QUANTIFYING DRUG REQUIREMENTS

The basic goal of national AIDS Control Programme is to halt and reverse the epidemic in India over the next 5 years by integrating programmes for prevention and care, support & treatment.  Keeping above in mind, the main objective of anti-retroviral (ART) center is to provide comprehensive services to eligible persons with HIV/AIDS including providing continuous ARV drugs free of cost.  Drug management is truly a cycle involves four basic functions: selection, procurement, distribution and

use. Each major function builds on the previous function and leads logically to the next.   The guidelines for management of HIV/AIDS using carefully selected number of drugs have already been identified by NACO.   Procurement, distribution, and other supply activities can be carried out most economically and most efficiently for a limited number of medicines.  However, the major challenge is improving efficiency in public drug supply based on order quantities estimating reliable needs of the population served using scientific ways to assess the demand.  This chapter describes the process for quantifying and reconciling needs to the budget.

Aim

• To provide an overview of problems with quantification of drug needs

Objective

-      By the end of the session, the participants would have learnt different methods used for quantifying the drug needs and also learnt most effective method that is to be used for quantification. 

Although system for supply of ARV drugs is centralized and streamlined, requirement of different drugs required for treatment of opportunistic infections (OIs) may vary from place to place, as districts are required to estimate their own supply needs for OIs.   In case of ARV drug supply needs are determined centrally (i.e., PUSH system) but in case of drugs for OIs  supply needs are determined locally i.e., PULL system thus require districts to determine the quantities of essential supplies required to deliver the essential services within their budget allocation. Moreover quantification is required to

·         To avoid stock-outs and ensure continuous availability of medicines for OIs.

·         To avoid wastage due to overstocking

·         To make the best use of scarce resources and to budget within means

·         To facilitate central bulk purchasing by providing sufficiently detailed information from health facilities to allow orders to be placed well in advance

Symptoms of Good Quantification

• Consider availability of supplies
• Reduced wastage
• No over or under stocking
• Service providers have adequate drugs and supplies
• Cost-effectiveness
• Rational adjustment to budgetary constraints
• Rational prescribing and use of supplies
• Easy management of stock
• Fulfillment of demand
• Satisfied clients/patients

Major options for Quantification and their Relative Predictive Accuracy

Quantification involves estimating the quantities of specific drugs needed for procurement. Drug needs can be quantified by using one or a combination of four standard methods.  The general methods discussed in this chapter are:

1.      Consumption method

The consumption method uses records of past consumption of individual drugs.  It is the most precise method for forecasting drug usage, provided the source data are complete, accurate, and properly adjusted for stock-out periods and anticipated changes in demand and use.  However, this method does not normally address the appropriateness of past consumption patterns, which may or may not correspond with public health priorities and needs.  Thus, irrational drug use may be perpetuated by total reliance on the consumption method.  If stock-outs have been widespread for long periods, it may be impossible to apply this method accurately. This method can be applied for procurement of drugs for OIs divided into three categories according to source agency as described Box 7.2 in chapter VII.

2.      Morbidity based Method

The morbidity method estimates the need for specific drugs based on the expected number of attendances, the incidence of diseases, and standard treatment patterns for the diseases considered. This method requires reliable data on morbidity and patient attendances (visits to ART center) to project drug needs.  Morbidity based quantification is the most complex and time consuming due to difficulties to assemble valid morbidity data on all diseases; incomplete and inaccurate data on patient attendance. Despite these constraints, this method may still be the best alternative for planning procurement or for estimating budget needs in a supply system or facility in which a limited range of health problems accounts for virtually all drug consumption, such as a special-purpose hospital such as ART center.

3.      Adjusted consumption method

Adjusted consumption is the method generally used if neither the consumption based nor the morbidity method is feasible i.e., if there is no reliable information on past consumption or morbidity, it is possible to extrapolate utilization from other facilities, regions or countries that serves the same type of population in the same type of geographic and climatic environment.

 

Critical issues in quantification

There are several critical issues common to all methods. The drug list is the central component.  In a system in which shortages have been wide spread, quantification estimates must be adjusted because the supply pipeline must be filled.  The lead time has a major impact on quantities required for safety stocks.  In virtually all supply systems, it is necessary to adjust for losses due to wastage and theft. 

Cross checking of data in the monthly reports and reviews at the state levels before submission to procurement office/central level may increase the validity and ownership of estimates, at the cost of adding time to the process.  It is important to make sure that consumption is not double counted.

Computerized quantification has three major advantages speed, accuracy, and flexibility provided data are entered correctly and the formulas are correct. Finally, it is much easier to do “what-if” analysis by making changes to quantities of various items to see what happens to the total procurement costs.  Once a computerized drug list and quantification model has been developed, they can be reused repeatedly.

1.      Estimating the time required for quantification

Quantification is time-consuming, and a realistic time frame must be established for all the steps in the quantification plan.  The time frame depends largely on how many levels of the supply system are involved and the type of data available. 

2.      Organizing the Drug List

The drug list is the central component of any quantification process.  Specifications for each drug on the list should include:

·         Drug description, generic name, or international non-proprietary name (INN)

·         Dosage form, such as tablet, suppository, ampoule for injection

·         Strength-for example, 250mg, 95 percent

·         Basic unit, such as tablet, tube, ampoule, vial

·         Package size in basic units

·         Projected purchase price per basic unit or per package.

Compile master list in a reasonable time, comparison of estimated quantities among facilities, and verification and adjustment of estimates.  Dosage forms and strengths should match those included in NACO or standard treatment guidelines. If 500 mg tablets are quantified but suppliers offer only 300 mg tablets, it will be difficult to make a conversion.

3.      Filling the supply pipeline

The number of levels, the frequency of requisition and delivery, and the amount of safety stock at each level all influence the amount of drugs needed to fill the pipeline and, hence the amount that must be procured when a program is started or expanded.  Underestimation of stock in the pipeline is a common cause of program failure.

4.      Considering the Impact of Lead Time (LT)

The procurement order quantity should be sufficient to last until the next procurement cycle is completed.  The steps of the procurement process needed to place an order itself may take several months.  In addition, once an order is placed, several more months are often required for the drugs to reach the central warehouse.  The waiting period from the time an order is prepared until it arrives in the health facility is the lead time.  When lead times are underestimated, the likely results are shortages and more expensive emergency purchases.

 

Critical issues in quantification at the Central Level

There may be a gap between the initial estimates of drug needs and the allocated budget.  The quantification process itself may help justify an increase in the budget, but often the quantification estimates have to be adjusted and reconciled to fit available funds.  Several issues must be addressed in any large-scale quantification:

5.      Preparing an action plan for quantification

Preparing action plan is the most critical step and then following a sound action plan through each step of the quantification.  Essential points include:

1. Defining name the official or office who will manage the process and define roles and responsibilities at the central and state level. To form a working group to coordinate activities of the offices, departments, and facilities involved.
2. Define the objectives and coverage of the quantification
3. Develop drug lists and data collection forms and train staff in the data collection and analysis.
4. Develop a work plan and timeline for quantification with realistic deadlines for each phase and manage quantification according to plan (adjusting for inevitable delays and unexpected constraints)
5. Adjust estimated quantities as needed
6. Evaluate the quantification process and plan improvements to resolve problems encountered.

6.      Adjusting for Losses and Program Growth

Inevitably, some drugs will be lost due to damage, spoilage, expiration, and theft.  If such losses are not considered in quantification and procurement, stock-outs are likely to result.  To prevent shortages, a percentage (usually 10%) can be added to allow for losses when quantifying requirements.  In a supply system in which patient utilization or the number of facilities is growing, it is reasonable to assume that drug consumption will increase.  In such situations, estimated quantities can be increased by a percentage corresponding to the rate of growth.

7.      Cross-Checking the Results of Quantification

Cross checking is a fundamental step to reconcile procurement quantities with available funds especially for high-volume, high cost drug using another method may reveal targets for interventions to promote more rational drug use.

8.      Estimating Total Procurement Costs & Adjusting and reconciling final quantities

When estimating the cost of drugs on a quantified list, the critical issue is determining the next purchase prices.  The last purchase prices could be used but could lead to underestimation of the actual next purchase prices, leading to insufficient funds when time comes to place orders, therefore, use most accurate prediction of next procurement prices. Difficult decisions must often be made to reduce the number of drugs and/or the quantities of drug until the estimated quantities and costs correspond with the available budget.  These reductions may require policy decisions regarding priority diseases, priority age groups, and priority facilities for supply, selection of less expensive therapeutic alternatives, and changes to standard treatment guidelines.  Several approaches to making reductions rationally, using specific tools such as VEN (vital, essential, non or less essential) categories, ABC analysis and therapeutic category analysis. 

CONSUMPTION METHOD STEPS IN QUANTIFICATION

1.      Prepare a List of Drugs along with consumption data & determine the period of time to be reviewed for consumption annual, biannual or quarterly. 

For each drug on the list, enter:

·         The total quantity used during the review period, in basic units,

·         The number of days in the review period that the drug was out-of-stock

·         The lead time for the last procurement (or the average from the last several procurements).

Consumption= Opening stock+ Drugs received – Closing stock

The likely sources for consumption and lead-time data are: stock records and distribution reports from a central distribution point, regional or district warehouses, invoices from suppliers & dispensing records from health facilities.

2.      Calculate the average monthly consumption. The average monthly consumption is a key variable in the quantification formula and should be as accurate as possible.  The simple approach is to divide total consumption by the number of months reviewed.  Adjust consumption for stock-outs especially if stock out had been longer than 30 days (1 month).  The formula for correction is:

Consumption adjusted = Recorded consumption X Period in calculation (in days, months)

for stock-outs                                                                    Period in stock (in days, months)

For example consider entry for Levofloxacin 500 mg capsule.  The total consumption for a six month review period was 89,000 capsules.  The drug was out of stock for thirty four days in the six month period.  Therefore, the average monthly consumption (CA) adjusted for stock-outs is:

Consumption adjusted =    89,000 X 6 months

for stock outs                                       (6-1)   

3.      Calculate the safety stock needed for each drug.  Safety (buffer) stock is needed to prevent stock-outs, although high levels of safety stock increase inventory holding costs and should be avoided.  The preferred method is to calculate the safety stock based on the average consumption and the expected lead time.  For vital items, it may be necessary to adjust the safety stock to cover variations in consumption or lead-time.  For other items adjustments should be made only when there is true uncertainty about the lead-time or consumption.

Safety stock = LT X C_A

Using this formula, the safety stock for Ampicillin 250mg capsules in the example is 18,218X3 months = 54,654.

NACO supplies drugs in 3 installments in a year.  It is recommended that all centers should ensure that they have a minimum stock of drugs for three months at each center.

Box 8.1. Consumption based forecast

Drug	Strength	Basic Unit (BU)	Pack size	Total consumption in period  in BU	Days out of stock	Adjusted average monthly consumption (BU)	Stock on Hand (BU)	Stock on Order (BU)	Safety stock level (BU)	Suggested quantity to order (BU)	Adjusted order quantity	Order quantity (packs)
Amoxiclav	625mg	Tab	1000	59500	0	9917	32000	42000	29750	45000	50737	51
Levofloxacin	500mg	Tab	1000	89000	34	18218	81000	58000	54654	79616	89766	90
Acyclovir injection	250mg	Amp	100	3879	0	647	111	7600	1940	47	53	1
Ampicillin suspension 100mL	125mg/5 ml	Bot	1	4128	0	688	1513	3000	2064	3743	4220	4220
Azithromycin	500mL	Tab	1000	853	29	169	351	929	507	747	843	1

BU – Basic unit

4.      Calculate the quantity of each drug required in the next procurement period.  The suggested formula for calculating the quantity to order is shown below:

Q_O = C_A X (LT +PP) + SS – (S₁ +S₀)

Q_O Quantity to order

C_A  = Monthly consumption adjusted for stock-outs

LT  = Average lead time in months

PP = Procurement period in months

SS= Safety stock

S₁ = Stock now in inventory

S₀ = stock now on order

Using the example of Ampicillin 250 mg capsules, the quantity to order is:

Q_o=18218 x (3+6) + 54,654 – (81,000+58,000) = 79,616.

5.      Adjust for expected changes in consumption pattern especially in case of items with seasonal variation in the consumption.  Using the example of Ampicillin 250mg capsules, if it is expected that utilization will increase by 5 percent in the coming year, it would be reasonable to adjust the six-month forecast by 2.5 percent, this would raise the expected need by 1990 capsules, bringing the total to 81606 capsules (or eighty-two hundred strips of 100).

6.      Adjust for Losses:  To avoid stock-outs, it is necessary to adjust quantification estimates to allow for losses.  If the supply system averaged 10% per year in losses, and this was applied to Ampicillin 250mg capsules, the allowance would add 8160 capsules to the estimate from step 7, bringing the total purchase quantity to 89,766 rounded of to 90,000.

7.      Compile:  Staff at each facility or storage point enter their own consumption quantities and stock-out information, and the estimates of the individual facilities are totaled and compiled on the master quantification list.

Morbidity method

The morbidity method uses data on patient utilization (attendances at health facility) and morbidity (the frequency of health problems) to project the need for drugs based on assumptions about how the problems will be treated. The quantification by this method assumes that prescribing is rational and standard treatment guidelines are available.  For most health problems there are at least two alternative treatments, and a percentage must be assigned based on how frequently each regimen is used. e.g., the ratio of Stavudine vs. Zidovudine based combination is 40:60.  Among the stavudine based combinations Stavudine 30mg is 90% and 40mg is 10% very few patients have weight more than 60 kg).  The proportion of Efaviranz  is 20% of total  (as many of patients have TB co-infection and need simultaneous Anti-tubercular therapy and ART).  The patient should be shifted to nevirapine after antitubercular treatment is complete.

Based on these norms, requirement of drugs have been calculated and the requirement for a unit of 100 patients per year is given below. 

The basic formula used in the morbidity method is

Quantity of the drug                           Number of treatment              Total quantity of a     

Specified for a standard         X         episodes of the health =          drug required for a

Course of treatment                            problem                                   given health problem

A treatment episode is a patient contact for which a standard course of drug treatment is required. What we need to know, therefore, is the number of treatment episodes of each health problem (and of the different standard treatments, if they are different by age group and severity) in the type(s) of health facilities whose drug requirement are being quantified. First choice regimen is 3 drug combination of Zidovudine + Lamivudine + Nevirapine and alternative first-line regimen is Zidovudine + Lamivudine +Efaviranz or Stavudine + Lamivudine + Nevirapine/Efaviranz.   A standard treatment is specified for particular health problem, then a new patient contact for this problem counts as treatment episode.  Repeat visit is counted as a treatment episode if requires same treatment.  However, if repeat visit is for a follow-up check on the patients’ progress only, no medicines then it does not count as a treatment episode. Where a particular health problem has several different standard treatments for different age groups or severities, then the number of treatment episodes for each of these must be established separately.

Key Learning Points

• The initial step in the procurement process is preparing the order list and systematic system needs to be in place to quantify the requirement of medicines especially for medicines for treatment of opportunistic infections. Make sure that monthly reports are accurate.
• Recorded consumption alone is not a reliable method.  Past consumption should be adjusted for stock-outs, losses, program growth etc.

·         Quantification is time-consuming, and a realistic time frame must be established for all the steps in the quantification plan since Lead time has a major impact on quantities required for safety stocks.  When lead times are underestimated, the likely results are shortages and more expensive emergency purchases.

·         Underestimation of stock in the pipeline is a common cause of program failure.

·         Cross checking is a fundamental step to reconcile procurement quantities with available funds.  Also it is always useful to check the estimates with a different quantification method to compare to see which appears to be more realistic, considering the reliability of source data used for the two estimates. 

Group exercise I

Find out the total quantity of Tab Paracetamol 500mg to be procured for the year 2011-2012.  The time taken to procure the drugs during the previous year was 4 months.  At present stock on hand is nil.  The average monthly consumption last year was 1,60,000 tablets, however, the drug was not available for 2 months and 10 days from July to August.  Also one box containing 10,000 tablets was not traceable. 

Group exercise II

Calculate the total quantity for Inj Cefotaxime 1g to be procured for the year 2011-2012.  The average time taken to procure the drugs during the previous year was 5 months.  The average monthly consumption last year was 5,000 vials; however, drug was not available for a total period of 20 days.  The stock in hand is 3,000 vials.  The total no. of patient contacts last year in the ART center was 20,000. Find out the quantity required for per 1,000 patient contacts.

Group exercise III

Find out the total quantity of Tab Azithromycin 500mg to be procured for the next quarter (4 months).  Annual consumption in the year 2009-2010 was 1,20,000 Tabs.  The stock in hand is 20,000 tablets.  There has been overall increase in number of patients attending the hospital by 10%.