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DRUG PROCUREMENT

Delivered by Mrs. Opanuga O. O.

CONTENTS

INTRODUCTION
OBJECTIVES OF NATIONAL DRUG POLICY

COMPONENTS OF DRUG MANAGEMENT DRUG PROCUREMENT - PROCUREMENT CYCLE - PROCUREMENT METHODS - PROCUREMENT /PURCHASING MODELS

KEY PRINCIPLES OF GOOD PROCUREMENT CONCLUSION

INTRODUCTION
Definition of a drug A drug includes any substance or mixture of substances manufactured, sold or advertised for use in the diagnosis, treatment, mitigation or prevention of any disease disorder, abnormal physical state, or the symptoms thereof, in man or in animals; restoring, correcting or modifying organic functions in man or in animals; disinfection or control of vermin, insects or pests; or contraception(National Drug Policy, NDP)

INTRODUCTION
GOALS OF NDP To make adequate supplies of effective, affordable, safe and good quality drugs available to the Nigerian populace at all times To ensure rational use of drugs and To stimulate increased local production of essential drugs

INTRODUCTION
OBJECTIVES OF NDP Ensure efficient and effective drug management in both public and private sectors Ensure access to drugs available at all levels of healthcare on the basis of health needs Promote rational drug use by prescribers, dispensers and consumers Increase local drug production and promote export

INTRODUCTION
OBJECTIVES OF NDP Ensure that all drugs in the distribution system are safe, efficacious, effective & good quality Strengthen administrative, legislative and regulatory control of importation, manufacture, procurement, storage, distribution, supply, sale and use of drugs Promote research on herbal remedies and integrate those found to be safe and efficacious into the healthcare system

INTRODUCTION
OBJECTIVES OF NDP Promote pharmaceutical research and development of raw materials for the production, compounding and formulation of pharmaceutical product as well as operational research for effective implementation of NDP Enlist government commitment at all levels for the achievement of the goals and objectives of NDP

INTRODUCTION
Drugs save lives and improve health Drugs promote trust and participation in health services Drugs are costly Drugs are different from other consumer products Drugs are therefore very important in the provision of healthcare services & for the realization of public health goals

INTRODUCTION

Medicines must also be effective, safe, of good quality prescribed and dispensed appropriately. Because medicines are so important and resources so limited, public health managers at all levels seek ways to improve the supply and use of medicines while minimising costs

INTRODUCTION

Access to Health Care services including essential drugs is a Fundamental Human Right. Realization of this right may involve various combinations of public and private financing and provision of services. Proper Management of drugs will lead to substantive improvement in the supply and use of drug Hence, there is a need for a Good Drug Management.

COMPONENTS OF DRUG MANAGEMENT


Drug management involves four basic components:

Selection Procurement Distribution Use

DRUG MANAGEMENT CYCLE

Selection

Use

Management Support Organization Financing Information Management Human Resources

Procurement

Distribution Policy and Legal Framework

DRUG MANAGEMENT CYCLE

The drug management framework represents the flow of activities that must be coordinated to ensure that appropriate, high quality 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.

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 education initiatives, and defining the role of the public and private sectors. By establishing pharmaceutical laws and regulations, countries can set pharmaceutical quality standards and price limits, require registration of pharmaceutical products, and establish guidelines. Good governance in the form of transparency and accountability prevents waste of scarce resources and increases peoples trust in the government and the health care system.

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 of pharmaceuticals. Essential medicines are those best suited to treat the most prevalent 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 wastage of scarce resources on unnecessary, unsafe, or ineffective medicines. Evidence-based selection of the most appropriate medicines requires that health managers and policy makers have access to current information on common illnesses, budgetary limits, and pharmaceutical advances, as well as input from doctors and pharmacists.

SELECTION
Selection process begins with Defining/Reviewing the prevalent health problems (disease pattern) for each level of health care Identifying treatment of first choice for each health problem (basis for EDL) Choosing individual drugs and dosage forms.

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 the total treatment cost

SELECTION

Preference for well known drugs having good pharmacokinetic properties Possibilities for local production Availability as single compounds Drugs should be identified by the generic names Choice of drugs depend on the staffs capacity to use them effectively (based on the extent of training & support facilities available)

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

PROCUREMENT

Procurement strategies vary widely, but most models include the following critical activities: pharmaceutical needs quantification, bid management, supplier selection, and medicine quality assurance. Good procurement practices, supported by adequate information systems, can help ensure that the selected medicines are made available for distribution.

PROCUREMENT

Drug Quantification Selection of Procurement procedure Tender Management Establishing Contract terms Assuring drug quality Ensuring Adherence to Contract terms

DRUG PROCUREMENT

Drug procurement is a process of acquiring drugs from private or public supplier or through purchases from Manufacturers, Distributors or Agencies like UNICEF, WHO or Bilateral Aid programs

DRUG PROCUREMENT

The Drug procurement system is a major determinant of availability drugs and total health costs. In developing countries, cost of drugs represents the single largest health expenditure, after personnel costs. Drugs also consume the major share of health related foreign exchange.

DRUG PROCUREMENT

Drug procurement is a very important aspect in delivery of Health Care

DRUG PROCUREMENT
An effective procurement process should Procure the right drugs in the right quantities and at the lowest possible price Ensure that all drugs procured meet recognized standard of quality Arrange prompt and dependable delivery to avoid shortages and stock outs

OBJECTIVES OF PROCUREMENT

To obtain high quality drugs at the lowest cost using standard & 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 the minimum inventory necessary for constant replenishment of stock to health facilities

OBJECTIVES OF PROCUREMENT CONTD

Ensure supplier reliability with respect to service and quality Set the Purchasing schedule, Formula for Ordered Quantities, Safety Stock levels, to achieve the lowest total cost at each level of the system i.e. set Re-order level, Minimum level, Re-order Quantity, Maximum level in order to avoid stock outs

OBJECTIVES OF PROCUREMENT CONTD

Maximize Use of Local Suppliers while seeking Low Prices, High Quality and Dependable Delivery These Objectives should be achieved in the Most Efficient Manner Possible.

DRUG PROCUREMENT
A good procurement system should start by Analyzing the current or existing procurement practices and Identify changes, which would contribute to the achievement of the above objectives

Procurement Cycle

Collect Consumption Information

Review Drug Selections

Determine Quantity Needed

Distribute Drugs

Reconcile Needs and Funds

Make Payment Choose Procurement Method

Receive and Check Drugs


Monitor Order Status Specify Contract Terms

Locate and Select Suppliers

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

Procurement Cycle contd


Monitor order status Receive and check drugs Make payment Distribute drugs Collect consumption information

PROCUREMENT METHODS
Method chosen should Obtain the lowest possible purchase prices Obtain supply of good quality products from reliable of the Supplier who will back it up with adequate services. Minimize Loss of Resources [e.g. funds and goods resulting from adverse influences on procurement decisions and practices]

PROCUREMENT METHODS

Obtain Optimum Economy in Personnel, time and other resources used in the procurement process The critical decision is to select the method, which will achieve these objectives for the particular health care systems or institution at any particular time. All drugs needs not be purchased by the same method and one particular method needs not to be used at all times

PROCUREMENT METHODS CONTD


There are 4 major methods: Open Tender Restricted Tender Competitive Negotiation Direct Procurement

OPEN TENDER

It is an unrestricted public bid by eligible suppliers or manufacturer based on the term and condition specified in the advertised tender invitation. It is a formal procedure by which quotations are invited from any manufacturer or representative on a local, international worldwide basis - ICB. (International Competitive Biddings) as specified by the World Bank (1993s) guideline

OPEN TENDER

It is open to all interested international manufacturers from World Bank member countries. The best/Lowest prices may be obtained by this method. It also promotes local production It is time consuming The workload is high.

Restricted Tender/Close Bidding/Selected Tender

Interested suppliers must be approved and registered in advance often through a Formal Pre-qualification Process by the buyer. Such process considers Adherence to Good Manufacture Practices (GMP), Past Supply Performance/Record, Financial viability and Related factors.

Restricted Tender/Close Bidding/Selected Tender contd

This pre-qualification process is open to any supplier that wishes to apply Favorable/Moderate prices are obtained here. It is less burdensome.

COMPETITIVE NEGOTIATION

Negotiated Procurement/Local Or International Shopping: The buyer approaches or contacts a limited number of known selected suppliers (typically at least 3 in number) for price quotations.

COMPETITIVE NEGOTIATION

Buyer may also bargain with these suppliers to achieve lower prices or service arrangement. This method is most useful for selected items for which best supply sources are well known.

DIRECT PROCUREMENT
It is the simplest and quickest but usually the most expensive method It deals with purchasing from single suppliers at the quoted or negotiated prices.

PROCUREMENT METHODS CONTD

Careful selection of reliable, compatible and appropriate suppliers is important for guaranteeing eventual quality and cost of supplies.

PROCUREMENT METHODS CONTD


At the initial stage of developing drug procurement system, it may be best to start with a relatively simple purchasing method, e.g. a combination of negotiation with known suppliers or international procurement and local tendering

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

Purchasing models/ mechanisms contd

Different combination of these models may be used at different levels of the system or for different drug. Inventory control should therefore consider changes in the purchasing system as program develops.

Purchasing models/ mechanisms contd

Whichever combination of supply system and models used, most public sector drug procurement involves group purchasing whereby the procurement office negotiates contracts for members of a group with similar needs and interests.

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 the fiscal/year when purchase & contracts are initiated thereafter the procurement staff have little or nothing to do, this is a waste of Human Resources.

Annual purchasing contd

It is most useful for small programs or new program It requires very high safety stock leading to high inventory costs. It is therefore very costly as a permanent system.

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.

Perpetual purchasing system

It is more adaptable to changes in demand than the periodic systems. It however requires skilled management to obtain its cost saving advantages. It requires the lowest safety stock and inventory costs.

Purchasing models/ mechanisms contd


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 less compatible with government annual budgeting but may be adopted when there is no available fund.

KEY PRINCIPLES OF GOOD DRUG PROCUREMENT

Procurement by generic name [INN International Non-Proprietary Name: Specify quality standard and not specific brands Limitation of procurement to the EDL: Select safe, effective and cost effect drug Procurement in bulk: makes for favourable prices

KEY PRINCIPLES OF GOOD DRUG PROCUREMENT CONTD

Formal supplier qualification and monitoring All suppliers should be pre and post qualified through a process that consider Quality service, Reliability and Financial viability. Competitive procurement

KEY PRINCIPLES OF GOOD DRUG PROCUREMENT CONTD

Sole-source commitment: group purchasing where all contracted drugs are from contracted suppliers. Separate deals have to be entered with noncontracted suppliers. Order Quantities based on Reliable Estimate of Actual Needs

KEY PRINCIPLES OF GOOD DRUG PROCUREMENT CONTD

Reliable Payment and Good Financial Management Transparency and Written procedures Separation of key functions: that require different expertise e.g. functions that involve committees, units may include award of contract, selection and qualification approval of suppliers.

KEY PRINCIPLES OF GOOD DRUG PROCUREMENT CONTD

Product Quality Assurance program : Establish and maintain a formal system for Product Quality Assurance this includes - QA product certification, - Inspection, - Targeted laboratory test and - Report of suspected products.

KEY PRINCIPLES OF GOOD DRUG PROCUREMENT CONTD

Annual audit with published results : Conduct annual audit to access compliance with procedure Regular reporting of procurement performance indicator - Report key procurement performance indicator against targets at least annually

KEY PRINCIPLES OF GOOD DRUG PROCUREMENT CONTD

- Use key indicator - Ratio of prices to market price - Suppliers Lead-Time - Percentage of Purchases made through Competitive Tendering -Planned versus Actual Purchases

DRUG PROCUREMENT Failure or Success of a drug procurement depend on: 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

DRUG PROCUREMENT

The Reliability of the supply Monitoring process & The Quality Assurance of drugs procured

CONSTRAINTS
Lack of fund (including foreign exchange Absence of a Rational System of Procurement with Good Selection & Quantification of Drug needs Lack of information on suppliers and prices, both finished and raw materials

DISTRIBUTION

A primary goal of drug distribution system is to deliver procured medicines and supplies to the clinics, hospitals, and centres that use them in a timely manner. Storage managers monitor expiration dates, inventory levels, and storage conditions such as light, temperature, and sanitation. When distribution systems function well and are supported by good procurement practices, patients are more likely to receive the medicines they need, on time, and in good condition.

DISTRIBUTION

Storage & distribution costs are a significant component of a health budget Transportation cost can represent several times the value of drugs distributed to remote locations Effective drug distribution relies on good system design & good management

Well-designed & well managed Distribution system


Well-designed & well managed Distribution system is cost effective & should Maintain a constant supply of drugs Keep drugs in good condition throughout the distribution process 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

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

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 & their community. 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 use of national and institution-specific treatment guidelines, drug utilization reviews, drug information services, and drug and therapeutic committees. Irrational Use of drugs occurs with polypharmacy, use of wrong or ineffective drugs, underuse or incorrect use of effective drugs

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

DRUG USE PROCESS


Diagnosing Prescribing Dispensing Proper consumption by the patient

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 finances and budgets, maintenance of accurate, useful, and up-to-date information systems, identification and motivation of capable staff, and the institution of monitoring and evaluation systems. The expertise and organizational structure provided through management support is critical at each stage of the pharmaceutical management framework.

DRUG MANAGEMENT CYCLE

Selection

Use

Management Support Organization Financing Information Management Human Resources

Procurement

Distribution Policy and Legal Framework

COMPONENTS OF DRUG MANAGEMENT CONTD

Each component of the framework depends on the success of the previous component and contributes to the viability of the next. Each component plays in a role in getting medicines to the people who need them These components are interwoven performing them independently or disjointedly and not as part of a system may lead to A rise in costs, Inevitable drug shortages & Patients dissatisfaction

CONCLUSION
Effective drug management is a collaboration process between the procurement office with registered staff and appropriate management system including technical and policy committees, which make final decisions as to: Which drug to buy What quantities to buy How do we buy When do we buy From which supplier

CONCLUSION CONTD
Key consideration for Financial Sustainability is Essential and this includes: Access to funds for drug purchase including foreign exchange for international procurement Support for procurement office Reliable payment mechanism

CONCLUSION CONTD

Accessibility to health facilities, The presence of qualified staff and The availability of pharmaceutical products are important components of an effective health care system. It is recognized that well trained human resource is very valuable in any health services system with evidence showing a direct and positive causal link between the health work-force and health outcomes.

CONCLUSION CONTD

Inadequate human resources provide major impediments to many global health initiatives and developing a strong workforce is vital in ensuring successful implementation of health related initiatives

Conducting trainings, workshops for health workers on Pharmaceutical supply management is therefore very important. Perhaps this is one of the major interventions that can address the stock outs of medicines, expiries and other logistical problems.

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