughout the process careful planning and the
involvement of all parties are needed, and the
political dynamics have to be considered at all times.

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 NDP process cont’d
Planning
• A drug policy without an implementation plan remains a dead
document.
• There are various types of plans.
A. Strategic plan to develop the policy itself, which should specify
the various steps in the development process, and especially plan
for the involvement of as many stakeholders as possible.
B. Master plan is an implementation plan
• typically covers a 3–5-year period.
• this details the various activities for each component of the
policy.
• spells out what needs to be done and who is responsible,
estimates the budget and proposes a time frame.
• If resources are insufficient without external input, a set of
priority activities should be identified that can be executed within
the existing means.
• can be broken down into individual annual work plans for the
various departments.
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 NDP process cont’d
Involving all parties
• Throughout the policy process there should be
consultation, dialogue and negotiations with all interested
groups and stakeholders.
• These include other ministries (higher education, trade,
industry), doctors, pharmacists and nurses, local and
international pharmaceutical industries, drug sellers,
NGOs, professional associations and consumer groups.
• Other government agencies (such as the drug regulatory
agency), insurance companies and groups paying for
health care must be involved.
• It is recommended that the national drug policy
committee meets regularly to review
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 NDP process cont’d

Political dynamics
• Formulating and implementing a national drug policy are
highly political processes.
• This is because such a policy usually seeks to achieve equity
of access to basic health care, primarily by making the
pharmaceutical sector more efficient, cost – effective and
responsive to health needs.

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 Formulating a national drug policy

Step 1: Organize the policy process

• The MOH is the most appropriate national authority to take the
lead role in formulating a national drug policy.
• The first step is to decide how to organize the development
process that will identify the structure of the policy, its major
objectives and its priority components.
• identifying all the interested parties that need to be involved,
the necessary resources,
• The need for assistance from WHO, donors or countries with
relevant experience
• This stage can be carried out within the ministry of health

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 Formulating a national drug policy…

Step 2: Identify the main problems

• In order to set realistic objectives a thorough analysis and
understanding of the main problems in the pharmaceutical
sector are needed.
• There are various ways of carrying out an initial situation
analysis.
– bring together a small team of experts, some of whom
should have performed similar analyses in other countries.

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 Formulating a national drug policy…

Step 3: Make a detailed situation analysis

• A more detailed situation analysis of the pharmaceutical sector
and its components may be needed.
• This should further analyses the source of the problems, in
order to identify potential solutions, choose the most
appropriate strategies, set priorities, and serve as a baseline for
future systems of monitoring and evaluation

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 Formulating a national drug policy…

Step 4: Set goals and objectives for a NDP

• Once the main problems have been defined, goals can be set
and priority objectives identified.
• For instance, if one of the priority problems is lack of access to
essential drugs, one of the priority objectives should be to
improve:
– the selection,
– affordability and
– distribution of essential drugs.

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 Formulating a national drug policy…
Step 5: Draft the text of the policy
• Once a thorough analysis of the situation and an outline of the
main goals, objectives and approaches have been completed, a
draft text of the national drug policy should be prepared.
• It should set out the general objectives of the policy.
– „Ensure that essential drugs are accessible to the entire
population; that the drugs are safe, efficacious and of good
quality; and that they are used rationally by health
professionals and consumers‟

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 Formulating a national drug policy…
Step 6: Circulate and revise the draft policy
• The draft document should be widely circulated for comments,
first within the ministry of health, then in other government
ministries and departments, and finally to relevant institutions
and organizations outside the government, including the
private and academic sectors.
• Endorsement by government sectors responsible for planning,
finance and education is important.
• Once this wide consultation is complete, the draft document
should be revised in the light of the comments received, and
finalized.

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 Formulating a national drug policy…

Step 7: Secure formal endorsement of the policy

• In some countries the document can then go to the cabinet or
parliament for endorsement.
• In others it will remain an administrative document that serves
as a basis for implementation plans and changes in the law and
regulations.
• It is therefore recommended that only certain enabling
components of the policy are incorporated into law, without
too many operational details.

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Step 8: Launch the national drug policy
• Introducing a national drug policy is much more than a
technical task.
• To a large extent the policy‟s success will depend on the level
of understanding of different sectors of society, and on their
support for its objectives.
• The implications and benefits for all interested parties should
therefore be stressed.

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