Drug Procurement 10-03-09
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Transcript of 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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PROCUREMENT METHODSCONTD
Careful selection of reliable, compatible andappropriate suppliers is important forguaranteeing eventual quality and cost ofsupplies.
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PROCUREMENT METHODSCONTD
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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Purchasing models/ mechanismscontd
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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Purchasing models/ mechanismscontd
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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KEY PRINCIPLES OF GOOD DRUGPROCUREMENT CONTD
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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KEY PRINCIPLES OF GOOD DRUGPROCUREMENT CONTD
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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KEY PRINCIPLES OF GOOD DRUGPROCUREMENT CONTD
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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KEY PRINCIPLES OF GOOD DRUGPROCUREMENT CONTD
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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DRUG MANAGEMENT CYCLE
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DRUG MANAGEMENT CYCLE
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