A country’s pharmaceutical sector comprises three interrelated systems: the pharmaceutical supply system, the financing system by which the manufacturers and distributors of drugs are paid, and the information system that enables their exchange and utilization. Many studies on drug supply have focused only on the first of these systems. In the last few years, other studies have looked at prices, the financing of drugs and the information supplied by producers. This book analyses all three systems simultaneously and emphasizes their relationships. The circulation of money and information very directly influences the circulation of drugs. And acting on the financing or information systems can often improve access to drugs more effectively than acting on the pharmaceutical supply system. Integration of the three systems is indispensable to economic analysis.

The pharmaceutical supply system is the most straightforward. It runs from the manufacturer to the patient and passes through the following stages:

- procurement (purchase from manufacturers);
- distribution (routing through the pharmaceutical system);
- dispensing (delivery to patients);
- utilization (use of drugs).

Utilization is determined both by prescribers and by patients, who may self-prescribe and who are the ultimate consumers of drugs.

In addition to these stages, the following functions are habitually involved:

- selection (choice of the drugs to be procured and distributed);
- quantification (evaluation of the quantities required);
- quality control (verification of compliance with standards).

These functions are carried out during the stages of procurement and distribution.

The financing system is more complex to describe and analyse than the pharmaceutical supply system. Payment may take place at each stage of the pharmaceutical supply system; the intermediate stages (distribution and dispensing) may be financed in different ways; and the final payment may be made by different agents (patients, the community, health insurance or government).

The information system is still more complex since the nature of the information involved may vary considerably. From a basic economic point of view, the following may be distinguished:

Information regarding supply:

- availability of drugs (authorized drugs, drugs in stock);
- usefulness and efficacy of drugs (technical data);
- suppliers’ prices and conditions of payment.

Information regarding demand:

- drugs requested by prescribers and by patients;
- quantities required for procurement, distribution and prescription;
- quality of drugs; undesirable side-effects.

Information on the relationship between supply and demand:

- actual consumption in volume and in value;
- shortages;
- current prices.

The pharmaceutical supply system is the principal system. The financing and information systems must ensure that this principal system functions well.