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part i policy and economic issues part ii pharmaceutical management part iii management support systems policy and legal framework 1 toward sustainable access to medicines 2 historical and institutional perspectives ...

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                     Part I:  Policy and economic issues                                      Part II:  Pharmaceutical management          Part III:  Management support systems
                     Policy and legal framework
                         1  Toward sustainable access to medicines
                         2  Historical and institutional perspectives
                         3  Intellectual property and access to medicines
                         4  National medicine policy
                         5  Traditional and complementary medicine policy
                         6  Pharmaceutical legislation and regulation
                         7  Pharmaceutical production policy
                         8  Pharmaceutical supply strategies
                     Financing and sustainability
                     chapter 8
                     Pharmaceutical supply strategies
                     Summary  8.2                                                                      illustrations
                     8.1     Systems for pharmaceutical financing and                                  Figure 8-1       Supply chain management framework    8.4
                             distribution  8.3                                                         Figure 8-2       Checklist for evaluating an autonomous essential 
                     8.2     Perspectives on the role of the state in health                                            medicines supply agency    8.9
                             care  8.5                                                                 Figure 8-3       Public- and private-sector roles in pharmaceutical 
                                                                                                                        supply  8.12
                     8.3     Basic pharmaceutical supply systems    8.7                                Table 8-1        Systems for financing and distributing 
                             Central medical stores  •  Autonomous supply                                               medicines  8.3
                             agency  •  Direct delivery system  •  Primary distributor                 Table 8-2        Comparison of basic pharmaceutical supply 
                             system  •  Primarily private system                                                        systems  8.6 
                     8.4     Contracting for pharmaceutical supply                                     country studies
                             services  8.13                                                            CS 8-1           An autonomous medical supply service: Medical 
                     8.5     Comparison of basic supply systems    8.13                                                 Stores Department in Tanzania    8.8
                     8.6     Vertical supply systems              8.14                                 CS 8-2           Developing a prime vendor pharmaceutical supply 
                     8.7     Meeting health needs through private                                                       system for the Tanzanian mission sector              8.11
                             channels  8.14                                                            CS 8-3           NGO essential medicines services in East 
                             Not-for-profit pharmaceutical services  •  For-profit                                      Africa  8.15
                             pharmaceutical services: retail pharmacies and drug sellers               CS 8-4           Decentralization’s effect on the supply of essential 
                     8.8     Health systems strengthening, decentralization, and                                        medicines in Indonesia    8.17
                             pharmaceutical supply management    8.16
                     8.9     Analyzing options for supplying essential 
                             medicines  8.18
                     8.10  Implementing sustainable changes in pharmaceutical 
                             supply systems  8.18
                     References and further readings                  8.19
                     Assessment guide  8.20
                     copyright   management sciences for health 2012
                                 ©
                8.2       POlICy AND lEGAl FRAMEwORk
                              suMMary
                              The basic goals of national medicine policies and public-                            that take advantage of the capacities in both the public 
                              sector pharmaceutical supply systems are to provide                                  and private sectors usually have systems that are more 
                              access to needed medicines and supplies, promote the                                 effective; they also tend to be more resistant to shock 
                              rational use of medicines, and ensure the quality, safety,                           from disaster events.
                              and efficacy of medicines. Various strategies exist to                               In many countries, missions, charities, and other not-for-
                              achieve these goals through different combinations of                                profit, nongovernmental organizations (NGOs) provide 
                              public and private involvement in the pharmaceutical                                 an important share of health care. NGOs in some coun-
                              management cycle. National systems vary with respect                                 tries have established not-for-profit essential medicines 
                              to public and private roles in financing, distribution, and                          supply agencies to provide high-quality, low-cost phar-
                              dispensing of pharmaceuticals, ranging from fully public                             maceuticals for their health facilities. Some of these have 
                              to fully private systems.                                                            been very successful, but the model has not worked in all 
                              At least five alternatives have traditionally existed for                            countries.
                              supplying medicines and supplies to governmental and                                 In most countries, the commercial sector is able to pro-
                              nongovernmental health services—                                                     vide a range of services that can enhance public access to 
                                 •	 Central medical stores (CMS): Traditional public-                              essential medicines. In general, this sector would poten-
                                    sector pharmaceutical supply system, in which                                  tially respond well to new opportunities for providing 
                                    medicin     es are procured and distributed by a central-                      supply services; however, the private commercial sector 
                                    ized government unit.                                                          is not always sufficiently well developed or motivated to 
                                 •	 Autonomous supply agency: An alternative to the                                provide critical supply services to the public sector and 
                                    CMS system, managed by an autonomous or semi-                                  should not be seen as a cure-all remedy for solving prob-
                                    autonomous pharmaceutical supply agency.                                       lems with existing systems. 
                                 •	 Direct delivery system: A decentralized, non-CMS                               The commercial sector also plays a vital role in pro-
                                    approach in which medicines are delivered directly                             viding access to many people, especially in rural and 
                                    by suppliers to districts and major facilities. The gov-                       underserved urban areas where retail drug outlets 
                                    ernment pharmaceutical procurement office selects                              are the first stop to treat common illnesses. Because 
                                    the supplier and establishes the price for each item,                          these outlets operate in a relatively uncontrolled envi-
                                    but the government does not store and distribute                               ronment, improving and monitoring the quality of 
                                    medicines.                                                                     products and services is challenging, and drug sellers 
                                 •	 Primary distributor (or prime vendor) system:                                  generally lack qualifications or training in pharmaceu-
                                    Another non-CMS system in which the govern-                                    tical management. Much work remains to be done to 
                                    ment pharmaceutical procurement office establishes                             solve these problems, although strategies that engage 
                                    a contract with one or more primary distributors                               the interests of shop owners, dispensers, the govern-
                                    as well as separate contracts with pharmaceutical                              ment, and the public have recently been developed and 
                                    suppliers. The contracted primary distributor                                  tested with some success. Chapter 32 covers drug seller 
                                    receives medicines from the suppliers and then                                 initiatives.
                                    stores and distributes them to districts and major 
                                    facilities.                                                                    In many countries—especially in countries that have 
                                 •	 Primarily private supply: An approach used in some                             been rolling out large-scale HIV/AIDS programs—the 
                                    countries that allows private pharmacies in or near                            relative roles of the public and private sectors in phar-
                                    government health facilities to provide medicines                              maceutical supply management are undergoing change 
                                    for public-sector patients. with such an approach,                             in both the pharmaceutical sector and the overall health 
                                    measures are required to ensure equity of access for                           sector. Changes in public and private roles need to be 
                                    the poor, medically needy, and other target popula-                            designed to account for the planned magnitude of scale-
                                    tions.                                                                         up and to promote accessibility to medicines and rational 
                              These systems vary considerably with respect to the role                             medicine use.
                              of the government, the role of the private sector, and                               Perspectives on the role of government in health care 
                              incentives for efficiency. Mixed systems in which differ-                            vary from a solidarity, or social welfare, approach (which 
                              ent categories of pharmaceuticals are supplied through                               holds that the state should provide all health and other 
                              different mechanisms are frequently seen, and countries                              social services except when it is unable to do so) to a self-
                                                                                                          8  /  Pharmaceutical supply strategies         8.3
                   help, or market-economy, approach (which holds that the          management functions. Issues and options related to 
                   private market should provide most health services). This        meeting public health needs through the private pharma-
                   chapter does not argue for or against either approach but        ceutical sector are also considered, including the poten-
                   advocates that, for most countries, the best strategy is a       tial contribution of private nonprofit essential medicines 
                   balanced approach drawing on the strengths and capa-             services. In the context of rapidly growing programs to 
                   bilities of both public and private sectors.                     treat critical diseases, such as HIV/AIDS, the chapter 
                   This chapter provides an overview of systems and strate-         outlines approaches for addressing supply problems. 
                   gies for organizing pharmaceutical supply for public             Finally, the chapter summarizes different government 
                   health services and issues related to health-sector reform,      roles, including periods of transition from one model of 
                   including the decentralization of pharmaceutical                 service delivery to another.
                 8.1    Systems for pharmaceutical financing                             ums can be used to reimburse pharmacies or patients 
                        and distribution                                                 themselves for medicines that are provided through 
                                                                                         private pharmacies. Australia, many countries in 
                 Approaches to pharmaceutical supply can be described in                 western Europe, and North America have followed 
                 terms of public and private roles in financing, wholesale dis-          this approach in recent years.
                 tribution, and retail distribution. The six main approaches          4.  Private financing and public supply: Government 
                 range from fully public to fully private, as summarized in              medical stores or state-owned wholesalers may supply 
                 Table 8-1.                                                              medicines that are dispensed by government health 
                                                                                         facilities but paid for (in whole or in part) by patient 
                   1.  Fully public: The classic public system follows a CMS             fees. Many former socialist economies followed this 
                      approach, in which a centralized government unit                   approach. In the 1990s, it was being used by China 
                      finances, procures, and distributes medicines. The state           and by government health services in Asia, Africa, and 
                      is the owner, funder, and manager of the entire supply             latin America that implemented user fees for pharma-
                      system. Many countries in Africa, Asia, Europe, and                ceuticals but continued to operate government medical 
                      latin America have made this their standard strategy.              stores. China specifically has shifted its health financ-
                   2.  Private supply to government health services: Through             ing scheme from a socialized system to a market-
                      direct delivery or prime distributor contracts                     oriented one. Some countries, such as Uganda, have 
                      (described later in this chapter), private channels                eliminated user fees and increased public spending, 
                      are used to provide publicly funded medicines to                   whereas others are working toward instituting social 
                      government-operated health facilities. Although most               health insurance systems in place of user fees (wHO 
                      common in North America, where it is known as a                    2003; wHO/wPRO n.d.).
                      prime vendor system, this approach can also be found            5.  State wholesale monopoly: At least through the 1980s, 
                      in Africa, Asia, and latin America.                                in parts of Europe and Africa, pharmaceuticals were 
                   3.  Social health insurance systems: Public funding from              imported and distributed by a state monopoly that 
                      central budgets and social health insurance premi-                 supplied private pharmacies as well as government 
                 Table 8-1      Systems for financing and distributing medicines
                                                                                                   Distribution
                  Financing                                                    Wholesale                                    retail
                  Public
                  Fully public                                                   Public                                     Public
                  Private supply to government health services                   Private
                  Social health insurance systems                                Private                                   Private
                  Private
                  Private financing and public supply                            Public                                     Public
                  State wholesale monopoly                                       Public                                    Private
                  Fully private                                                  Private                                   Private
            8.4     POlICy AND lEGAl FRAMEwORk
                    Figure 8–1     Supply chain management framework
                     Supply chain
                    Levels                      Private sector                        Public sector                         Partners
                    International                 Multinational                        International procurement              Donors
                                                  suppliers                            agencies
                                                  Local                                                                       Third-party payers
                                                  manufacturers                        Government                             Regulatory agency
                    National                                                           supply services
                                                                                                                              Academic institutions
                                                  Local 
                                                  wholesalers                                                                 Professional associations
                    Regional                     Distributors                          Regional facilities
                    District                      Shops,                               District facilities
                                                  pharmacies
                    Community                     Private                              Primary care facilities                NGO and community 
                                                  prescribers                                                                 organizations
                                                                                                                             Key
                                                                              Users                                               Primary product flow
                                                                                                                                  Alternative flow
                                                                                                                                  Information flow
                      Source: CPM/MSH 2011.
                         health services in some cases. Although this model has         these programs, with a particular emphasis on pharmaceu-
                         historical significance, it is rarely seen now.                ticals. More information on these donor initiatives can be 
                      6.  Fully private: Patients pay the entire cost of medicines      found in Chapters 2 and 14.
                         and purchase them from private retail pharmacies and             Public financing includes government budgets (central, 
                         drug sellers, which now exist in nearly every country          regional, and local) and compulsory social health insur-
                         in the world and account in some cases for a large             ance programs. Private financing includes out-of-pocket 
                         percentage of pharmaceutical distribution. Outside             payments by individuals and households, private health 
                         the market economies that have high levels of social           insurance, community medicine schemes, cooperatives, 
                         and private health insurance, this approach is also the        employers, and financing through other nongovernmental 
                         major source of prescription medicines in many coun-           entities. Chapter 11 includes more information on financ-
                         tries, including many of those that nominally provide          ing, and Chapter 12 covers pharmaceutical benefits in 
                         free pharmaceutical services.                                  insurance.
                                                                                          Public distribution includes wholesale distribution and 
                       The context of financing public health in resource-limited       retail dispensing by government-managed pharmaceutical 
                    countries has changed because of global funding initia-             supply and health services as well as distribution through 
                    tives to combat specific diseases—primarily HIV/AIDS  state-owned enterprises (state corporations). Private distri-
                    and malaria. The Global Fund to Fight AIDS, Tuberculosis            bution includes private for-profit wholesalers, retailers, and 
                    and Malaria; the Global Drug Facility; the U.S. President’s         nonprofit essential medicines supply services. Figure 8–1 
                    Emergency Plan for AIDS Relief; and others are dramati-             illustrates a pharmaceutical supply chain framework featur-
                    cally changing the public health financing paradigm for             ing the public and private sectors and possible partners.
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...Part i policy and economic issues ii pharmaceutical management iii support systems legal framework toward sustainable access to medicines historical institutional perspectives intellectual property national medicine traditional complementary legislation regulation production supply strategies financing sustainability chapter summary illustrations for figure chain distribution checklist evaluating an autonomous essential on the role of state in health agency care public private sector roles basic table distributing central medical stores direct delivery system primary distributor comparison primarily contracting country studies services cs service department tanzania vertical developing a prime vendor meeting needs through tanzanian mission channels ngo east not profit africa retail pharmacies drug sellers decentralization s effect strengthening indonesia analyzing options supplying implementing changes references further readings assessment guide copyright sciences goals policies that ...

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