Public Medicine Procurement and Challenges Lucile de Comarmond

Public Medicine Procurement and Challenges Lucile de Comarmond Chief Pharmacist Workshop on Impact of TRIPS/IP on Access to Medicine 17 -18 September 2014

Presentation Outline Introduction Procurement System Procedures Procurement System Responsibilities Medicine Quality Assurance Procurement Finance Challenges Way forward

Introduction Procurement of medicines is an important component of an effective medicine supply system and therefore a major determinant in the quality of health care delivery services. It is a complex process involving activities which range from: v Selection of items v Quantification of needs v Identification of appropriate method of procurement v Selection of suppliers and awards to suppliers v Financing v Negotiation with suppliers for deliveries and payment v Monitoring the order status

Procurement system Procedures The objective is to ensure the availability of the right medicines in the right quantities, at affordable prices and at recognized standard of quality. Procurement procedure must comply with the Public Procurement Act. Procurement of medicines is centralized. Medicines are procured in bulk limiting to the National Formulary List for a maximum stock of 6 -8 months stock. Medicines are procured by generic name. Main procurement method is competitive negotiation although direct bidding is done for emergency purchases.

Quantification is centralized using the projective consumption method using past consumption to predict demand Purchasing model is perpetual (orders are placed whenever stocks reaches re-order level) Pharmaceutical suppliers are medicine manufacturers and independent foreign wholesalers exporters. Procurement Committee approves the medicine and supplier selection recommended by the Procurement Office The Medicine Procurement Unit is audited annually by the Ministry of Finance

Procurement System Responsibilities Procurement of medicines is under the responsibility of the Medicine Procurement Unit. The activities of the procurement office includes: Compiling the procurement list submitted by the CMS Identifying suppliers Acquiring quality supplies at the best possible price Tracking supplier’s compliance with agreements. Ensuring prompt and dependable delivery Evaluating suppliers performance

Medicine Quality Assurance Program The National Drug Quality Control Laboratory was established to support the medicine quality assurance program. The program ensures : Medicines are selected on the basis of quality, safety and efficacy Suppliers with acceptable quality standard are selected Packaging meets agreed requirements and can withhold handling and storing condition. Pre- and post-marketing surveillance including analytical medicine testing. Product quality concerns reported by prescribers, pharmacies and consumers are addressed and resolves. Medicines recalls procedures are implemented to remove defective products

Procurement Finance Procurement will function effectively when there is a reliable and adequate source of fund. Public medicine procurement is funded 100% by government. Each year the Ministry of Health receives a committed annual budget for the procurement of medicines (approximately 6% of total health budget) Half of the budget is normally disbursed in the first quarter and then followed by quarterly disbursement. All medicines are procured from overseas and access to foreign exchange is critical. Lead time for payment of supplier is between 3 - 6 weeks.

Challenges Main obstacles are: Inadequate technical capacity in quantification - no software available( inaccurate forecasting) Inadequate inventory management in CMS – availability of accurate timely information Shortage of trained staff Small quantity requirement, bulk purchasing suppliers (manufacturers) have a minimum order requirement that exceeds the quantity needed. Suppliers charge a premium to fill small quantity orders or totally ignore the request.

Challenges Bulk procurement can cause storage problems Demand for medicines reflects the prescribing patterns of doctors and MOH has a high turnover of expatriate doctors. Timeliness of payment -Most suppliers are requesting advance payment Shipment schedules – Delays due to trans-shipment especially sea-freight. Fluctuation in foreign exchange can drive up the price of the imports overnight.

Way forward Public Medicine Procurement can be improved by: v Establishing a computerized procurement management information system. v Capacity building for Medicine Procurement and CMS staff v More flexibility by MOF with the disbursement of funds and shorter lead time for payment. v Procurement of Medicines must be considered as a priority for access to foreign exchange v Establishing computerized Inventory Management system in the Central Medical Stores and ensure that there adequate trained staff. v Participating in the SADC Pool Procurement Initiative.

Thank you for your attention