Presentation given by Hanne Bak Pedersen,

Senior Health Advisor, UNICEF New York

　

　　UNICEF has been asked to make suggestions for the replenishment system. We will divide the presentation in two. First, I will give some general recommendations on the different components of the replenishment system regardless of the country situation. And after that, my colleague, Andrew Morris from Cambodia, will illustrate how some of these recommendations can be implemented in the countries and the sometimes big problems with doing so.

　　The goals and strategies for a replenishment system or drug management system should be clarified in a national drug policy (NDP) which addresses all the issues related to improvement of the drug situation in the country. NDPs, based on the concept of essential drugs, are one of the best ways to ensure the availability, access and proper use of safe and effective needed drugs in a country. Provision of essential drugs and the rational use of these are an integral part of the health care system and should be seen in this context. It's important to remember this, and several of the country delegations have already commented on this.

　　The objectives of a replenishment system should be to guarantee the supply of a satisfactory assortment of safe, effective, good quality drugs, regardless of income and geographical situation. The goals that need to be addressed in devising and/or improving a replenishment system are in terms of

　

public service: to ensure that drugs reach the patient under optimal conditions, and that drugs should be safe and reliable;

　

equal access: to ensure availability and easy access to pharmacies or drug outlets;

　

cost sharing and cost control: that drugs should be affordable for the whole population (ensured through acceptable financing mechanisms), that drug distributors should operate within the national regulatory framework, and that sound competition should be stimulated where possible for the benefit of consumers and the efficiency of the economy at large.

　　A replenishment system consists of quite a number of components. We have to:

　

　　The players in the replenishment system are, apart from the government, the producers, the importers, the wholesalers and the pharmacies, which respectively should have project quality, purchase power, efficiency and reliability as their prime objectives.

　

Financing the Drug Bill

　

　　Financing the drug bill and insuring stable and adequate financing of drug supply as well as of health care, in general is becoming increasingly difficult due to multiple effects of economic pressures, changes in the structure and size of the population (such as the aging of the population and migration), as well as changes in decease patterns, and the resurgence of older diseases and the emergence of new ones. Many countries are undertaking restructuring of their health care sectors, and changes in the relationship between the public and private sector often occur, impacting on financing issues.

　　However, it remains the responsibility of the government to ensure that drug financing mechanisms are managed to achieve universal access to essential drugs. In most established market economies, drugs and vaccines account for between 5 to 20% of health care spending, and except for in Canada and the United States, more than half of the expenditures are publicly financed. In developing countries, household out-of-pocket expenditure make up a much larger proportion of total expenditure. In the public sector, drugs generally account for 10 to 30% of total recurrent cost, making them the second largest category after salaries. In order to achieve a greater health impact of these resources, a number of measures such as the use of cost effective drugs, therapeutic guides, and promotion of rational drug use, efficient procurement and distribution must be applied actively.

　　The categories of health care financing are, mainly: government budget raised by taxes; social insurance schemes; private insurance; direct payment by patients; and other sources, such as multi- or bilateral grants, loans from the IMF or World Bank, drug donations in kind from NGOs, and so forth. Many countries use a mix of categories in financing the drug bill, and often, very limited resources are available. In many developing countries, up to 80% of the national health budget is devoted to health infrastructure, equipment and health staff salaries, leaving only around 20% for other expenses. And in addition, as already mentioned, there is still a focus on secondary, tertiary health care rather than primary health care.

　　With implementation of the Bamako Initiative, a system of direct payment by patients to a revolving fund supporting the operation of the local health care system has proven to be a way to improve the quality of health care and the supply of essential drugs. Local initiative, however, should be considered in context with national ones, and these should support each other.

　

Drug Selection

　

　　Selections involve decisions on the drugs made available, the dosage form, the strength and their packaging. The international generic name of each drug should be used. Why should one be selective? Well, I think it's a very important tool as many of us only have very limited resources available.

　　Drug selection should be based on scientific evidence on efficacy, safety and quality. In addition, the principles of medical need and relative cost-effectiveness are influencing factors. The crucial step for the selection process is to identify the health care problems one wants to address. As already mentioned, we might not be able to address them all in one go. Afterwards, one needs to define standard treatment guidelines, and identify which drugs then are needed. Today, more than a hundred countries have national essential drug lists. An essential drug list should be the basis for drug supply, formulary development, and training of health care professionals, and the implementation of this should be monitored.

　　Who should make the selection? At the national level, a committee should be responsible for drug selection. This committee should consist of individuals competent in the field of medicine, nursing, pharmacology, public health and also consumer affairs. The committee should meet regularly and update the essential drug list preferably once a year. Clear guidelines for the responsibility and the functioning of such a committee should be laid down in order to ensure transparency. At the local level, a limited list of essential drugs should be prepared, addressing the needs there, both for primary health care and for the hospital level.

　

Estimation of Drug Requirements

　

　　Having decided which drugs to use, it is important to get the quantity right. This is quite a big task, particularly in the beginning, and requires a systematic monitoring of stock levels, both at local and central levels. Some of the symptoms of poor quantification are: chronic and widespread shortages of commonly used drugs despite adequate funding, procurement and distribution; surpluses of otherwise appropriate drugs; and inequity of drug supplies between different geographical areas and levels of health care. There's a difference between drug needs and what may be wanted, as already commented on by several of the delegations; personal preferences of key decision makers may influence the process, as well as make unrealistic demands on the system by health care providers. In order to quantify the drug needs as objectively as possible, certain methods may be used, as indicated here (see Table). I won't go into detail, just mention that the Morbidity-Standard Treatment Method is based on population, morbidity, mortality and standard norms of treatment. I think we'll discuss this and the other matters such as Adjusted Consumption, which requires a reasonable accurate information system, later on, perhaps in the working group.

　

Procurement Methods

　

　　Procurement of drugs is inefficient in many countries, which constitutes a big problem as substantial public savings can accrue from efficiency. The national list of essential drugs should be used as a basis. Market intelligence is of enormous benefit for drug procurement and strengthens the country's bargaining power. It can be obtained through continuous survey and analysis of supplier performance, price strengths, information on new drugs and their introduction to well established markets, and reliable quality assurance. It is recommended that countries, to the extent possible, share information and experience on a number of these issues which would allow for more transparency.

　　There are several methods for drug procurement, such as open or restricted tender, negotiated procurement, and direct procurement. The choice of method to be used depends on type and amount of drugs needed, as well as on the time available for completion. In general, if large quantities are needed of a known product, available from several manufactures, it is advisable to invite tenders on the generic name of the required drugs. In a restricted tender, which is more manageable than an open tender, participation of suppliers is limited to those who are registered with the government and who have met established prerequisites. I know that many of the countries here today have difficulties in getting transparency into procurement, and in some cases, organizations such as UNICEF, IDA and Mission FARMA, which are nonprofit organizations, have helped the countries with supply selection and also in the actual supply of drugs.

　　Whichever method one chooses, it is important to give priority to ensuring quality. In this respect, manufacturing according to GMP standards is essential, and systematic monitoring of supplier performance should be carried out. Reliable mechanisms for exchange of information of product quality should be utilized, such as the WHO certification scheme on proper pharmaceutical products moving in international commerce.

　　Who should carry out the procurement? In some countries, such as for example Sri Lanka, a public procurement system is well functioning. Systems may include private or public facilities for storage, packaging, repackaging, transport and quality control. The administration of such a system requires technical and financial expertise. However, this model has not always been successful, and there seems to be a tendency for more involvement of the private sector. One can devise many different kinds of models but the key element is that there is a central body responsible for data collection, needs assessment, and organization of a tendering system, and this is often public. The tendering system itself can be private or public, and the distribution system also can be private or public. These are issues I also believe we are going to address in the working group.

　

Drug Distribution

　

　　Two requirements are essential for an effective distribution system. One is adequate storage in terms of space, ventilation, temperature regulation, and the second is adequate transport which likewise must comply with drug quality requirements. Several guidelines on this have been produced on this by WHO and others.

　　Effective drug systems are often based on a combination of private and public sector initiatives. Of prime importance is the responsibility to be efficient. The government plays an important role in relation to importers and distributors. It should define the playing fields of companies and other actors in drug supply and distribution and set minimum conditions for handling drugs, make equal rules for all the players, and monitor the results of the distribution system concerning the system as a whole (with regard to accessibility, delivery time, efficiency of the system, drug costs, and professional and quality levels). It should also act as a gatekeeper, setting conditions for drugs and companies to enter pharmaceutical distribution, controlling and inspecting. However, in many countries, distribution networks have developed in a somewhat haphazard way. The key element in deciding a new system or redesigning a system is to look at the storage points, the modes of transportation and the materials handling system.

　　I tried to focus on some of the important elements of the replenishment system. Financial resources remain the crucial problem. However, what we do with the funds available is just as crucial. In concluding, I would like to say that I think there is no perfect system for replenishment. There are many ways of doing it.

　　Many of the community-run systems that function today are based on some kind of direct payment by patients, such as fee for service. Often, the management of the system, particularly the management of funds, constitutes the biggest problem in its operation. Therefore, it is of utmost importance that in designing a replenishment system, one clearly defines the objectives sought, along with the functions at each level. In addition, mechanisms for communication and coordination among the various levels must exist and sufficient training must be given to enable the personnel at each level to deal with the responsibilities.

　　Donor funding from international, bilateral or nongovernment organizations are often crucial to ensure support while financial bases are built up in the countries, and to cover some of the costs such as training of human resources, social organization and the initial supply of drugs for the start-up of community revolving drug funds. Coordination of this assistance at the county level is essential in order to achieve this satisfactorily. I am very happy to see that at least some of us have come together today so that we are able to discuss this at country level, as well as discuss the coordination between different organizations.

　　Thank you very much.