Pharmaceutical Supply Strategies. (MDS-3: Managing Access to Medicines and Health Technologies, Chapter 8)
(2012; 21 pages)


The basic goals of national medicine policies and public sector pharmaceutical supply systems are to provide access to needed medicines and supplies, promote the rational use of medicines, and ensure the quality, safety, and efficacy of medicines. Various strategies exist to achieve these goals through different combinations of public and private involvement in the pharmaceutical management cycle. National systems vary with respect to public and private roles in financing, distribution, and dispensing of pharmaceuticals, ranging from fully public to fully private systems.

At least five alternatives have traditionally existed for supplying medicines and supplies to governmental and nongovernmental health services -

  • Central medical stores (CMS): Traditional public sector pharmaceutical supply system, in which medicines are procured and distributed by a centralized government unit.
  • Autonomous supply agency: An alternative to the CMS system, managed by an autonomous or semi autonomous pharmaceutical supply agency.
  • Direct delivery system: A decentralized, non-CMS approach in which medicines are delivered directly by suppliers to districts and major facilities. The government pharmaceutical procurement office selects the supplier and establishes the price for each item, but the government does not store and distribute medicines.
  • Primary distributor (or prime vendor) system: Another non-CMS system in which the government pharmaceutical procurement office establishes a contract with one or more primary distributors as well as separate contracts with pharmaceutical suppliers. The contracted primary distributor receives medicines from the suppliers and then stores and distributes them to districts and major facilities.
  • Primarily private supply: An approach used in some countries that allows private pharmacies in or near government health facilities to provide medicines for public-sector patients. With such an approach, measures are required to ensure equity of access for the poor, medically needy, and other target populations.

These systems vary considerably with respect to the role of the government, the role of the private sector, and incentives for efficiency. Mixed systems in which different categories of pharmaceuticals are supplied through different mechanisms are frequently seen, and countries that take advantage of the capacities in both the public and private sectors usually have systems that are more effective; they also tend to be more resistant to shock from disaster events.

In many countries, missions, charities, and other not-for profit, nongovernmental organizations (NGOs) provide an important share of health care. NGOs in some countries have established not-for-profit essential medicines supply agencies to provide high-quality, low-cost pharmaceuticals for their health facilities. Some of these have been very successful, but the model has not worked in all countries.

In most countries, the commercial sector is able to provide a range of services that can enhance public access to essential medicines. In general, this sector would potentially respond well to new opportunities for providing supply services; however, the private commercial sector is not always sufficiently well developed or motivated to provide critical supply services to the public sector and should not be seen as a cure-all remedy for solving problems with existing systems.

The commercial sector also plays a vital role in providing access to many people, especially in rural and underserved urban areas where retail drug outlets are the first stop to treat common illnesses. Because these outlets operate in a relatively uncontrolled environment, improving and monitoring the quality of products and services is challenging, and drug sellers generally lack qualifications or training in pharmaceutical management. Much work remains to be done to solve these problems, although strategies that engage the interests of shop owners, dispensers, the government, and the public have recently been developed and tested with some success. Chapter 32 covers drug seller initiatives.

In many countries - especially in countries that have been rolling out large-scale HIV/AIDS programs - the relative roles of the public and private sectors in pharmaceutical supply management are undergoing change in both the pharmaceutical sector and the overall health sector. Changes in public and private roles need to be designed to account for the planned magnitude of scale up and to promote accessibility to medicines and rational medicine use.

Perspectives on the role of government in health care vary from a solidarity, or social welfare, approach (which holds that the state should provide all health and other social services except when it is unable to do so) to a self-help, or market-economy, approach (which holds that the private market should provide most health services). This chapter does not argue for or against either approach but advocates that, for most countries, the best strategy is a balanced approach drawing on the strengths and capabilities of both public and private sectors.

This chapter provides an overview of systems and strategies for organizing pharmaceutical supply for public health services and issues related to health-sector reform, including the decentralization of pharmaceutical management functions. Issues and options related to meeting public health needs through the private pharmaceutical sector are also considered, including the potential contribution of private nonprofit essential medicines services. In the context of rapidly growing programs to treat critical diseases, such as HIV/AIDS, the chapter outlines approaches for addressing supply problems. Finally, the chapter summarizes different government roles, including periods of transition from one model of service delivery to another.

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