¹ This glossary is taken from chapter 31, ‘Promoting rational prescribing’ in Management Sciences for Health, Managing Drug Supply, 2nd edn, 1997. Kumarian Press, West Hartford, CT, USA.

ABC analysis: Classification of inventory items into three categories (A, B and C) according to the value of their annual usage, which is used for analysing drug consumption and utilization, comparing actual versus planned purchases, justifying procurement budgets, guiding procurement patterns, and setting priorities for stock management.

ABC value analysis: Method by which medicines are divided, according to their annual usage (unit cost times annual consumption), into class A items (the 10-20% of items that account for 75-80% of the funds spent), class B items (with intermediate usage rates), and class C items (the vast majority of items with low individual usage, the total of which accounts for 5-10% of the funds spent). ABC analysis can be used to give priority to class A items in procurement, inventory control and port clearing.

Active ingredient: That portion of a medicine (drug) that has therapeutic properties.

Adherence to treatment (also compliance): The degree to which patients adhere to medical advice and take medicines as directed. Adherence depends not only on acceptance of information about the health threat itself but also on the practitioner’s ability to persuade the patient that the treatment is worthwhile and on the patient’s perception of the practitioner’s credibility, empathy, interest and concern.

Basic unit: The smallest unit in which a medicine can be conveniently dispensed or administered. It is used in quantification, reorder formulas, and comparison of prices of different-sized bottles or vials. Typical basic units are tablet or capsule, mL (for liquids), and gram (for ointments and creams).

Batch: The quantity of a medicine produced in one production run.

Bioavailability: The rate and extent of availability of an active ingredient from a dosage form as measured by the concentration/time curve in the systemic circulation or its excretion in the urine.

Branded generics: Generic (off-patent) pharmaceutical products marketed under brand names.

Clinical pharmacist: An individual trained in pharmacy, usually at the bachelor’s degree level, who has had specialized training in the uses, side-effects, contraindications and dosages of medications for human use.

Clinical pharmacologist: A physician who has had specialized training in the uses, side-effects, warning and dosages of medications for human use.

Co-insurance: Cost control measure in insurance schemes in which the member pays a specified percentage of the cost - for example, 25% for drugs used in serious and chronic illnesses, 50% for most other pharmaceuticals, and 75% for symptomatic treatment for minor illnesses.

Collection system: Drug distribution system in which the health facilities are responsible for providing transport of supplies from the warehouse to the health facility. Compare delivery system.

Community drug scheme: A form of revolving drug fund that is managed at the community level and often has broader objectives, such as health education, provision of preventive services, or financing of salaries, medical supplies or other costs, in addition to the financing of medicines.

Compound: To mix together the ingredients of a prescription or drug formula. Generally refers to a manual process performed for individual orders by a dispenser or pharmacist.

Consumption: The rate at which items are issued to clients or patients. This is also called demand (which is, in strict terms, the rate of requests or orders). Consumption is usually measured in terms of units consumed within a specific period.

Copayment: Cost control measure in insurance schemes in which the member pays a set charge per item received; copayment may be lower for generic drugs, higher for brand-name drugs.

Course-of-therapy prepackaging: Prepackaging of medicines in sealed plastic bags, each bag containing a complete course of treatment for that medicine, as established by standard treatment norms. The package usually contains a complete label with instructions for use.

Deductible: Payment of a specified initial amount by an insured person before services are covered; usually a set amount per quarter or per year.

Delegation: The assignment by a manager of an activity, task, defined scope of authority, or responsibility to a staff member under the manager’s supervision.

Delivery system: Drug distribution system in which the warehouse is responsible for providing transport of supplies from the warehouse to the health facilities. Compare collection system.

Disintegration: The breaking up of a tablet or capsule into granules or aggregates in an aqueous fluid.

Dispense: To prepare and distribute to a patient a course of therapy on the basis of a prescription.

Dispenser: A general term for anyone who dispenses medicines. Also specifically used to mean an individual who is not a graduate pharmacist but is trained to dispense medications, maintain stock records and assist in procurement activities.

Dissolution: The breaking down of fine particles into molecules or ions homogeneously dispersed in an aqueous fluid.

Distribution system: A system of administrative procedures, transport facilities, storage facilities and user facilities through which supplies move from a central point to the user facilities.

Drug: Any substance in a pharmaceutical product that is used to modify or explore physiological systems or pathological states for the benefit of the recipient. In this manual the words ‘drug’ and ‘medicine’ are used interchangeably.

Drug product: A unique combination of drugs(s), strength, and dosage form (for example, ampicillin 500 mg capsule).

Drug use: The process of diagnosis, prescribing, labelling, packaging, and dispensing and of adherence to drug treatment by patients.

Drug use evaluation: A system of ongoing, systematic, criteria-based evaluation of drug use that will help ensure that appropriate medicine use (at the individual patient level) is provided. It is the same as drug utilization review.

Efficacy: The ability of a drug to produce the purported effect, as determined by scientific methods.

Excipient: An inert substance used to give a pharmaceutical preparation a suitable form or consistency.

Exemption: A release from payment of fees for specific population groups or disease or drug types, employed in many revolving drug fund schemes to promote access to services.

Expiry date: The date appearing on a pharmaceutical product and established by the manufacturer, beyond which the manufacturer will not guarantee the potency, purity, uniformity or bioavailability of the product.

Evaluation: A periodic assessment of progress toward achieving long-term objectives and goals. Monitoring and evaluation are the third phase in the management cycle.

First-expiry/first-out procedure (FEFO): A method of inventory management in which products with the earliest expiry date are the first products issued, regardless of the order in which they are received. This method is more demanding than FIFO (see below) but should be used for short-dated products such as vaccines.

First-in/first-out procedure (FIFO): A method of inventory management in which the first products received are the first products issued. This methods generally minimizes the chance of drug expiration.

Formulary list: A list of medicines approved for use in a specific health-care setting.

Formulary manual: A manual containing clinically oriented summary pharmacological information about a selected number of medicines. The manual may also include administrative and regulatory information pertaining to medicine prescribing and dispensing.

Formulary system: The principles, criteria, procedures, and resources for developing, updating and promoting the formulary (essential medicines) list.

Generic name: The approved or nonproprietary name of a drug. It is generally the international nonproprietary name given by WHO.

Generic pharmaceutical products: Products marketed by any producer under nonpropietary or approved names.

Generic substitution: Dispensing of a product that is generically equivalent to the prescribed product, with the same active ingredients in the same dosage form, and identical in strength, concentration and route of administration.

GMP (good manufacturing practices): Performance standards for pharmaceutical manufacturers established by WHO and many national governments; they include criteria for personnel, facilities, equipment, materials, manufacturing operations, labelling, packaging, quality control and, in most cases, stability testing.

Goal: The general aim toward which the organization or programme is striving.

Health insurance: A financing scheme characterized by risk sharing in which regular payments of premiums are made by or on behalf of members (the insured). The insurer pays the cost or a set portion of the cost for covered health services.

Implementation: The second step in the management cycle; the process of putting a plan into action by organizing and directing the work. It involves managing people, money, information and other resources to achieve intended results.

Indicator: Criterion used to measure changes, directly or indirectly, and to assess the extent to which the targets and objectives of a programme or project are being attained. Indicators should meet the criteria of clarity, usefulness, measurability, reliability, validity and acceptance by key stakeholders.

Indicator drug: One of a small number of representative drugs, also known as tracer or index drugs, selected to be used with performance indicators to assess the performance of a drug supply system.

Information service: The system of records kept at offices, storage facilities and clinical facilities; forms that are used to communicate supply needs, consumption data, and other information about the system, reports that summarize that data from records and forms for planning and evaluation purposes, and procedures that coordinate the use and flow of these documents.

Inventory: The total stock kept on hand at any storage point to protect against uncertainty, permit bulk purchasing, minimize waiting time, increase transportation efficiency and buffer against seasonal fluctuations.

Inventory control: The function of supply management that aims to provide sufficient stocks of medicines at the lowest costs possible.

Irrational prescribing: Prescribing that does not conform to good standards of treatment - for example, extravagant prescribing, overprescribing, incorrect prescribing, multiple prescribing, or underprescribing of medication.

Issue unit: The quantity or size of each item counted as one inventory issue unit in the stock records. For example, in some supply systems, the unit for tetracycline capsules might be one bottle of 100 capsules; in others it might be one capsule. This is not necessarily the same as the basic unit or comparison unit, although they may be the same.

Item: A unique product for inventory purposes. In drug supply, an important issue is whether generic equivalent items are treated as the same item or whether different brands of the same generic product are treated as different items. The item is sometimes called a stock-keeping unit (SKU), which is not the same as an issue unit.

Labelling: Placing written or symbolic instruction on the immediate container in which drugs are dispensed.

Lead time: The time interval needed to complete the procurement cycle. It begins at the time the need for new stock is recognized and ends when that stock is received and available for issue.

Managed care: Insurance systems in which the insurer plays an active role in overseeing the utilization and quality of service, for example, through health maintenance organizations (HMOs), preferred provider organizations (PPOs) and managed indemnity insurance.

Management cycle: The process consisting of the three interconnected functions of planning, implementing, and monitoring and evaluation.

Medicine: Any substance in a pharmaceutical product that is used to modify or explore physiological systems or pathological states for the benefit of the recipient. In this manual the words ‘drug’ and ‘medicine’ are used interchangeably.

Monitoring: The ongoing process of reviewing the degree to which programme activities are completed and objectives are being met, to allow for corrective action to be taken during implementation. Monitoring and evaluation are the third phase in the management cycle.

Multisource pharmaceutical products: Pharmaceutically equivalent products, available from different manufacturers, that may or may not be therapeutically equivalent.

Objectives: Results that a programme or workplan seeks to achieve. A well-formulated objective fits the SMART mnemonic: specific, measurable, appropriate to overall objectives or goals, realistic in terms of available resources, time-bound (there is a deadline).

Operating costs (or recurrent costs): The regular expenses of running programmes and providing services (as opposed to capital expenses).

Pharmacology: The study of medicines (drugs) and their actions.

Pharmaceutical equivalents: Products that contain the same amount of the same active substance(s) in the same dosage form, meet the same or comparable standards and are intended to be administered by the same route.

Pharmaceutical product: A dosage form containing one or more drugs (medicines) along with other substances included during the manufacturing process.

Potency: The extent to which a medicine (drug) contains the specified amount of the active ingredient.

Prepacked kits: Also known as ration kits or set packs. An assortment of drugs and medical supplies to cover a set number of patient attendances, which are distributed unopened to health facilities.

Prescribing: The act of determining what medication the patient should have and the correct dosage and duration of treatment.

Private health insurance: Voluntary private indemnity insurance provided by private insurance companies through employees, mutual societies or cooperatives.

Procurement: The process of acquiring supplies, including those obtained by purchase, donation and manufacture.

Pull system: Drug distribution system in which each peripheral facility determines the drug quantities to be requisitioned from the procurement unit or warehouse. Compare push system.

Push system: Drug distribution system in which the procurement unit or warehouse determines what drug quantities are to be issued to the peripheral facilities. Compare pull system.

Purity: The extent to which drugs are free from potentially harmful contaminants, significant quantities of other drugs, bacteria or other microorganisms.

Quality assurance: The management activities required to ensure that the drug that reaches the patient is safe, effective, and acceptable to the patient.

Quality control: The testing of drug samples against specific standards of quality.

Revolving drug funds: A drug sales programme in which revenues from drug fees are used to replenish drug supplies.

Shelf-life: The length of time a material may be stored without affecting its usability, safety, purity or potency.

Social health insurance: Compulsory health insurance provided to civil servants, people in the formal employment sector, and certain other groups through programmes such as social security funds, national health insurance funds, and other systems. Premiums are often deducted directly from salaries or wages.

Specifications: A precise description of an item to be procured, including any special requirements.

Standard treatment guidelines: Agreed-upon treatment practices for a diagnosed illness; may include more than details of drug treatment.

Stock: Goods and materials stored for future use.

Stock records: A generic term that applies to card record systems, stock ledgers and computer files. These provide basic information for inventory management by recording all transactions for an item, including receipts, issues, orders placed, orders received and stock losses.

Stockout: Complete absence of an item that is normally expected to be on hand. In many cases, this can be misleading as an indicator, because a warehouse may always reserve a small stock - the warehouse is not literally out of stock, but there is a functional stockout because the warehouse will not issue the reserved stock.

Strategy: A broad plan of action for fulfilling a programme’s basic purpose and achieving its main goals.

Supervise: To oversee; to provide direction; to guide and instruct with immediate responsibility for performance.

Supplier: Any individual or company that agrees to provide medications, regardless of whether that party is the manufacturer.

Symbolic labelling: A system of providing written instructions for patients using sketches and other graphic representations.

Targets: Measurable, time-limited, intermediate progress points toward objectives; also called milestones.

Therapeutic category analysis: The analysis of expenditures by therapeutic category, for comparison with morbidity patterns and public health priorities, as a means of focusing cost control efforts.

Therapeutic equivalents: Pharmaceutically equivalent products whose effects with respect to both safety and efficacy are essentially the same, when administered in the same molar dose, as can be derived from appropriate studies (bioequivalence, pharmaco-dynamic, clinical, or in-vitro studies).

Therapeutic substitution: Interchange of one pharmaceutical product with another that differs in composition but is considered to have similar pharmacologic and therapeutic activities in accordance with written protocols previously established and approved.

Users fees: Charges paid by the users of a service.

VEN system: A system of setting priorities for purchasing drugs and keeping stock, in which drugs are divided according to their health impact into vital, essential, and nonessential categories.

Waiver: A release from payment of fees based on financial hardship, employed in many revolving drug fund schemes to promote access to services.

Wholesaler: A dealer who purchases supplies from a manufacturer and resells them to the ultimate buyers.