drug procurement 10-03-09

8/3/2019 Drug Procurement 10-03-09

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DRUG

PROCUREMENT

Deliveredby

Mrs. Opanuga O. O.


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CONTENTS

INTRODUCTION

OBJECTIVES OF NATIONAL DRUG POLICY

COMPONENTS OF DRUG MANAGEMENT DRUG PROCUREMENT

- PROCUREMENT CYCLE

- PROCUREMENT METHODS- PROCUREMENT /PURCHASING

MODELS


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KEY PRINCIPLES OF GOODPROCUREMENT

CONCLUSION


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INTRODUCTION

Definition of a drug

A drug includes any substance or mixture ofsubstances manufactured, sold or advertised for

use in the diagnosis, treatment, mitigation orprevention of any disease disorder, abnormalphysical state, or the symptoms thereof, in manor in animals; restoring, correcting or modifying

organic functions in man or in animals;disinfection or control of vermin, insects orpests; or contraception(National Drug Policy,NDP)


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INTRODUCTION

GOALS OF NDP

To make adequate supplies of effective,affordable, safe and good quality drugs

available to the Nigerian populace at alltimes

To ensure rational use of drugs and

To stimulate increased local production ofessential drugs


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INTRODUCTION

OBJECTIVES OF NDP

Ensure efficient and effective drugmanagement in both public and private sectors

Ensure access to drugs available at all levels ofhealthcare on the basis of health needs

Promote rational drug use by prescribers,dispensers and consumers

Increase local drug production and promoteexport


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INTRODUCTION

OBJECTIVES OF NDP

Promote pharmaceutical research and development

of raw materials for the production, compounding

and formulation of pharmaceutical product as wellas operational research for effective implementationof NDP

Enlist government commitment at all levels for the

achievement of the goals and objectives of NDP


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COMPONENTS OF DRUGMANAGEMENT

Drug management involves four basic components:

Selection

Procurement Distribution

Use


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DRUG MANAGEMENT CYCLE

The drug management framework representsthe flow of activities that must becoordinated to ensure that appropriate, highquality medicines are available when

patients need them. The framework emphasizes the relationships

between selection, procurement, distribution,

and use activities All of which are supported by a strong

management support system.


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POLICY, LAW & REGULATION

A countrys policies, laws, and regulations define the general

goals and parameters for effective drug management overall,therefore encircling the other elements in the framework.

Drug policy includes such elements as allocating budgets,prioritizing research and development, promoting educationinitiatives, and defining the role of the public and privatesectors.

By establishing pharmaceutical laws and regulations, countriescan set pharmaceutical quality standards and price limits,require registration of pharmaceutical products, and establish

guidelines.

Good governance in the form of transparency and account-ability prevents waste of scarce resources and increasespeoples trust in the government and the health care system.


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SELECTION Establishing and using a list of carefully selected essential

medicines is perhaps the single most cost-effective action that

any health care system can take to promote a regular supply ofpharmaceuticals.

Essential medicines are those best suited to treat the mostprevalent illnesses afflicting a population.

If these medicines are made available, prescribers can be sure of

a sufficient supply to treat the most common illnesses.

Selecting the most useful medicines also helps prevent wastageof scarce resources on unnecessary, unsafe, or ineffectivemedicines.

Evidence-based selection of the most appropriate medicinesrequires that health managers and policy makers have access tocurrent information on common illnesses, budgetary limits, andpharmaceutical advances, as well as input from doctors andpharmacists.


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SELECTION

Selection process begins with

Defining/Reviewing the prevalent healthproblems (disease pattern) for each level of

health care

Identifying treatment of first choice for eachhealth problem (basis for EDL)

Choosing individual drugs and dosage forms.


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WHO SELECTION CRITERIA

Essential drugs should be selected based on

Relevance to pattern of prevalent disease)

Proven Efficacy & Safety

Adequate scientific data & evidence of

performance in a variety of settings

Adequate quality including bioavailability &

Stability

Favourable cost-benefit ration in terms of thetotal treatment cost


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SELECTION


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SELECTION

List of common health problems

Choice of standard drug & Non-drug treatments

Drug List

EDL Drug Supply (Procurement, Treatment Guidelines

Donations, Distribution, Producton)

Formulary Rational Drug Use (Training, Supervision, Monitoring)

Drug Information

Greater Availability & More Rational Use of Drugs


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PROCUREMENT

Procurement strategies vary widely, butmost models include the following criticalactivities:

pharmaceutical needs quantification, bidmanagement, supplier selection, andmedicine quality assurance.

Good procurement practices, supported by

adequate information systems, can helpensure that the selected medicines are madeavailable for distribution.


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PROCUREMENT

Drug Quantification

Selection of Procurement procedure

Tender Management

Establishing Contract terms Assuring drug quality

Ensuring Adherence to Contract terms


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DRUG PROCUREMENT

Drug procurement is a process of acquiringdrugs from private or public supplier orthrough purchases from

Manufacturers,

Distributors or

Agencies like UNICEF, WHO or Bilateral Aidprograms


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DRUG PROCUREMENT

The Drug procurement system is a majordeterminant of availability drugs and totalhealth costs.

In developing countries, cost of drugsrepresents the single largest healthexpenditure, after personnel costs.

Drugs also consume the major share ofhealth related foreign exchange.


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DRUG PROCUREMENT

Drug procurement is a very importantaspect in delivery of Health Care


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DRUG PROCUREMENT

An effective procurement process should

Procure the right drugs in the right quantitiesand at the lowest possible price

Ensure that all drugs procured meetrecognized standard of quality

Arrange prompt and dependable delivery toavoid shortages and stock outs


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OBJECTIVES OF PROCUREMENT

To obtain high quality drugs at the lowest cost usingstandard & economical methods

To ensure prompt & dependable delivery by careful

supplier selection and monitoring of order status To establish re-order points & quantities which avoid

stock outs,prevent overstocks and maintain theminimum inventory necessary for constant

replenishment of stock to health facilities


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OBJECTIVES OF PROCUREMENTCONTD

Ensure supplier reliability with respect to service andquality

Set the Purchasing schedule, Formula for Ordered

Quantities, Safety Stock levels, to achieve thelowest total cost at each level of the system i.e. setRe-order level, Minimum level, Re-order Quantity,Maximum level in order to avoid stock outs


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OBJECTIVES OF PROCUREMENTCONTD

Maximize Use of Local Suppliers whileseeking Low Prices, High Quality andDependable Delivery

These Objectives should be achieved in theMost Efficient Manner Possible.


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Procurement Review


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ProcurementCycle

Review

Drug

Selections Determine

Quantity

Needed

Reconcile

Needs and

Funds

Choose

Procurement

Method

Locate

and Select

SuppliersSpecify

Contract

Terms

Monitor

Order

Status

Receive

andCheck Drugs

Make

Payment

Distribute

Drugs

Collect

Consumption

Information


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Procurement Cycle

The Cycle involves the following steps:

Review drug selection

Determine quantities needed Reconcile needs and funds

Choose procurement method

Locate and select suppliers Specify contract terms


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Procurement Cycle contd

Monitor order status

Receive and check drugs

Make payment Distribute drugs

Collect consumption information


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PROCUREMENT METHODS

Method chosen should

Obtain the lowest possible purchase prices

Obtain supply of good quality products fromreliable of the Supplier who will back it up withadequate services.

Minimize Loss of Resources [e.g. funds andgoods resulting from adverse influences onprocurement decisions and practices]


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PROCUREMENT METHODS

Obtain Optimum Economy in Personnel, timeand other resources used in the procurementprocess

The critical decision is to select the method,which will achieve these objectives for theparticular health care systems or institution atany particular time.

All drugs needs not be purchased by thesame method and one particular methodneeds not to be used at all times


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PROCUREMENT METHODSCONTD

There are 4 major methods:

Open Tender

Restricted Tender Competitive Negotiation

Direct Procurement


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OPEN TENDER

It is an unrestricted public bid by eligible suppliersor manufacturer based on the term and conditionspecified in the advertised tender invitation.

It is a formal procedure by which quotations areinvited from any manufacturer or representative on alocal, international worldwide basis - ICB.(International Competitive Biddings) as specified by

the World Bank (1993s) guideline


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OPEN TENDER

It is open to all interested internationalmanufacturers from World Bank membercountries.

The best/Lowest prices may be obtained bythis method.

It also promotes local production

It is time consuming

The workload is high.


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Restricted Tender/CloseBidding/Selected Tender

Interested suppliers must be approved andregistered in advance often through aFormal Pre-qualification Process by the

buyer.

Such process considers Adherence to GoodManufacture Practices (GMP), Past Supply

Performance/Record, Financial viability andRelated factors.


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Restricted Tender/CloseBidding/Selected Tender contd

This pre-qualification process is open to anysupplier that wishes to apply

Favorable/Moderate prices are obtainedhere.

It is less burdensome.


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COMPETITIVE NEGOTIATION

Buyer may also bargain with these suppliersto achieve lower prices or servicearrangement.

This method is most useful for selected itemsfor which best supply sources are wellknown.


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DIRECT PROCUREMENT

It is the simplest and quickest but usually themost expensive method

It deals with purchasing from single suppliersat the quoted or negotiated prices.


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Careful selection of reliable, compatible andappropriate suppliers is important forguaranteeing eventual quality and cost ofsupplies.


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At the initial stage of developing drugprocurement system, it may be best to startwith a relatively simple purchasing method,

e.g. a combination of negotiation with knownsuppliers or international procurement andlocal tendering


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Purchasing models/ mechanisms

The most commonly used inventory model are:

Periodic Purchasing :-

- Annual Purchasing

- Scheduled Purchasing

Perpetual Purchasing

Modified Optional Replenishment a

modification of the two mechanisms above


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Purchasing models/ mechanismscontd

Different combination of these models maybe used at different levels of the system or fordifferent drug.

Inventory control should therefore considerchanges in the purchasing system asprogram develops.


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Whichever combination of supply system andmodels used, most public sector drugprocurement involves group purchasing

whereby the procurement office negotiatescontracts for members of a group with similarneeds and interests.


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Periodic Purchasing

Annual purchasing

It is the simplest model/mechanism

But it entails Uneven Workload.i.e Workload is high in the early part of thefiscal/year when purchase & contracts areinitiated thereafter the procurement staff have

little or nothing to do, this is a waste ofHuman Resources.


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Annual purchasing contd

It is most useful for small programs or newprogram

It requires very high safety stock leading tohigh inventory costs.

It is therefore very costly as a permanentsystem.


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Periodic Purchasing contd

Scheduled purchasing

It is a modification of Annual Purchasing

Intervals are cut down to three or six months Provides an even workload for procurement

staff &

This requires less inventory.


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P h i d l / h i


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Government funding and accounting

procedures or requirement may not allow

the adoption of a superior model or allow the adoption of a less superior

model

e.g. perpetual purchasing is lesscompatible with government annualbudgeting but may be adopted whenthere is no available fund.


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KEY PRINCIPLES OF GOOD DRUGPROCUREMENT

Procurement by generic name [INN International Non-Proprietary Name: Specifyquality standard and not specific brands

Limitation of procurement to the EDL: Selectsafe, effective and cost effect drug

Procurement in bulk: makes for favourable

prices


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KEY PRINCIPLES OF GOOD DRUGPROCUREMENT CONTD

Formal supplier qualification and

monitoring

All suppliers should be pre and post qualifiedthrough a process that consider Qualityservice, Reliability and Financial viability.

Competitive procurement


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Sole-source commitment: grouppurchasing where all contracted drugs are

from contracted suppliers. Separatedeals have to be entered with non-contracted suppliers.

Order Quantities based on ReliableEstimate of Actual Needs


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Reliable Payment and Good FinancialManagement

Transparency and Written procedures

Separation of key functions: that requiredifferent expertise e.g. functions thatinvolve committees, units may includeaward of contract, selection andqualification approval of suppliers.


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Product Quality Assurance program :

Establish and maintain a formal system forProduct Quality Assurance this includes

- QA product certification,

- Inspection,

- Targeted laboratory test and

- Report of suspected products.


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Annual audit with published results :

Conduct annual audit to access compliancewith procedure

Regular reporting of procurementperformance indicator

- Report key procurement performance

indicator against targets at least annually


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DRUG PROCUREMENT

Failure or Success of a drug procurement dependon:

Procurement method chosen and how it fits into

the prevailing circumstances The Adequacy of Specification of Contract

Terms

The Caliber and Performance of Suppliers

selected


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DRUG PROCUREMENT

The Reliability of the supply

Monitoring process &

The Quality Assurance of drugs procured


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CONSTRAINTS

Lack of fund (including foreign exchange

Absence of a Rational System ofProcurement with Good Selection &

Quantification of Drug needs

Lack of information on suppliers and prices,both finished and raw materials

DISTRIBUTION


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DISTRIBUTION

A primary goal of drug distribution system is to

deliver procured medicines and supplies to theclinics, hospitals, and centres that use them in atimely manner.

Storage managers monitor expiration dates, inventory

levels, and storage conditions such as light,temperature, and sanitation.

When distribution systems function well and aresupported by good procurement practices, patientsare more likely to receive the medicines they need,on time, and in good condition.

DISTRIBUTION


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DISTRIBUTION

Storage & distribution costs are a

significant component of a healthbudget

Transportation cost can represent

several times the value of drugsdistributed to remote locations

Effective drug distribution relies ongood system design & goodmanagement

Well-designed & well managed


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Well designed & well managedDistribution system

Well-designed & well managed Distribution system is

cost effective & should

Maintain a constant supply of drugs

Keep drugs in good condition throughout the distributionprocess

Minimise drug losses due to spoilage & expiry

Rationalise drug storage points

Use available transportation resources efficiently Reduce theft & fraud

Provide information for forcasting drug need

DISTRIBUTION CYCLE


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DISTRIBUTION CYCLE

Port/Custom Clearing

Receipt & Inspection Control

Inventory Control

Storage

Requisition of supplies

Drug Delivery to Depots and Health Facilities

Dispensing to patients

Reporting Consumption

USE


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USE RUD requires that the patient receive drugs appropriate to their

clinical needs in Correct doses, dosage forms & frequency for

adequate period of time at the lowest cost to them & theircommunity.

The prescriber, the dispenser, and the patient must each

understand their role in treating the illness.

The RUD is also supported through the development and useof national and institution-specific treatment guidelines, drugutilization reviews, drug information services, and drug andtherapeutic committees.

Irrational Use of drugs occurs with polypharmacy, use of wrongor ineffective drugs, underuse or incorrect use of effective drugs

Rational Use of Drugs


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Rational Use of Drugs

RUD involves the following Criteria

Correct Drug

Appropriate indication

Appropriate drug (efficacy, safety, suitability, cost)

Appropriate dosage, administration, & duration

Appropriate patient (No contraindication, minimal ADR)

Correct dispensing with appropriate information

Patient adherence to treatment


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Management Support


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Management Support

Management support reinforces each component of

drug management and unifies the framework. The entire drug management system depends on

effective integration and management of financesand budgets, maintenance of accurate, useful, and

up-to-date information systems, identification andmotivation of capable staff, and the institution ofmonitoring and evaluation systems.

The expertise and organizational structure

provided through management support is critical ateach stage of the pharmaceutical managementframework.


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Selection

Use Procurement

Distribution

ManagementSupport

OrganizationFinancing

Information Management

Human Resources

Policy and Legal Framework

COMPONENTS OF DRUG


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COMPONENTS OF DRUGMANAGEMENT CONTD

Each component of the framework depends on the success ofthe previous component

and contributes to the viability of the next.

Each component plays in a role in getting medicines to thepeople who need

them

These components are interwoven performing themindependently or disjointedly and not as part of a system may

lead to

A rise in costs, Inevitable drug shortages &

Patients dissatisfaction


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CONCLUSION

Effective drug management is a collaborationprocess between the procurement office withregistered staff and appropriate managementsystem including technical and policycommittees, which make final decisions asto:

Which drug to buyWhat quantities to buyHow do we buy

When do we buyFrom which supplier


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CONCLUSION CONTD

Key consideration for FinancialSustainability is Essential and thisincludes:

Access to funds for drug purchaseincluding foreign exchange forinternational procurement

Support for procurement office Reliable payment mechanism


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CONCLUSION CONTD

Accessibility to health facilities,

The presence of qualified staff and

The availability of pharmaceutical products are

important components of an effectivehealth care system.

It is recognized that well trained human resource isvery valuable in any health services system with

evidence showing a direct and positive causal linkbetween the health work-force and health outcomes.

CONCLUSION CONTD


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Inadequate human resources provide majorimpediments to many global health initiatives anddeveloping a strong workforce is vital in ensuringsuccessful implementation of health related initiatives

Conducting trainings, workshops for health workers

on Pharmaceutical supply management is thereforevery important. Perhaps this is one of the majorinterventions that can address the stock outs of

medicines, expiries and other logistical problems.


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THANK YOU

drug procurement 10-03-09

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