Chapter Two: Health

Commodity Security
By; Fitsum.T ([Link], MSc in
PSCM)

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 Learning Objectives:
 At the end of this chapter, students will able to;

• Define health commodity security

• Describe the strategic pathway to health commodity
security
• Describe key logistics terms
• Explain the purpose of logistics system
• Describe the major activities of the logistics system
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Identify components of a logistics cycle
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 2.1 Introduction to health commodity
security
• Health commodity; a collective term to include
pharmaceuticals, consumable medical supplies &
durable medical equipment.
• Commodity security is broadly defined as; the ability
to choose, obtain, and use health commodities when &
where they are needed.
• It’s the handling of usable pharmaceutical products.

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Con’t…
• It is a concept, that has proven successful in
identifying the gaps in access to groups of
commodities and in developing strategic plans to
address them.
• Commodity security exists, because of “every person is
able to choose, obtain, and use quality
pharmaceuticals and other essential health products
whenever s/he needs them.”
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2.2 Strategic pathway to health commodity
security
• The strategic approaches to ensure access to essential
health commodities was a direct response to the impact
of medicines on public health.
• In a past few decades, there were almost over 6 million
deaths from HIV/AIDS, tuberculosis, and malaria
combined all over the world.
• Children under five in sub-saharan Africa accounted for
the majority of the more than 1 million deaths.
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Con’t…
• Additionally, WHO estimates that more than 2 million
children in developing countries died from perinatal
conditions; 4 million died from just three diseases:
pneumonia, measles, and diarrhea.
• Furthermore, heart disease, cancer, and other chronic
diseases cause most of the deaths in middle and low
income countries; they are becoming an increasing
problem in low income countries.
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 Con’t…
• In all these cases, medicines and non-drug consumables
(NDC) that are essential for prevention and treatment
exist, but regular access to them remains one of the
central challenges to health systems.
• Basic to the development of commodity security and
medicines access frameworks is recognizing, how
important it is to ensure regular access to essential
health commodities to prevent and treat diseases and to
provide primary health
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care services.
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Con’t…
• Common to each type of health commodity security is a
shared understanding of how a holistic model that
includes;
 the supply chain, policies for medicines,

 service delivery,

 the pricing environment, and

 the health financing that affects the access to and the

availability of medicines.
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In the following sections, we review these frameworks.8
Phramaceutical Supply Chain Management
 2.2.1 Reproductive Health Commodity
Security
• Definition and objective: Peoples are able to choose,
obtain, and use the reproductive health supplies they
want.
• The reproductive health commodity security (RHCS)
framework was first published in 2004, describes the
elements that are involved in securing RH supplies.
• The center of the framework is the client; the ultimate
beneficiary/user of RH commodities.
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The figure 2.1 below shows RHCS framework in detail;
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Con’t…

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 Con’t…
• In every country or region, there is a context; that both
affects and is affected by RHCS.
• This is made up of national policies and regulations that
directly or indirectly affect access to contraceptives and
other RH commodities.
• Within this context, the policymakers and public and
private health care workers commitment; to policies,
programs, and systems is fundamental to ensure
ownership and sustainability.
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Con’t…
• It forms the basis from which stakeholders
(government, donors, and consumers) will invest the
necessary capital; to procure supplies and finance the
necessary distribution and health service systems for
RHCS.
• Households, third parties (e.g., employers and
insurers), governments, and donors are all possible
sources of capital.
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Con’t…
• Due to the variety of important stakeholders in RHCS,
including government, donors, and the private sector
interagency coordination; is required to ensure the
effective allocation of resources, strategy
development, and joint programming.
• Capacities; must exist for a range of function, policy
development and implementation; commodity
forecasting and procurement,

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Con’t…
• and distribution; service delivery; and monitoring and
evaluating progress.
• Capital, coordination, and capacities are the basis
for the public and private RH supply channels to;
 efficiently meet the needs of the total market of client
demand, from those who need subsidized products to
those who are able to pay.

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 2.2.2 HIV/AIDS Commodity Security

• Definition and objective: When patients and service

providers can choose, obtain, and use medicines and
other health commodities when and where they need
them for prevention, treatment, and care of HIV/AIDS
and related illnesses.
• The HIV/AIDS commodity security (HACS) framework
was adapted from the RHCS framework (see figure 2.2 );
it shares much of the same conceptual underpinning.
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Con’t…

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 Con’t…
• The ability of customers; to obtain and use commodities is
also at the center of the framework.
• The customers range from those;
 taking antiretroviral therapy (ART)to treat the infection

 to those using condoms to prevent infection,

 to individuals receiving care in the form of nutritional

supplements, and
 to those using antibiotics to cure opportunistic infections
(OI), or fighting tuberculosis
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Chain Management 17
Con’t…
• Service providers includes a variety of clinical and
program personnel (e.g., laboratory staff, counselors,
and physicians) who depend on a routine supply of
health commodities to make HIV/AIDS programs work.
• The framework suggests that ensuring customer
satisfaction for the different categories of HIV
commodities requires a comprehensive, multi-
programmatic effort.

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Con’t…
• These programs; require antiretroviral (ARV) drugs;
drugs to treat OIs; HIV test kits; laboratory reagents;
medical consumables, such as syringes and gloves; and
information, education, and communication (IEC)
materials to support adherence and increase uptake.
• The framework also identifies functions; including
logistics and service delivery that are needed to make
these programs work.

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Con’t…
• It emphasizes that cross-cutting issues exist at every
level of the programs and functions.
• Commodity security for the people who use HIV/AIDS
products and services rests on the capacity;
 to coordinate within and between the functions and
systems and

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 Con’t…

 to improve the policy, legal, and social environment in

which they operate.
• The HACS model framework brings all of these elements
together to illustrate how they must be addressed when
shaping a strategic response to commodity security for
HIV/AIDS programs.

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 2.2.3 World Health Organization’s Essential
Medicines Security
• Definition and Objective: To help save lives and
improve health by ensuring the quality, efficacy, safety
and rational use of medicines, including traditional
medicines, and by promoting equitable and
sustainable access to essential medicines, particularly
for the poor and disadvantaged.

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 Con’t…
• The World Health Organization's Medicines Security
(WHOMS) framework in figure 2.3 comprises four broad
objectives:

(1) To promote the formulation, implementation, and

monitoring of national medicines policies,

(2) To expand access to essential medicines , by improving;

 financing and

 supply systems.
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Con’t…
(3) To improve the quality and safety of medicines, and

(4) To promote the rational use of medicines by health

workers and consumers in the public and private sectors.

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Con’t…

• All countries and stakeholders seeking to secure

essential health commodities need to adopt the
strategy.

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 2.3. Components involved in health
commodity security
• Assuring health commodity security in Low & Middle
Income Countries (LMICs) requires functional logistics
systems plus a healthy supplier base.
• This takes into account components across asset
management, upstream operations, and supply &
trading, refining, marketing and retail.

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Con’t…
• The core activity components to secure health
commodities include:
 Commodity management,
 Logistics network design,
 System set up,
 Warehouse operations,

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Con’t…
 Transport management,

 Distribution management,

 Inventory management and control,

 Staff management,

 Capacity assessment,

 Coaching, and

 Monitoring.

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 2.4. Key logistics terms

• 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.

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Con’t…
• In essence, supply chain management integrates
supply and demand management within and across
companies.
• The followings are the key logistic terms;

• Pharmaceutical Logistics: logistics is the flow of

pharmaceutical materials, related information, and
money between consumers and suppliers.

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Con’t…
• Integrated Pharmaceutical Logistics System (IPLS):
is a system for managing various categories of health
supplies, using a single set of procedures.
• The IPLS is a type of indent system, where
dispensaries, health centers, and hospitals order
quantities of each supply from resupplying agent,
according to their needs and within their budget.

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Con’t…
• Public Health Facilities: these are health facilities
owned by the government of Ethiopia and managed
under Federal Ministry of Health (FMOH) or regional
health bureaus.
• The public health facilities are responsible for:
 Managing & treating diseases,
 Controlling disease outbreaks and
 Vaccinating communities to avoid the spread of disease.

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Con’t…
• Pharmaceuticals, supplies, commodities, goods,
materials, products, and stock: these items flow
through a logistics system and are used interchangeably
throughout supply chain management and to mean any
substance or mixture of substances used in the
diagnosis, treatment, mitigation or prevention of a
disease, and include medical instruments and medical
supplies.
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Con’t…
• Logistics management: the part of supply chain
management that;
 plans, implements, and controls the efficient, effective
forward and reverses flow and storage of
pharmaceuticals, services, and
 related information between the point of origin and
the point of consumption in order to meet customers’
requirement.
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Con’t…
• It 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.

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Con’t…
• In other words, logistics can be considered activities as
the operational component of supply chain
management, including quantification, procurement,
inventory management, warehousing, distribution,
transportation and data collection and reporting.
• Supply chain management includes; the logistics
activities plus the coordination and collaboration of
staff, levels, and functions.
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 2.5 Purpose of logistics system

• The goal of a health logistics system is much larger than

simply making sure a product gets where it needs to go.
• Ultimately, the goal of every public health logistics
system is to help ensure that every customer has
commodity security.
• A properly functioning supply chain is a critical part of
ensuring commodity security; financing, policies, and
commitment are also necessary.
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Con’t…
• Well-functioning supply chains benefit public health
programs in important ways by;
 increasing program impact

 enhancing quality of care

 improving cost effectiveness and efficiency.

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Con’t…
• 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 (see
figure below).
• The major elements under logistic cycle includes;
Serving customers, Product selections, Quantification,
Procurement, Inventory management, Storage &
Distribution.
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Con’t…

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Con’t…
• Let’s briefly review the major activities in the logistics
cycle:
 Serving customers; Everyone who works in logistics
must remember that they select, procure, store, or
distribute products to meet customer needs.
• The logistics cycle ensures customer service by
fulfilling the six rights.

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 Con’t…
• Storekeepers provide customer service when they issue
medicines to the health facility, and the central medical
stores provide customer service when they issue
commodities to the district.
• Each activity in the logistics cycle, therefore, contributes
to excellent customer service and to ensuring commodity
security.

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Con’t…
 Product selection; In any health logistics system,
health programs must select products.
• In a health logistics system, a national formulary and
therapeutics committee, pharmaceutical board, board
of physicians, or other government-appointed group
may be responsible for product selection.

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Con’t…
 Quantification; after products have been selected, the
required quantity and cost of each product must be
determined.
• It is the process of estimating the quantity and cost of
the products required for a specific 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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 Con’t…
 Procurement; after a supply plan has been developed as
part of the quantification 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.
• In any case, procurement should follow a set of specific
procedures that ensure an open and transparent process
that supports the six rights.
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Con’t…
 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 points, 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.
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 Con’t…
 Heart of the logistics cycle;

• Logistic Management Information System (LMIS): is the

system of physical and technology based records and
reports, that supply chain workers and managers use to
collect, organize, present and use logistics data gathered
across all levels of the system.
• Information is the engine, that drives the logistics cycle;
without information, the logistics system would not run
smoothly.
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 THANK YOU!

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