NTA Level 5 • Semester 1 • PST05101

Introduction to Procurement of Medicines and Medical Supplies

Medicines and Medical Supplies Management • Source Session/Topic 8

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Session 8: Introduction to Procurement of Medicines and Medical Supplies

Total Session Time: 120 minutes

Prerequisites

• None

Learning Tasks

By the end of this session students are expected to be able to:

a) Define terms used in procurement of medicines and medical supplies

b) List objectives of good procurement

c) List operation principles for good procurement

d) Mention good procurement practices for medicines and medical supplies

Resources Needed:

• Flip charts, marker pens, and masking tape

• Black/white board and chalk/whiteboard markers

SESSION OVERVIEW

SESSION CONTENTS

STEP 1: Presentation of Session Title and Learning Tasks (5 minutes)

READ or ASK students to read the learning tasks and clarify

ASK students if they have any questions before continuing.

STEP 2: Definitions of Terms Used in Procurement of Medicines and Medical

Supplies (10 minutes)

Procurement:

• Is the acquisition of medicines and medical supplies, from an external

source

• It requires that the goods, services or works are appropriate and they

are procured at the best possible cost to meet the needs of the acquirer

in terms of quality, quantity, time and location.

Procurement Period (PP)

Indicates the time between one order and the next regular order

Lead Time (LT)

The period from the preparation of order to the arrival of products to

the storage facility

Procurement planning

• Procurement planning is the process of deciding what to buy, when and

from what source. During the procurement planning process the

procurement method is assigned and the expectations for fulfillment of

procurement requirements determined

Bulk purchasing

Procurement of pharmaceuticals in large quantities in order to obtain

lower unit prices

Generally done in a bid system in which all medicines are identified

by their generic (INN) name.

Direct procurement

• The simplest but usually most expensive method of procurement, in

which an item is purchased from a single supplier at its quoted price.

Supplier

• Any individual or company that agrees to provide medications,

regardless of whether that party is the manufacturer

STEP 3: Objectives of Good Procurement (25 minutes)

|Activity: Brainstorming (5 minutes) |

| |

|Ask students to brainstorm on the following question: |

| |

|What are the objectives of good procurement? |

| |

|ALLOW few students to respond |

| |

|WRITE their responses on the flip chart/ board |

| |

|CLARIFY and SUMMARISE by using the content below |

The following are the objectives of good procurement:

• To eek to manage the buyer-seller relationship in a transparent and

ethical manner

• To procure the right medicines in the right quantities

• To obtain the lowest practical purchase price

• To ensure that all pharmaceuticals procured meet recognized

standards of quality

• To arrange timely delivery to avoid shortages and stockouts

• To ensure supplier reliability with respect to service and quality

• To set the purchasing schedule, formulas for order quantities, and

safety stock levels to achieve the lowest total cost of purchasing

at each level of the system

• To achieve these objectives in the most efficient manner possible

STEP 4: Operation Principles for Good Procurement (20 minutes)

|Activity: Buzzing (5 minutes) |

| |

|ASK students to pair up and buzz on the following question for 3 |

|minutes |

| |

|What are the operation principles of good procurement? |

| |

|ALLOW few pairs to respond on the question and let other pairs add on |

|points not mentioned WRITE their response on the flip chart/board |

| |

|CLARIFY and SUMMARIZE by using the content below |

• Division of responsibilities among different offices, committees and

individual in respect to appropriate expertise.

• Transparency in procurement procedures by having formal written procedure

throughout the procedure.

• Planning and regular monitoring of procurement process.

STEP 5: Good Procurement Practices for Medicines and Medical Supplies

(40 minutes)

|Activity: Small Group Discussion ( 15 minutes) |

| |

|DIVIDE students into manageable groups |

| |

|ASK students to discuss in groups on the following question: |

| |

|What are the good procurement practices for medicines and medical |

|supplies? |

| |

|ALLOW students to discuss for 15 minutes |

| |

|ALLOW each groups to present |

| |

|CLARIFY and SUMMARIZE by using the contents below |

The following are good procurement practices for medicines and medical

supplies;

• Ordering medicines by generic name as most of the time are cheaper

• Limiting procurement to products on essential medicine list or formulary

list (can’t purchase all drugs available in the market)

• Making bulk purchases i.e. large procurement volume makes favorable

prices and contract terms possible.

• Carrying out formal supplier qualification and monitoring i.e. suppliers

should be pre or post qualified through a process that considers product

quality, service reliability (and delivery time) and financial viability.

• Using a competitive bidding process i.e. inducing supplier competition is

a key to detaining favorable pricing.

• Committing to a sole source i.e. except when each health facility

purchases drug independently, all public pharmaceutical procurement

systems are group purchasing programs (eg. MSD Tanzania). The sole-source

commitment must be monitored and enforced.

• Ordering quantities based on reliable estimate of actual need i.e. actual

estimates of medicines requirements are needed to avoid stockouts of some

medicines and overstock of others.

• Making timely payments and using good financial management i.e. prompt,

reliable payment can have as great an influence as bringing down medicine

prices as bulk discounts. Reliable drug fund can help to achieve this.

Efficient financial management systems are especially important if have

limited funds.

• Separating key functions i.e. there are several key procurement functions

which require different expertise. These functions should be handled by

separate individual units, committees or sub-committee e.g. of key

functions: selection, quantification, preparation of specifications etc.

without separations of functions, the process is susceptible to influence

by special interests.

• Implementing a product quality assurance i.e. an effective procurement

program must ensure that the medicines purchased and distributed are of

high quality according to international standard.

• Ensuring transparency and following written procedures i.e. the

appearance and reality of fairness is an essential to attract the best

suppliers and the best prices. This can be achieved by maintaining

transparent tender procedures.

• Carrying out an annual audit with published results i.e. at least once a

year, the procurement unit should undergo an audit, which is a formal

examination of accounting books and records by accountants who

specialized audit procedures.

• Reporting regularly on performance i.e. introduction of standard

indicators for monitoring performance and program implementation is a

significant advance in drug management.

STEP 6: Key Points (10 minutes)

• Procurement being acquisition of medicines and medical supplies requires

that the goods, services or works are appropriate and they are procured

at the best possible cost to meet the needs of the acquirer in terms of

quality, quantity, time and location.

• Among objectives of good procurement includes; seek to manage the buyer-

seller relationship in a transparent and ethical manner, procure the

right medicines in the right quantities, obtain the lowest practical

purchase price, ensure that all pharmaceuticals procured meet recognized

standards of quality and arrange timely delivery to avoid shortages and

stock-outs

• Operation principles of good procurement includes Division of

responsibilities among different offices, committees and individual in

respect to appropriate expertise. Transparency in procurement procedures;

Formal written procedure throughout the procedure. But also Planning and

regular monitoring of procurement process.

• It is very important to adhere to good procurement practices for

medicines and medical supplies; of which are several.

STEP 7: Evaluation (10 minutes)

• What is the definition of the following terms?

o Procurement

o Bulk purchasing

o Direct procurement

o Procurement period

o Lead time

• What are the objectives of good procurement?

• What are the operation principles for good procurement?

• What are the good procurement practices for medicines and medical

supplies?

References

MSH and WHO (2012) Managing Access to Medicines and Health Technology,

3rd Edition. Kumarian Press

World Health Organization (WHO), Regional Office for Africa

Brazzaville 2004, Management of Drugs at Health Centre Level Training

Manual.

United Republic of Tanzania Ministry of Health and Social Welfare,

Strategy for Development and Implementation of an Integrated Logistics

System for Essential Health Commodities: Government Printers, Dar es

Salaam

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