ABC analysis: a tool of effectively controlling pharmaceutical expenditure in Greek NHS hospitals

Analysis of pharmaceutical inventory management based on ABC-VEN analysis in Rwanda: a case study of Nyamagabe district

BACKGROUND

Pharmaceuticals account for a large portion of healthcare spending in healthcare organizations. Their effective inventory management is required to match the cost of stocks with the customer demand and avoid shortage of supplies at any health facility level. This study aimed to analyze pharmaceuticals' inventory management using ABC-VEN analysis.

METHODS

The study was conducted at Rwanda Medical Supply (RMS) Ltd, Nyamagabe Branch for products distributed to health facilities in Nyamagabe District catchment area from the financial years 2017-2018 to 2019-2020. It consisted of a descriptive retrospective study of 457 items. The latter are generic essential medicines distributed to public health facilities during the study period. Products were arranged according to a descending order of importance, and we performed a breakdown of products according to the Pareto Principle. Following an ABC analysis of distribution data for such drugs billed to healthcare facilities, a VEN analysis was performed to identify high-value vital products that require more attention.

RESULTS

During the ABC analysis, 76 products were classified in group A. These accounted for 19.84% and had a value of 74.91% of the total cost of all products. Group B included 116 products, representing 30.29% with a value of 20% of the total cost, while Group C had 191 products, representing 49.87% with a value of only 5.09% of the total cost. During the VEN analysis, 202 products (44.20%) were classified as vital, 231 (50.54%) as essential, and 24 products (75.26%) as non-vital. The analysis with ABC-VEN resulted in Class I representing 55.80% of all medicines that cost 87.88% of all total cost, Class II representing 40.70% with a total cost of 11.82%, and Class III representing 3.50% with a cost of 0.3%.

CONCLUSIONS

This study results show that inventory management of vital and expensive products, such as antibiotics, antihypertensive pharmaceuticals, consumables, and massive solutions would be carefully monitored to prevent a shortage of such products at health facility levels. The ABC-VEN analysis is one of the practical and affordable method to achieve their optimized supply chain.

5-year inventory management of drug products using ABC-VEN analysis in the pharmacy store of a specialized public hospital in Vietnam

In developing economies, expenses of healthcare delivery have risen disproportionally to the monetary backing supplied by the federal government. However, issues relating to inventory control alongside regulating the pharmaceutical market have been recognized. We conducted a systematic categorization based on ABC and VEN analysis for available drugs at Can Tho Dermatological Hospital (CTDH) from 2016–2020, thereby making evidence-based recommendations for public authorities to attain rationality in monitoring the stock supply network. Results revealed that ratio of Category I with the highest cost and importance to the annual revenues was barely 88%. Meanwhile, fractions of Category II and III to the overall expenses were 5–10% and below 5%, respectively. Given scarce funds, it is crucial that Essential drugs be utilized effectively. Thanks to ABC-VEN integrated matrix, we uncovered medicines for which significant savings could be achieved. This method has proven to be a powerful tool in decision-making for importation and stockholding.

Drug Procurement Analysis of the Ten Biggest Diseases at the Barru District Public Health Center Using the ABC Method

Management of pharmaceutical preparations at the public health center aims to ensure theavailability of drugs whenever needed, in sufficient quantities and guaranteed quality, to support qualityservices at the public health center so that pharmaceutical services can take place effectively andefficiently. In this study, an analysis of pharmaceutical preparations from the 10 biggest diseases at theBarru District public health center was conducted using the ABC method. This study aims to determinethe ABC value of medicines at the Barru District public health center based on use value, investmentvalue and critical index value in 2020 and to determine which medicines are a priority in the procurementof pharmaceutical preparations at the Barru District public health center.This research is a quantitative research with a descriptive observational study design to obtainan overview of drug procurement at the Barru District public health center in 2020. Data collection wascarried out by reviewing documents with purposive sampling technique on quantitative retrospectivedata in the form of the number of medicines, budgets and medicines use data at Barru District publichealth center that listed on 2020 Health Center LPLPO.The results showed that the analysis of the critical index value of pharmaceutical preparationsat the Barru District public health center resulted in an average percentage of preparations that wereincluded in the ACIV group as much as 16.42%, the BCIV group as much as 16.23% and the CCIV groupas much as 67.35%. There are 5 pharmaceutical preparations that are a priority for the procurement ofpharmaceutical preparations at the Barru District public health center with a total investment value ofRp. 322,838,650.00.

A systematic review of pharmaceutical price mark-up practice and its implementation

Pharmaceutical products, apart from being essential for medical treatment, are of high value and heavily regulated to ensure the prices are controlled. This systematic review was conducted to identify pharmaceutical pricing mark-up control measures, specifically in the wholesale and retail sectors. The search method comprised the following databases: PubMed, Science Direct, Springer Link, ProQuest, and EBSCOhost and Google Scholar. The results were filtered systematically from the inception of the aforementioned databases until 23 April 2021. Eligible studies were those focusing on the implementation of pharmaceutical pricing strategies that involve a) mark-ups of medicine, and b) pharmaceutical cost control measures. A total of 13 studies were included in this review: seven covered European countries, four covered Asian countries, one covered the USA and one covered Canada. The main points of discussion in the qualitative synthesis were the implementation of medicine mark-ups, price mark-up regulatory strategies and the outcomes of these regulatory strategies. Our findings suggest that Western countries have a lower mark-up margin, around 4% to 25% of the original purchased price, compared to Asian countries, up to 50%.

Clinical and Financial Implications of Medicine Consumption Patterns at a Leading Referral Hospital in Kenya to Guide Future Planning of Care

Background: Medicines can constitute up to 70% of total health care budgets in developing countries as well as considerable expenditure in hospitals. Inventory management techniques can assist with managing resources efficiently. In Kenyatta National Hospital (KNH), a leading hospital in Kenya, over 30% of expenditure is currently allocated to medicines, and this needs to be optimally managed.

Objective: To investigate drug consumption patterns, their costs and morbidity patterns at KNH in recent years.

Methodology: Cross-sectional retrospective record review. Inventory control techniques, ABC (Always, Better, and Control), VEN (Vital, Essential, and Non-essential) and ABC-VEN matrix analyses were used to study drug expenditure patterns. Morbidity data was extracted from the Medical Records.

Results: Out of an average of 811 medicine types procured annually (ATC 5), 80% were formulary drugs and 20% were non-formulary. Class A medicines constituted 13.2–14.2% of different medicines procured each year but accounted for an average of 80% of total annual drug expenditure. Class B medicines constituted 15.9–17% of all the drugs procured yearly but accounted for 15% of the annual expenditure, whilst Class C medicines constituted 70% of total medicines procured but only 5% of the total expenditure. Vital and Essential medicines consumed the highest percentage of drug expenditure. ABC-VEN categorization showed that an average of 31% of medicine types consumed an average of 85% of total drug expenditure. Therapeutic category and Morbidity patterns analysis showed a mismatch between drug expenditure and morbidity patterns in over 85% of the categories.

Conclusion: Class A medicines are few but consume the largest proportion of hospital drug expenditure. Vital and essential items account for the highest drug expenditure, and need to be carefully managed. ABC-VEN categorization identified medicines where major savings could potentially be made helped by Therapeutic category and Morbidity pattern analysis. There was a high percentage of non-formulary items, which needs to be addressed. Inventory control techniques should be applied routinely to optimize medicine use within available budgets especially in low and middle income countries.