Dr. Indermohan S. Narula

　　The Second International Meeting on Essential Drugs and Community Health Systems focused on the Asian countries. The reason for this was the comparative similarity of approach in the setting up of RDFs and in the strengthening of primary health care delivery. In every participating country of Asia, the MOHs have assumed responsibility for implementing and running the RDFs, either as pilot projects or as national programs. In these countries, UNICEF collaborates and works with and through the MOH to ensure the viability of the RDF project. The Nippon Foundation, in annual installments, has directly provided seed stock in the form of drugs in response to requests developed by MOHs with varying inputs from UNICEF.

The purpose of the support provided by the Nippon Foundation was to:

This purpose was based on the following core development assumption:

The overall aims of the second conference for Asian countries were to:

Specifically, during the conference, each country was asked to

The conference was structured as follows:

Current Status	In the previous year, following the first conference in Tokyo, the Cambodian MOH and UNICEF, who had already embarked on a reorganization of the national drug supply and logistics system, decided to put in place the necessary framework for the implementation of RDFs in selected areas. This involved the development and approval of relevant policies and guidelines regarding the operation of RDFs, the extent and nature of community co-management, local use of locally generated funds, and how RDFs will be supervised or monitored. As part of the initiative to restructure the national drug supply and logistics system, provision was made for the inclusion of a responsive drug replenishment mechanism that would cater to RDFs at the community and health facility levels. Guidelines and training materials were also developed for preparing communities and health teams to develop basic management skills for operating and co-managing RDFs. Materials are currently being developed for training health workers in good prescribing practices.
	The plan of action for setting up RDFs in pilot areas has been developed and submitted for resourcing to the Nippon Foundation and UNICEF. During the current year the seed stock will be distributed through the revamped drug supply and logistics system to selected communities and health facilities. Performance will be monitored. Based on the results of monitoring and review, decisions regarding the extent and pace of future scaling up efforts will be made.
Key Constraints	Guidelines and procedures for use of locally generated funds are still not approved. This is because the current policies of the government regarding revenues generated at government health facilities have not been reviewed. While the MOH is willing to go ahead with the proposed policies, progress has been quite slow. It is hoped that by the time the seed stock becomes available, at least policy and guidelines will have been approved.
	Self-medication still a significant problem in Cambodia. This is due to a number of factors, probably one of which is the relative unavailability of drugs at health facilities. Other factors, such as easy and unrestricted availability of drugs (especially antibiotics) in the local market, lack of information about the harmful effects of drugs, insufficient funding for the purchase of all required drugs, and a lack of confidence in the health services (particularly in the rural areas) also considerably contribute to the self-medication problem.
	The MOH had embarked on a phased and systematic rehabilitation of health centers throughout the country, starting with the areas selected for RDF implementation. However, because of a number of administrative and monetary reasons, this rehabilitation has not proceeded as planned. It is hoped that with rehabilitated centers and with RDFs, communities would be encouraged to increasingly utilize the health services being offered.
	As with many other countries, adequate government funds still do not reach the periphery. There is still a very top down approach as far planning and budgeting is concerned. The relatively limited progress of the decentralization embarked upon by the MOH and the Government of Cambodia also contributes to poor funding levels at the periphery.
Priority Areas for Action	Properly priced drugs are critical to the survival of RDFs. The cost of drugs should be affordable and at the same time should not be such that it would lead to the decapitalization of the drug fund. Therefore, for the purpose of sensitive and responsive pricing, the development and establishment of RDF pricing mechanisms becomes a priority for the MOH and UNICEF.
	During the pilot phase, it might be practical to monitor and supervise the RDFs from a central level, but as the number of RDFs increase, the integration of RDF monitoring and community financing into the overall supervision carried out at various levels of the MOH becomes an urgent priority.

Current Status	Currently there are 388 village communities with community health workers and operational RDFs. Most of the RDFs, supported by a variety of bilateral and multilateral donors and INGOs, are at the community level and are operated by community health workers under the supervision of health centers. These health centers are responsible for re-supply, utilizing the government drug distribution system. The MOH has finalized a plan of action for 1997 with a detailed budget to set up RDFs, through the health centers, at eight (out of nine) provincial and ten district hospitals, and in ten pilot communities. The estimated budget for commodities and training will amount to US$561,350.
	Drugs and medical supplies have been relatively underfunded in the past. Therefore, partly in response to the chronic underfunding and partly in response to the ongoing support and anticipated seed stock from the Nippon Foundation, the government has committed itself to increasing the budget for drugs to 8% of the national health budget within the next five years.
Key Constraints	UNICEF actively supports the CHW-based RDFs. Since RDFs at the community level are outside formal government health facilities and the concept of RDFs is relatively new in Laos, the MOH is planning to integrate community RDFs and facility-based RDFs at provincial and district hospitals and at health centers. The government is therefore carefully studying the whole issue of cost recovery to develop an appropriate policy framework. Eventually, the implementation of RDFs at the government health facility level will include the RDFs at the community level.
	As in Cambodia, the pricing mechanism needs further work and consolidation so that the RDFs do not decapitalize in the short- to medium-term, and so that access to affordable drugs is improved and not reduced. There is a need to correlate pricing to the high inflation that is eroding the buying power of the revolved funds, and to include the possibility of government subsidies to help compensate for this inflationary pressure.
	In some provinces drugs still being provided free-of-charge at the hospital level. This situation has been in fact increasing ever since the government introduced measures requiring certain categories of people (such as children, veterans and others) be exempted from paying fees and costs. Health management teams are aware that this will impose a considerable strain on the meager resources at their disposal. It could have a significant decapitalizing effects on the RDFs.
Priority Areas for Action	The relatively recent introduction of the nationwide government exemption policy has increased the potential for decapitalization. Therefore there is an urgent need to develop guidelines and procedures for implementing government policies in a way that reduces the potential for decapitalization, especially at health facility and community levels.
	As is the case with other countries, overall supervision needs to be strengthened and supervision of RDFs at community and facility levels needs to be integrated into the overall supervision being carried out at various levels.

Current Status	The pilot activities in selected sums have had mixed results, but there is sufficient positive indication for the RDF project to be scaled up to ten additional sums during 1996-97, the districts already being selected by UNICEF. UNICEF has completed its assessment of the two pilot sums, and the plans for scaling up are included in the country report. By the year 2000 the MOH plans to have RDFs set up in all 312 sums in the country.
	National health insurance currently covers 95% of the population. This is done by government payment of insurance premiums for vulnerable groups, such as herdsmen and government salaried workers. Other waged workers with private companies have their premiums covered by the companies, while some herdsmen and the self-employed are expected to pay their own premiums. However, the government has begun to scale down premium payments for herdsmen, who are now being encouraged to cover their own premiums. Recent changes in the government and ongoing restructuring has delayed reimbursement to sum and provincial hospitals, resulting in significant outstanding dues. This has had a domino impact, affecting drug purchases from Mongolemimpex which in turn affects its ability to procure the drugs needed for the system and the drug pipeline. The cost recovery rate is currently at 73.9%, indicating that at present there is still considerable potential for decapitalization.
Key Constraints	Local management at the sum level is generally still weak despite extensive efforts to decentralize. Responsibility has been effectively decentralized but decentralization of authority for resource allocation and provision of funds still lags behind. Centralization, a legacy of the past, still intrudes into day-to-day operations. It is manifest in the administration of both local governments and communities. Revision of policies (especially regarding procedures, community education, and training of local government workers at sum and bag levels is urgently needed if the beneficial effects of decentralization are to be realized.
	Drug procurement and distribution is still centralized. This is a clear manifestation of the still prevailing centralized approach to the procurement and distribution of commodities. While it is recognized that the unique geographical topography of Mongolia necessitates a centralized drug procurement and distribution system for the provision of evenly priced drugs throughout the country, the current lack of funds and resources to efficiently realize this system makes it necessary to consider the development of other complementary drug replenishment systems. When RDFs eventually cover a larger area, this centralized distribution could become a very severe limiting factor. While other players in the procurement and distribution of pharmaceuticals are encouraged, the increasing rate of inflation that is rapidly eroding capital also needs to be accounted for , along with the development of a dynamic pricing mechanism.
	Links with the health insurance system need further development. While the health insurance system is another way of cost recovery in Mongolia, because most of the premiums are being paid by the government, the government is still indirectly financing health services to a large extent. There is a need to consider disengaging RDFs from the national health insurance scheme or to make drug related transactions between the insurance agency and health facilities transparent so that reimbursement delays will not drastically affect RDF operations. In this sense, capacity for accounting and financial management at all levels needs to be further strengthened in tandem with increasing the capacity for decentralized operations by local governments and, more specifically, health services.
Priority Areas for Action	During the conference, questions about who has the authority to use drug funds deposited in banks led to the emergence of RDF ownership as an issue. There was some divergence of opinion regarding the ownership of drug funds. Mongolia decided to explore the issues surrounding the legal status of RDFs and develop a plan to define the legal status. This was especially pertinent in light of recent changes in Mongolia and the fact that significant sums of money are on deposit in banks with no clear guidelines about how such funds are to be used, this in an environment of escalating inflation that is eroding repurchasing capacity.
	The UNICEF-sponsored review of the pilot RDFs and the discussion following Mongolia's presentation showed that more attention needed to be paid to the accounting and financial aspects of RDF operations. This could become a critical limiting factor in the sustainability of RDFs. It was therefore agreed that during 1997 the project in Mongolia would further develop and strengthen the financial and accounting frameworks for operating RDFs based on the pilot experience.

Current Status	Over the period 1995-1996, there was evidence1 that the RDFs are revolving in all the townships operating such funds. This is a relatively short time frame to assess elements of sustainability and the extent of co-management by the community. However, it was noted that RDFs based in township hospitals are operated and managed mainly by the health facility's technical personnel. Involvement of the community at present is nominal and appears to be limited to membership in RDF management committees. As a result, there is currently a mixed response at the community level. Even the technical staff involve in RDF management have relatively limited control over a number of aspects of the operation; many critical financial and resource allocation decisions are taken on their behalf at higher levels. Hence the need to explore how some of this decision-making could be decentralized to the township level.
	During the conference it was reported that some of the townships have put in place relatively effective exemption mechanisms. Government policy identifies indigents that are exempt from payment for services. There exemptions can become a considerable drain on RDFs. In these townships, the local communities are compensating RDFs for drugs used by indigents. It appears that this is done through a locally appropriate system of collecting donations from community members. How the system operates in detail and how effective it is over the medium- to long-term remains to be seen.
	The Department of Health has issued financial guidelines for the operation of township RDFs, and these are reportedly being effectively implemented. It was also reported that overall coverage and utilization of township and rural health facilities are increasing and that staff appear to more motivated in the performance of their duties.
Key Constraints	As described above, community participation is still very weak because of existing structural and socio-political constraints. The traditional centralized and provider-oriented approach within the MOH, even down to the township levels, does not facilitate the type of community participation needed for determining priorities and making resource allocation decisions. There is also the very limited role of the community, despite representation on RDF committees, in supervision and oversight of RDF and local health services. As to participation in local decision-making about the use of funds generated, the centralized orientation firmly regulates such decision-making, even by MOH personnel at the township level.
	The very limited decentralization within the MOH is shown quite clearly by the centralized drug procurement system. At present all aspects of drug supply logistics are done at the central level except the generation of the requisition for replenishment. All drugs have to be purchased by the Central Medical Store and these are then dispatched to the townships. A number of reasons for this are cited, including the ability of the Central Medical Store to obtain volume discounts and procure better quality drugs with longer shelf lives. Another reason cited for the continued centralized procurement and drug distribution system is the weak financial management capability at township health team levels. There is also concern that local buying could allow low quality drugs to enter the drug supply system. As in many of the other countries, there is widespread irrational drug use through a combination of poor prescribing practices (including polypharmacy) and the extent of self-medication.
Priority Areas for Action	Increasing the buying power of revolved funds emerged as an area for urgent action. Because of the long procurement and distribution cycle of the Central Medical Store, cumbersome and archaic procedures, and the instability of the local currency (inflation), the MOH has decided to develop a medium- to long-term investment plan to increase the supply of essential drugs.
	It was also recognized that this would have to be done concomitantly with the decentralization of management systems, starting with the national drug supply and logistics system and the development of the pharmaceutical sub-sector. During the conference it was agreed that the MOH and UNICEF would initiate the development of a plan of action to accelerate decentralization within the MOH, starting with drugs procurement, management in participating townships, and the management capabilities of health teams at peripheral levels.

Current Status	The MOH has initiated the first phase of the CDP in three selected districts as a part of the development of the project proposal for the second phase of the CDP. The project proposal developed was presented at the conference in the form of a report of activities and also as a plan of action for the next three years. It was to be finalized by the MOH and submitted to the Nippon Foundation by the 1st of December 1996.
	It was also reported that inputs from the Nippon Foundation and KfW had stimulated the MOH to coordinate and improve collaboration between various donors involved in the strengthening of the Logistics Management Division. This is seen as a very welcome development as the LMD is the main agency responsible for the procurement, storage and distribution of drugs, medical supplies and other commodities.
Key Constraints	The MOH's capacity to systematically implement projects in concert with other related projects is very weak. There is still a tendency to develop and implement projects in response to available and possibly available funds. Despite the presence of a national five-year health plan, the MOH and its Department of Health Services seem to operate projects from donors' points of view instead of planning to develop and implement a system for the MOH regarding the CDP. One of the consequences of the MOH's project orientation and the presence of so called project implementation units, is that each unit, because of a lack of resources for basic operations, makes every effort to ensure that its own project has funds to operate. This often leads to the exclusion of working and sharing resources with other operations and services of the MOH. This tendency manifests itself in a weak coordination and implementation capability at central and provincial levels. In an attempt to ensure that some basic services are provided to the population, the MOH relies excessively on NGOs and other donors to deliver these basic health services.
Priority Areas for Action	The chronic weakness of the LMD exists despite generous inputs by various donors. The replenishment system, as it currently operates, does not have the capability to support RDFs at the community level. The MOH has adopted as a priority the development of a replenishment mechanism to support community drug funds, this in consonance with strengthening the LMD and with attention to recommendations from the recent UNICEF and MSH study on drug financing in Nepal.
	Along with the development of an effective and responsive replenishment system, a transparent accounting and financial management system (at least at the health post and health center levels) should be developed in addition to guidelines and clear procedures within the LMD for the operation of the Community Drug funds. This too has been accorded priority but is seen as a very difficult task at present because of the inertia within HMG. However, the operation of RDFs at the community level provides the MOH with an opportunity to try to put in place a simple financial and accounting system linked to basic inventory management and the management of health post finances and resources

Current Status	It was reported (according to monitoring data by the MOH and UNICEF) that almost all the RDFs in first phase provinces are so far revolving, with those in the plain areas revolving more frequently than those in the mountainous areas. The successful implementation of the first phase lead to approval for the implementation of the second phase which has just begun. This project will cover eighteen out of the fifty-three provinces and include the two provinces that UNICEF is supporting directly. In light of the implementation experience so far, the training materials employed were revised. These revised materials are being used for current training of the next batch of communes. So far thirty TOTs have been carried out. Again, based on implementation experience and two reviews completed so far, the guidelines for RDF operations at the commune levels are also being revised.
	Recognizing the phenomena of widespread irrational drug use, attendant polypharmacy and self-medication, training on rational drug use is currently underway and so far 2400 staff have received training.
	One of the beneficial effects of the RDF project has been the integration of various health committees as a response to the operation of RDFs. Since commune level MOH staff and the peoples' committees are responsible for the operation of CHC and RDFs, the peoples' committees in a number of communes have consolidated various health committees into health/RDF committees. Community mobilization activities are being carried out and health education activities are being initiated at the commune level. The second phase of the project is poised to receive the next batch of drugs from the Nippon Foundation.
Key Constraints	There is a wide variation in RDF co-management by peoples' committees and commune health center teams. In some communes the financial and business aspect of the RDF is prominent, while in others the technical aspect. This appears to be because the guidelines that govern the interaction of peoples' committees, RDF/health committees and commune health center teams are not clear. Therefore guidelines for RDF operation and interactions between communities and the CHC need to be reviewed, revised and incorporated in the next training materials review.
	Considerable training has been provided to health workers in the participating districts and provinces regarding rational drug use, but there is anecdotal evidence that the training has not been impacted on prescribing practices. Therefore the impact of training on rational drug use needs to assessed. During 1996, because of the stimulatory effects of RDF operations, project management was moved from RDF project committees to the PHC section of the division of planning and financial management. This integration of health care delivery, various PHC activities, and the operation of the RDFs needs to be accelerated.
Priority Areas for Action	Prior to the distribution of the next batch of seed stock drugs, the financial management and accounting frameworks for RDF operations should be reviewed. Revisions should be incorporated into the training of health workers and members of health and peoples' committees.
	With the increasing number of RDFs, there is increased access to affordable and acceptable quality basic drugs. While this is encouraging, the flip-side is that already entrenched irrational prescribing, polypharmacy and widespread self-medication are also increasing. To counteract this, the MOH with UNICEF will develop a plan for accelerating training on rational drug use and community health education.

　　The main thrust of the Essential Drugs Project has been the provision of seed stock to health facilities at community and sub-district levels and occasionally at the hospital level (Laos, Myanmar and Mongolia). Support has also been provided for RDF guidelines development and the training of health workers. It has been government health services and the communities themselves, however, that have provided the personnel costs; they have taken the responsibility to ensure that management of health facilities and replenishment systems can effectively operate the RDFs on a sustainable basis. This is a significant proportion of costs because it is recurrent and constantly increasing, even though national budgets are generally decreasing.

　　The provision of seed stock and funding for training and RDF guidelines development can basically be considered as a one time input. As government funding must be responsible for recurrent costs, funds are always in very short supply for capital inputs. Consequently, such capital inputs are invariably provided by donors. Donors assume that the government will continue to provide for recurrent costs such as personnel, infrastructure, logistics, training for program expansion, and capital input for scaling up and institutionalization of RDFs. But in light of severe budgetary constraints currently being experienced by participating countries and the difficulty in meeting expanding recurrent costs, government will have to continue to rely on external funds for capital inputs and the start up costs for subsequent scaling up and institutionalization.

　

Development and implementation of national ED programs based on results of first phase activities

　

　　In spite of sizable support over the three years, it has become clear that the initial problem of frequent essential drugs shortages in remote and peripheral areas was but the visible tip of a much larger problem, encompassing such issues as:

　

　

　　It also raised questions about MOH orientation towards communities and highlighted the need to put in place mechanisms that will make community participation more than just compliance elicited by health workers, especially at community and district levels.

　

Revitalization and scaling up of existing ED pilot projects into national programs

　

　　If the above mentioned areas are not to be neglected, and the gains made in the last three years not to be forfeited, support for scaling up and the institutionalization of RDFs and community health systems must be continued. The commodity component has been the largest part of the total cost of the project, but if the commodity inputs are synchronized with the development of other related components, funding could then be spread out over a longer period and targeted more towards technical aspects that focus on capacity building and systems development. Additional support may not have to be on the same scale as in the last three years, but it will need to be carefully structured and targeted to well developed action plans with commodity support prudently synchronized with other project components.

　　The selected countries could be required to develop and submit more detailed action plans with clear objectives and indicators, along with a well-defined monitoring plan to assess progress. Commodity inputs could then be made conditional on the achievements of critical events in the action plans. This would obviously require increased and more wide-ranging technical oversight of project implementation and would be more than just providing commodity support. It would mean a more hands on technical approach that could involve close work with whatever implementing partners are selected to work with the MOHs in the chosen countries.