OVERVIEW OF PHARMACEUTICAL SUPPLY MANAGEMENT (PSM) CYCLE RISKS AND SOLUTIONS

1. OVERVIEW OF PHARMACEUTICAL SUPPLY MANAGEMENT (PSM) CYCLE RISKS AND SOLUTIONS Dr. John Munyu Chief Executive Officer, Kenya Medical Supplies Agency (KEMSA)

2. OVERVIEW OF PRESENTATION 1. KEY FACTS ABOUT PHARMACEUTICAL INDUSTRY IN KENYA 2. PHARMACEUTICAL MANAGEMENT 3. PHARMACEUTICAL SUPPLY MANAGEMENT CYCLE 4. CONCLUSION

3. 1. KEY FACTS ABOUT PHARMACEUTICAL INDUSTRY IN KENYA • Kenya's pharmaceutical industry is on a rebound, riding on the back of increased expenditure in healthcare and general economic growth over the years. • Sales of over-the-counter (OTC) and prescription drugs clocked Sh17.7 billion(USD 221.3M )in 2008 up from Sh14.4 billion the previous year--representing a growth of 22.9 per cent, according to the Kenya Pharmaceutical and Health Report 2010, a new report by Research and Markets. • By 2014, the Kenyan pharmaceutical market is expected to hit a value of Sh33.5 billion,(USD 418.8M) equating to a compound annual growth rate (CAGR) of 13.53 per cent in local currency terms and 22.8 per cent in US dollar terms.

4. KEY FACTS ABOUT PHARMACEUTICAL INDUSTRY IN KENYA CONT’D • According to the Kenya Association of Pharmaceuticals Industry (KAPI), public procurement has been a key source of growth especially with redefining of KEMSA mandate • Government spends about KSh. 15 billion (USD 187.5M)annually on Essential Medicines and Medical Supplies (EMMS) making it the largest buyer in Kenya • counterfeit drugs pose a big threat to the industry

5. 2. PHARMACEUTICAL MANAGEMENT Pharmaceutical management is the set of practices that aim to: • Ensure timely Procurement, supply and use of quality and safe drugs in both public and private health facilities. • Ensure effective and quality medicines / health products are provided at all times • Quality of service is guaranteed at any health care setting. • Ensure country’s ability to address public health concerns • Ensuring that drug registration and country selection of EDL is done as per the laid legal framework governing pharmaceutical management and supplies

6. AN OVERVIEW OF PHARMACEUTICAL SUPPLY MANAGEMENT

7. IMPORTANCE OF GOOD PHARMACEUTICAL SUPPLY MANAGEMENT • To ensure high quality essential drugs and medical supplies are available, affordable and rationally used • To ensure that patient has access to right medical supplies in right quantity at right time • To guarantee the continuous availability of medicines and public health supplies. • Assist in the development of health policy reforms • Establishes a link for collaboration between private and public health care providers • Assist to define policies on personnel capacity needs for regulatory activities, monitoring, enforcement, inspection and surveillance. • Assist to identify infrastructural, office space, MHE, Vehicles for commodity distribution, ICT equipments and laboratory facilities to conduct quality assurance services.

8. 3. PHARMACEUTICAL SUPPLY MANAGEMENT CYCLE Pharmaceutical supply management cycle is managed Through an integrated system that includes; product selection, Procurement, distribution and rational use

9. PHARMACEUTICAL SELECTION PROCESS, RISKS AND PROPOSED SOLUTIONS • a) Selection process is carried by National Therapeutic and Drug Selection Committees (NTDSC) based on information provided in: • i) Treatment Norms • ii) National Essential Drug List (EDL) • ii) Cost v Therapeutic Class • b) Key Policy issues in drug selection • Drug selection is linked to national clinical guidelines to ensure access to essential drugs and to promote rational drug use.

10. PHARMACEUTICAL SELECTION PROCESS, RISKS AND PROPOSED SOLUTIONS c) Risks issues • Adoption of the essential drugs concept: - to identify priorities for government involvement in the pharmaceutical sector, and especially for drug supply in the public sector and for reimbursement schemes • Procedures to define and update the national list(s) of essential drugs – The concept of EDL was adopted in Kenya in 1993 and the list was not revised until 1993. thereafter the EDL was revised in 2002 and few amendments made in 2010. A good mechanism need to be put in place for updating the EDL after specified period of time which should be over 5 years. • Selection mechanisms for traditional and herbal medicines – This need to be addressed NTDSC because of interests is shifting towards traditional and herbal medicines as a result of increased costs in the convectional medicines.

11. PHARMACEUTICAL SELECTION PROCESS, RISKS AND PROPOSED SOLUTIONS CONT’D …risks Promoting essential drugs in the private sector: Promotion of essential drug list concept to the private is a challenge as the EDL is only confined to the public sector. Donations of non-essential drugs: The donation of non-essential drugs can undermine the acceptance and implementation of the selection process and adherence to evidence-based clinical guidelines. Gaining further acceptance of the EDL principle: There may be opposition to the use of the essential drugs list. Prescribers may see it as undermining their clinical freedom, pharmacists may be worried about the financial implications. While Manufacturers may fear that their market will be eroded, and consumers may think that they are being offered second-rate cheap drugs.

12. PHARMACEUTICAL SELECTION PROCESS, RISKS AND PROPOSED SOLUTIONS CONT’D SUGGESTED SOLUTIONS • Drug donations should only be limited to national’s EDL unless specifically requested and agreed upon • Risks in the use of non – essential drug list in the private sector could be addressed by NTDSC using Private health insurance programmes and enlightened professional associations as the best entry point for introducing cost-effective drug selection into the private sector. • Procedures to define and Update NEDL should be aligned to be the best practices as defined by the WHO • Traditional and Herbal medicines should be considered in the broader development of health policy. When developing a national drug policy, It’s important to include traditional and herbal medicines within its scope.

13. PHARMACEUTICAL PROCUREMENT PROCESS, RISKS AND PROPOSED SOLUTIONS a) Pharmaceutical Procurement Process Facts: i) Pharmaceutical procurement is a complex process which involves many steps, agencies, ministries and manufacturers. • Pharmaceutical procurement must embrace fundamentals of good procurement practices that include competition , fairness and transparency , integrity and accountability of the whole procurement process. • Pharmaceutical procurement is a specialized professional activity that requires a combination of knowledge, skills and experience • Steps in procurement process are highly interlinked and failure to manage each of the steps accordingly could severely affect timely procurement, deliveries and increase procurement costs.

14. Determine Quantities Review Medicine Selections Collect Consumption Information Reconcile Needs and Funds Choose Procurement Method Distribute Medicines Locate and Select Suppliers Make Payment Specify Contract Terms Receive and Check Medicines Award Contract Monitor Order Status THE PHARMACEUTICAL PROCUREMENT CYCLE

15. PHARMACEUTICAL PROCUREMENT PROCESS, RISKS AND PROPOSED SOLUTIONS CONT’D b) Key Principles of good Pharmaceutical procurement i) Procurement should be done by generic name ii) Limitation of procurement to the essential drug list iii) Procurement in bulk – help achieve economies of scale iv) Order quantities based on reliable estimate of actual need i.e. needs forecasting and quantifications must be done correctly v) Reliable payment and good financial management vi) Transparent and written procedures e.g. procurement manuals, SOPs vii) Product quality assurance Program

16. PHARMACEUTICAL PROCUREMENT PROCESS, RISKS AND PROPOSED SOLUTIONS CONT’D • Risks in Pharmaceutical procurement • Mechanism for good forecasting and quantification process to ensure procurement is based on need requirements is a challenge • Regular drug policy update to ensure good procurement and supply management is often not done • Delay or failure to update EDL will lead to procurement of drugs that do not meet the needs of the patients iv) Efficient and transparency procurement management e.g. different procurement functions and responsibilities should be divided among different offices – sometimes this overlooked

17. PHARMACEUTICAL PROCUREMENT PROCESS, RISKS AND PROPOSED SOLUTIONS CONT’D …risks • In adequate or irregular pharmaceutical Procurement funding by the government leads to shortage / delays of funds to pay the suppliers, shortage of drugs at the facilities, • External financing of pharmaceutical procurement by Bilateral donors, international agencies and development Banks create sources of conflict of procurement procedures and guidelines. • Unbiased market information on product availability, comparative pricing, product quality and supplier performance could be challenging to obtain. viii) Lack of trained procurement staff

18. PHARMACEUTICAL PROCUREMENT PROCESS, RISKS AND PROPOSED SOLUTIONS CONT’D d) Proposed solutions to pharmaceutical procurement risks • M&E of the pharmaceutical procurement system to monitor local performance and adherence to good procurement practices • Contract –out parts of procurement functions to improve efficiencies and effectiveness of the procurement system E.g. Procurement of bulk Medical supplies where the procuring entity does not have adequate market information and requisite (procurement of Mosquito nets by UNICEF) • Assistance by Donors should be more consistence with the procurement policies of the country receiving the assistance • Adequate and timely release of pharmaceutical funds will ensure adherence to pharmaceutical procurement plan and execution • Good governance in the whole of the procurement cycle is required to ensure accountability, transparency and integrity of the process is upheld in all stages of the cycle

19. PHARMACEUTICAL PROCUREMENT PROCESS, RISKS AND PROPOSED SOLUTIONS …solutions • Well trained procurement staff to handle pharmaceutical procurement and establishing procurement committees that are responsible for ensuring procurement accountability at various levels of the procurement process vii) Order / procurement quantities should be based on a reliable estimate of actual need. viii) Procurement and tender documents should list drugs by their international Nonproprietary Name (INN), or Generic name • Procurement should be effected in the largest possible quantities in order to achieve economies of scale; this should apply to both centralized and decentralized systems x) Provide management support

20. PHARMACEUTICAL DISTRIBUTION PROCESS, RISKS AND PROPOSED SOLUTION • Pharmaceutical distribution: FACTS • Developing nations must depend on pharmaceuticals as the principal defense against debilitating diseases but access to medicine is hampered by poor distribution infrastructure • Distribution of pharmaceuticals within many developing countries is severely inadequate to meet the health care needs of large sectors of the population, particularly those persons living in rural areas. iii) The Third World consumes only 20% of the global supply of pharmaceuticals iv) Problems exist in the entire range of drug management: Ordering, receipt, storage, distribution, and re-supply iv) The distribution of pharmaceutical products should be carried out according GMP, GSP and GDP v) The quality of pharmaceutical products can be affected by a lack of adequate control over numerous activities which occur during the distribution process

21. Procurement Consumption Reporting Port Clearing Dispensing Receipt & Inspection Delivery Inventory Control Requisition Storage THE PHARMACEUTICAL DISTRIBUTION CYCLE

22. PHARMACEUTICAL DISTRIBUTION PROCESS, RISKS AND PROPOSED SOLUTION CONT’D • Risks in pharmaceutical distribution i) Personnel issues with relation to: • Receipts of the drugs, inspection, inventory control and stores management etc. • Adequate number of staff to work as store keepers, clerks, packers and drivers etc. ii) Inadequate space • Organization and Management structure in terms of managerial and technical personnel with resources and authority required to carryout their distribution duties. • Quality Management aspect of distribution system - adherence to policies of distribution regarding quality of the product

23. PHARMACEUTICAL DISTRIBUTION PROCESS, RISKS AND PROPOSED SOLUTIONS CONT’D …risks • Premises, warehousing and storage could be a challenge if does not uphold GSP as per the WHO guidelines • The type and conditions of vehicles and equipments used to transport pharmaceuticals • Security of pharmaceuticals in transit viii) Inaccessible road network increasing the risks of delaying the supply, loses in transit, theft and pilferage

24. PHARMACEUTICAL DISTRIBUTION PROCESS, RISKS AND PROPOSED SOLUTION CONT’D • Proposed Solutions • Government to be sensitized to support in developing road network for ease of access to the rural areas • Staff training in GSP and GDS in line with WHO guidelines • Managerial and organizational support in terms of required resources • Tracking system of vehicles used to distribute drugs to reduce cases of theft, vehicle highjack and other transport incidences v) Outsource or contracting out distribution function to improve efficiency and reduce costs

25. PHARMACEUTICAL DISTRIBUTION PROCESS, RISKS AND PROPOSED SOLUTION CONT’D …solutions • Good documentation practices - Written instructions and records should be available which document all activities relating to the distribution of pharmaceutical products, including all applicable receipts and issues. • Pharmaceutical distribution should ensure it is compliant to the demand list so that distribution is done as per the order list • Repackaging and relabeling of pharmaceutical products should only be performed by staff who are adequately trained on this and in accordance with GMP principles. • Put in place mechanisms to handle complaints from the customers / clients and ensure timely redress of the complaints x) Ensure rational drug use

26. 4. CONCLUSION Effective and efficient Pharmaceutical Supply Management Cycle (PSM) requires an understanding of the interdependence of each of the cycle stage. This will assist the management support team to work adequately across the spectrum of the PSM chain and ensure requisite staff and resources are appropriated accordingly for timely drug selection, quantification, procurement, storage / distribution and rational use of pharmaceuticals. GOOD GOVERNANCE IS KEY IN ALL THESE ACTIVITIES

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