2.

Describe the logistics

cycles

Eyob T.([Link])
 2.1. Introduction to essential
medicines and national drug policy
 2.1.1. Concept of essential medicines
 Essential medicines are those that satisfy the priority health care needs of the
population. They safe lives;

reduce suffering and

improve health.

 They are selected with due regard to:

public health relevance,

evidence on efficacy, safety and

comparative cost effectiveness.

Purpose: Essential medicines are intended to be
available:

- at all times

- in adequate amounts

- in the appropriate dosage forms

- with assured quality

- adequate information and

-at a price the individual and the community can afford

 The rise of the essential drugs concept
 An idea gradually emerged: why not concentrate first on a basic list of
reliable drugs to meet the most vital needs?
 The idea of working with a limited range of drugs had long been in places
where there was no alternative:
• Different country started listing limited range of affordable drugs used to
meet basic needs.
 In 1975, WHO defined essential drugs as “those considered to be of utmost
importance and hence basic, indispensable, and necessary for the health
needs of the population.
 A year later, the WHO prepared its first Model List of Essential Drugs,
listing 224 drugs and vaccines.
 In Alma Ata in 1978, the WHO/UNICEF Conference on Primary Health
Care adopted the essential drugs concept as one of its basic tools.

The concept of EMs: A limited range of carefully selected

medicines leads to
− better health care,
− better drug management and
− lower costs.
 Principles of the essential medicines concept
 Common health problems for the majority of the population can be treated
with a small number of carefully selected medicines;
• In practice, most health professionals routinely use fewer than 200 drugs.
• Better management of medicines
− Lower stocks
− Procurement, distribution and other supply activities can be carried out most
efficiently for a limited number of pharmaceutical products;
• Patients can be better informed about the effective use of medicines by
health professionals (More experience with fewer drugs & training).
− ↑effectiveness & safety → ↓ health care cost;
• Lower prices (↑ competition ↓ cost, difficult to afford all drugs available)
• Fairness (rural vs urban)
 Implementation: The essential medicine concept is applied in any country in
both private and public sectors, and at any level of health care units.
 The implementation of the concept of essential medicines is intended to be
flexible and adaptable to many different situations;
• exactly which medicines are regarded as essential remains a national
responsibility.
• The selection of essential medicines is one of the core principles of a
national drug policy because it helps to set priorities for all aspects of the
pharmaceutical system.
 Under optimal circumstances, registration of medicines for private & public
sectors should be based on the an evaluation of efficacy, safety and quality.
 In some countries, cost and need are also criteria for medicine registration.
 More commonly, the selection and use of essential medicine are limited to
public sector health facility.
 However, many private sector and health insurance systems have limited
formulary list.
 For each level of health care in the public sector, a list of essential medicines
is prepared.
 Selection criteria
 Because of the great differences between countries, “the preparation of a
drug list of uniform, general applicability is not feasible or possible."
 For a national essential drug list to be credible and accepted, explicit criteria
must be defined and published.
 The final selection criteria should be based on thorough discussions and
acceptance by a multidisciplinary committee of experts.
Essential medicines are selected with due regard to:

− Disease prevalence

− Public health relevance

− Evidence on efficacy and safety

− Relative cost-effectiveness
 As per WHO the choice of these medicines depends on many factors like:
• Pattern of disease, treatment facilities, training and experience of available
personnel, financial resources, and genetic , demographic and
environmental factors.
1. Quality of drugs – Only those drugs should be selected for which sound
& adequate data on safety & efficacy are available.
2. Pattern of prevalent disease – Most effective drug against locally
prevalent disease is selected.
3. Cost – Major consideration in drug selection.
− Cost of total treatment & not just one unit must be considered.
4. Benefit risk ratio – When several comparable drugs are available for
same therapeutic indication, drug which provides most favorable benefit
/ risk ratio is to be selected.
5. When two or more drugs are therapeutically equivalent preference
should be given to –
− Better understood drug.
− Clinical utility – Treatment of more than one condition or disease.
− Favorable pharmacokinetic profile preferred.
− Favorable stability under local anticipated conditions.
− Local reliable manufacturing facilities exist.
6. Dosage forms – Selection of dosage forms
− On the basis of general utility & wider availability
− Restricts number of preparations to minimum.
 The formulary process
 Once a national essential drugs list (NEDL) has been agreed upon and
adopted, the next step is the development of standard treatment guideline
(STG) and a formulary manual.
 Essential Drug List: is a list of drugs considered optimal treatment choices to
satisfy the health care needs of a given population.
 Formulary List: is a list of drug products approved for use in a specific
health care setting.
• It may be a national formulary list (NEDL), a provincial list, a hospital list,
or a list reimbursed by a health insurance program.
• In most of the cases, formulary list is synonymous with essential drugs list.
 The formulary commonly includes:
• the generic name of a drug, its indications for use, dosage schedules,
contraindications, side effects, and important information that should be
given to the patient.
 STG: are systematically developed statements that assist prescribers in
deciding on appropriate treatments for specific clinical problems.
• The information is disease centered, emphasizing the common diseases
and complaints and the various treatment alternatives
 The key difference between a formulary manual and STG is that
• the former is drug centered,
− • Concentrating on drug information and usually not providing comparisons of
different medicines,
• the latter are disease centered,
− listing treatment alternatives and indicating treatments of choice.
 The procedures for developing an essential medicines list, STG, and
formulary manual are all similar ;
• together, they can be called the formulary process.
 2.1.2. National drug policy and medicine financing
 Despite the obvious medical and economic importance of drugs essential
drugs are not used to their full potential. Why?
1. Lack of access to essential drugs
 WHO has estimated that at least one-third of the world’s population lacks
access to essential drugs;
 In poorer areas of Asia and Africa this figure may be as high as one-half
 Millions of children and adults die each year from diseases that could have
been prevented or treated with cost-effective and inexpensive essential drugs.
 2. Poor quality
 Inadequate drug quality assurance systems.
 Availability of Substandard and counterfeit products.
 Inappropriate handling, storage and distribution can alter the quality of drugs.
• All these factors may have serious health consequences and lead to a waste
of resources
 3. Irrational use of drugs
 Many people buy, or are prescribed and dispensed, drugs that are not
appropriate for their needs.
• Use several drugs (poly pharmacy)
• Use drugs that carry unnecessary risks.
 The irrational use of drugs may unnecessarily prolong or even cause ill-
health and suffering, and results in a waste of limited resources.

 A national drug policy as a common framework to solve these problems in

pharmaceuticals.
 What is a national drug policy (NDP)?
 A commitment to a goal and a guide for action:
 NDP:
• expresses set by the government
medium- to long-term goals
• prioritizes for the pharmaceutical
sector
• identifies the main strategies for attaining goals
 It provides a framework within which the activities of the pharmaceutical
sector can be coordinated.
 It covers both the public and the private sectors, and involves all the main
actors in the pharmaceutical field.
 A national drug policy, presented and printed as an official government
statement, is important because it acts as a formal record of aspirations, aims,
decisions and commitments.
 The policy document should be developed through a systematic process of
consultation with all interested parties.
 In this process the
• objectives must be defined,
• priorities must be set,
• strategies must be developed and
• commitment must be built.
 A national drug policy is an essential part of health policy.
 It must fit within the framework of a particular health care system, a national
health policy and, perhaps, a programme of health sector reform
 The goals of the national drug policy should be consistent with broader
health objectives, and policy implementation should help to achieve those
broader objectives.
 The National Drug Policy also require Government Licensing to
• private and public sector
− health care providers and
− institutions,
 before they are allowed to deliver healthcare services and/or
• to import, sale, distribute or prescribe and dispense Medicines and
Pharmaceuticals.
 Objectives of a national drug policy
 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.
 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
interested parties are needed, and the political dynamics have to be
considered at all times.
 All parties include ministries (higher education, trade, industry), doctors,
pharmacists and nurses, local and international pharmaceutical industries,
drug sellers, NGOs, professional associations and consumer groups.
 Ethiopian NDP
 meet country’s demand for essential drugs
 systematize its supply, distribution and use
 create conducive situations to make prices of drugs compatible with people’s
purchasing power
 ensure safety, efficacy & quality of drugs
 develop domestic drug manufacturing capacity
 training of manpower and drugs research and development
 devise ways and means for utilization of traditional drugs in regular health
services after ensuring safety and efficacy
2.2. Pharmaceutical logistic system
 2.2.1. Definition of terms
 Drug: Any chemical compound administered to humans or animals as an aid
in the diagnosis, treatment or prevention of disease.
• A substance used recreationally for its effects on the central nervous system.
 Management: a process of getting the work or the task done that is required
for achieving the goals of an organization in an efficient and effective
manner..
• Generally management involves: Planning, organizing, Leading,
Coordinating and controlling the activities there to be done.
 Logistic: flow of pharmaceuticals, related information & money between
consumers & suppliers
 It is about having the right thing, at the right place, at aright time.
 Supply chain: network of individuals, organizations, resources, activities,
 technology involved in creation and distribution of
 pharmaceutical products to customers.
 Drug supply management: is monitoring and optimizing how a product
moves through the supply chain.
• It is an act to ensure the high quality essential drugs are available,
affordable, and used rationally.
 2.2.2. Concept of Supply Chain Management (SCM)
 Medicines are backbone of health care system so that they need special
attention because of the following five reasons:
1. Medicines save lives.
2. Medicines promote trust and participation in health services.
3. Medicines are costly.
4. Medicines are different from other consumer products, where consumers
can select and use by themselves.
5. Substantive improvements in the supply and use of medicines through
minimizing waste are possible.
 A drug supply chain consists of a flow of drugs from/to:
• Raw material manufacturers
• Intermediate product manufacturer
• End product manufacturer
• Whole sales and distributers
• Retails and
• End customers/ patients
 Connected by agents, transportation and storage activities and integrated
through sharing of information, planning and processing activities.
 Drug management cycle
 Drug management functions are undertaken in four principal phases, which
are interlinked and are reinforced by appropriate management support
systems.
 These includes:
1. Selection 3. Distribution
2. Procurement 4. Use
 From drug selection to drug use a whole range of management capacities are
required and necessitate using the appropriate tools within a given legal and
policy framework.
1. Drug Selection: Is the process of determining which types of medicines
should be used for what clinical indications.
• It is often done by a committee (Drugs and therapeutic committee) that
includes clinicians, pharmacists, policy makers and others.
2. 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/national tender which contains the
exact specifications and quantities desired and where and when the
products are to be delivered.
• Procurement includes quantification and inventory managements.
 Quantification: - Is the calculation of required quantities of medicines
essential to correctly treat patients for a certain period of time:
• usually one year for the national level and
• one month to a quarter for the district and/or health center level.
 Inventory Management:- Are the processes involved in ensuring that
• adequate stocks of products are kept,
• quality maintained (stability or shelf life)and
• programme and service delivery points have the products they need
available and accessible where and when they need them.
3. Distribution: - Involves arrangements for the physical transport of products
from central level to intermediary storage points to the final service delivery
points.
• A particularly important element of this is Logistics Management
Information System (LMIS) providing information of how much of each
product is needed where and when.
4. Rational Use: - assess whether received medications are:
• appropriate to their clinical needs,
• in doses that meet their own individual requirements,
• for an adequate period of time, and
• at the lowest cost possible.
 2.2.3. Objectives and characteristics of supply chain

Minimizing cost

Providing a Objectives Increasing customer

competitive satisfaction
advantage to firms. of SCM

Improving
standardization by
optimizing efficiency
 2.2.4. Importance of logistics
 Logistics is one activity in supply chain management.
 Logistics focuses on the efficient and cost-effective delivery of goods to the
customer.
 Supply chain management covers a wide range of activities, including
planning, sourcing materials, labor and facilities management, producing and
delivering those goods and services.
 Logistics is an important link in the supply chain as it facilitates the
movement of goods from suppliers to manufacturers and then to sellers or
distributors and eventually to customer.
 A supply chain is essentially a series of transactions.
 If logistics fails, the supply chain fails
 2.2.5. Logistic activities
 The goal of logistic is to optimize the delivery of goods and information.
 Numerous essential organizational tasks must be carried out to guarantee the
timely and efficient transfer of goods and information.
 These logistical activities include:
Transportation - centers on the movement of goods from one location to
another.
Order processing: time between placing order and receiving should be ↓.
− involves taking an order and carefully packaging drug with speed and accuracy.
• Materials Handling - involves the physical tracking and movement of
items throughout a warehouse.
− important to ensure that materials are stored properly, tracked accurately, and
delivered efficiently.
• Inventory Control/Management - involves tracking the transport of goods
into or out of a warehouse.
• Warehousing/Logistical Planning - This process is focused on
strategically laying out a warehouse and organizing its storage solutions to
maximize the use of space and streamline processes.
• Information Control - Logistical activities also include handling the flow
of information.
− This includes ensuring that orders are tracked and updated in real-time, payment
processes are handled accurately, customer service expectations are met, and all
other relevant data is kept up-to-date.
 2.2.6. Pull and push system
 Push and pull strategy refers to two different approaches to managing the
flow of goods in a supply chain management.
A. pull system
 In pull system each level of the system determines the types and quantities of
medicines needed and place orders with the supply source.
 Staff at health facilities work out demand estimates and submit requisitions to
central stores.
 This can also be called an independent demand or requisition system.
 Conditions favoring a pull system:
• Lower level staff members competent in assessing needs and managing
inventory.
• Sufficient supplies available at supply sources to meet programme needs.
• Large range of products being handled.
• Good data available to decision makers.
 B. Push system
 In push system supply sources determine the types and quantities of
medicines to be delivered to lower levels.
 Supplies are delivered according to a delivery plan made at the beginning of a
period.
 Health facilities are expected to provide stock and consumption information
to the supply source to assist planning.
 This is also known as an allocation or ration system
 Push systems can be useful when there is a lack of good data available to
decision-makers, staff at health facility level do not have competence in
inventory control
 Conditions favoring a push system:
• Lower-level staff not competent in inventory control.
• Rationing necessary as demand exceeds supply.
• Limited number of products being handled.
• The situation requires short-term supply through pre-packed kits
 Advantages of pull systems
 they are responsive to health facilities’ medication requirements
 there is more flexibility in selecting medicines for specific health problems in
particular regions or types of health units.
 Their flexibility can result in less shortages or surpluses of items and less
wastage caused by expiry of medications.
 Advantages of kit systems
 The kit system is a typical example of a “push” system.
 They are packed centrally into sealed cartons and distributed unopened to
health facilities.
 They can provide essential medicines with a simplified system of budgeting,
procurement, storage, transport and supply management.
 Reduced risk of theft in transit.
 Decreased handling at central medical store saves resources.
 They are widely used in disaster relief.
 Some countries use push systems for routine supply of essential medicines to
rural health facilities.
 Disadvantages of push system
 Less flexibility in selection of essential medicines for specific health
problems in different regions or types of health units.
 Resistance by senior prescribers because of limited range of medications.
 Lack of flexibility in quantities of medicines, leading to shortages or
surpluses of certain items.
 Difficulty in supplying or returning individual items, leading to wastage
caused by expiry.
2.3. Selecting pharmaceuticals
 2.3.1. Introduction to selection of pharmaceuticals
 is a process of deciding the type of drug products needed for the prevalent
diseases.
 identifies what medicines are required to provide the intended health care
interventions.
 is the first step in ensuring that programs and patients will have access to the
right products.
 2.3.2. Criteria for selection of medicines, lab reagents, supplies
and medical equipments
 Factors that should be considered in selection include
• The pattern of prevalent disease
• Drugs products which have sound and adequate scientific data on
efficacy, safety and quality
• Drug products in their generic names (International nonproprietary names
(INN))
• Cost–effective drugs
• Only those drug products with dosage forms
• Only those drugs products for which proper storage could be assured
• Select single compound drug products
 Select combination of drug products if the following advantages are met.
• Clinical documentation justifies the concomitant use of more than one
drugs
• The therapeutic effect is greater than the sum of the effect of each
• Cost of combination is less than the sum of individual products.
• Compliance is improved
 Locally manufactured drugs should have get priority.
 Genetic, demographic and environmental factors should also be considered.
 National health policy
• Free health care (Universal Healthcare): e.g. assisted deliveries
• Subsidized health care: Health coverage available at reduced or no cost for
people with incomes below certain levels.
• Managed health care:
 National drug policy  Available human resource
• Free drug policy • Medical care (general and
• Subsidized cost of drug specialist)
• Cost sharing • Nursing care (nurse, midwifery,
 Quality and type of care provided psychiatry)

• Primary: • Pharmaceutical care (pharmacist,

pharmacy technician)
• Secondary:
• Financial resource
• Tertiary:
 2.3.3. Basic steps in selection
1. Establish drug selection committee
• Drug & Therapeutic Committee (DTC)
2. Determine the prevalent health problems & patient characteristics
• Using patient prescription registration book
• Using the morbidity registration book
3. Decide which health problems may be treated at the level of drugs
selection.
• Community health service
• health center
• Health station and hospital (Regional & District)
4. Choose the drugs to be used for the health problems based on age level &
their severities.
5. Structure the list of drug products based on
a) Pharmacotherapeutically
b) Alphabetically .
c) By level of importance (VEN analysis)
− V (vital) – drugs w/c are potentially lifesaving. E.g. ORS, vaccines, Antimalarials
etc.
− E (Essential) – dugs w/c are effective against less life threatening common
problems. E.g. Certain Antibiotics
− N (Normal uses) – drugs used for minor or self-limiting health problems. – E.g.
Cough syrup, antacid
6. Add pack size & price per pack
7. Introduce the final list of drugs
8. Up – date the list of drugs
• The list of drug should be reviewed periodically
• Any addition into and deletion should be on the basis of the selection
criteria.
2.4. Quantification of
pharmaceuticals
 2.4.1. Introduction to quantification
 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 consumption.
 If you order supplies based on consumption, you will have the supplies you
need when you need them.
 Symptoms of poor quantification
 The most commonly encountered symptoms of poor quantification of drug
requirements are:
• Shortages
• Surpluses or overstock
• Inequity of supply b/n d/t levels of health services (exess and expired in
one and shortage in another).
• Inadequate cost-effectiveness:- by 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
 2.4.2. Quantification method
 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 drugs
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.
 Each of the method has its own advantage and disadvantage as detailed in
table 2 below:
 Method Uses Essential Data Limitations
Consumption First choice for Reliable inventory Must have
procurement and records, Records of accurate
future supplier lead consumption data;
consumption time, Projected drug Can perpetuate
forecasts costs irrational use
Morbidity Estimating need Data on population Morbidity data not
in new programs and patient available for a
or disaster attendance; Actual diseases; Standard
assistance or projected treatments may
incidence of health not really be used
problems; Standard
treatment; Projected
drug costs
 The estimate of the drug and medical supplies required for a given period is
undertaken:
• To avoid shortages (out of stock) and ensure credible health care service,
• To prevent excess stock and avoid waste (loss or mismanagement of
financial resources).
 Factors that influence 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 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.
 Delivery (lead) time: - it is time lag between placing orders and receiving the
orders.
 It is important to establish how long it takes to have a drug delivered and
receipted in the store so that the drug does not become out of stock.
 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 work load at the issuing store (e.g. Pharmaceutical Fund and
Supply Agency (PFSA))
• Stock out of drugs at the central store (PFSA),
 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 a drug was consumed.
 It is also known as average monthly consumptions (AMC).

Note:

 According to Ethiopian Integrated Pharmaceutical logistics System (IPLS) 3

months period is used to calculate average monthly consumption.
 E.g. The first method of calculating monthly consumption; is to add the
quantity of drugs in stock at the beginning of a period, to the quantity of
drugs received during that period and then subtract the quantity of drugs
remaining at the end of the period. look at the following transaction in X
health center for paracetamol container which contain 1000 tab x 500mg.
• March 2017, quantity of paracetamol tablet containers in stock = 14
• June 2017, quantity of paracetamol tablet containers received = 8
• August 2017, quantity of paracetamol tablet containers remaining stock= 4
 Therefore, total quantity of paracetamol tablet containers consumed over
a six-month period = 14 + 8 – 4 = 18
AMC= Total consumption/Number of months = 18/6 =3 container per
month
 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 3 x 1,000 tablets
May 2000 4 x 1,000 tablets
June 2000 3 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
18 x 1,000 tablets

)* + ),---
ℎ"# $ %& ' ( (% =3 container
.
3container= 3000 tablets
 A third method of calculating average monthly consumption is to obtain data
on actual consumption from the daily use record or daily use/cash record.
Data of monthly consumption of paracetamol 500-mg tablets over a six-
month period.
April 2000 2,000 tablets
May 2000 3,100 tablets
June 2000 2,300 tablets
July 2000 2,100 tablets
August 2000 3,100 tablets
September 2000 3,200 tablets
Total six months 15,800 tablets

)/,*--
 ℎ"# $ %& ' ( (% = 2633.3 tablets
.
 Each container has 1,000 tablets.
 Therefore the average monthly consumption to the nearest container =3
 Request indicator (re-order):- It is also known as safety stock.
 It is the level of drugs in stock; it indicates when fresh orders should be
made.
 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.
• It is easy to calculate the RI once the monthly consumption is obtained.
 E.g. If the delivery time is 3 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 approximately 8 tins of 1000 tablets
 This means that when the stock of paracetamol is reduced to 8 tins, a new
request must be made.
 Quantity to be requested (QTR)
 Depends on
• AMC (average monthly consumption)
• Delivery (lead time)
• Request indicator (RI)
• Duration (for how many months?) and
• Duration of preserve for unseen circumstances like delay in delivery
 So
012 ( × ℎ ) ± 27 + ℎ 9' % ( )
•
 Example:
a. RI = 6 tins; Balance: 8 tins (number of patients = 100)
b. RI = 6 tins; Balance: 6 tins (number of patients = 100)
c. RI = 6 tins; Balance: 0 tins (number of patients = 100)
 In the above three situations, consider the existing lead time of 3 months
and add one month as RESERVE.
a. RI = 6 tins; current stock balance = 8 tins
 In this case the RI is above by 2 tins. Therefore, make the normal request less
by 2 tins.
 Request quantity = (2 tins x 3 months) + 1 month + 1 month consumption
= (2 x 3) + 2 – 2 = 6 tins
b. RI = 6 tins; current stock balance = 6 tins
 Average monthly consumption is 6 /3 = 2 tins
 The quantity to be ordered is = (AMC x LT) + 1 month consumption for
unforeseen Events
= (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 ½.
 Assignment 1
 The following information was extracted from the bin card for Amoxicillin
capsule at the Gudaya Bila health center pharmacy. Amoxicillin 500 mg c
Capsule 50x10 box was consumed as follow:
20 boxes in January, 2017
30 boxes in February, 2017
20 boxes in March, 2017
 Then what is average monthly consumption of 500mg of Amoxicillin in
both box and capsule?
 If lead time is two weeks, what is safety stock or request indicator?
 2.4.3. Budget reconciliation
 In addition to estimating the quantities needed of medicines, we need to
estimate the financial requirements to purchase the medicines.
 This is done by comparing budget required for quantity of drug we
calculated.
 If total cost is not in line with budget making adjustment is essential
• The need of drugs should be reconciled with funds allocated for drugs
purchasing.
 This can be done by using:
1. VEN analysis
2. ABC analysis
 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 a potentially of life saving, are categorized as
vital.
− This category of drugs should be available all the time in the health facilities. E.g.
ORS, Vaccines, Antimalaria etc.
• E (Essential) – dugs, 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
 ABC analysis
 ABC analysis is an extremely powerful tool, with uses in selection,
procurement, management of distribution, and promotion of rational drug
use.
 Class A: item (10 to 20% of items, 75 to 80% of expenditures,
• are mostly high volume and fast moving drugs.
 Class B item 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.