UNIT 2 PROCUREMENT

CONTENTS
Introduction ....................................................................................................................................... 3 Unit Aims and Structure ................................................................................................................. 3 Section 1: The Function of Procurement ........................................................................................... 4 Right Quality .............................................................................................................................. 5 Right Quantity ............................................................................................................................ 5 Right Time.................................................................................................................................. 5 Right Place ................................................................................................................................. 5 Right Cost .................................................................................................................................. 6 Right Source .............................................................................................................................. 6 Section 2: The Procurement Process ................................................................................................ 7 Need .............................................................................................................................................. 7 Specify........................................................................................................................................... 7 Source ........................................................................................................................................... 8 Method .......................................................................................................................................... 8 Enquiry .......................................................................................................................................... 8 Evaluation ...................................................................................................................................... 8 Order ............................................................................................................................................. 8 Progress ........................................................................................................................................ 8 Delivery ......................................................................................................................................... 9 Payment ........................................................................................................................................ 9 Review ........................................................................................................................................... 9 Section 3: Specific Requirements for Procuring Medical Items ........................................................ 10 Need ............................................................................................................................................ 10 Organisation Policy/Rules on Procuring Medical Items............................................................. 13 Specify......................................................................................................................................... 15 Quality Specifications ............................................................................................................... 16 Technical Specifications ........................................................................................................... 16 Functional Specifications .......................................................................................................... 16 Source ......................................................................................................................................... 16 Different Types of Suppliers ..................................................................................................... 16 Guidelines for Drug Donations ................................................................................................. 17 Guidelines for Donations of Medical Equipment ....................................................................... 18 Good Manufacturing Practice (Gmp) ........................................................................................ 19 Method ........................................................................................................................................ 20 Qualification of Suppliers .......................................................................................................... 20 Order ........................................................................................................................................... 21 Labelling and Packaging .......................................................................................................... 21 Documentation ......................................................................................................................... 23 Spares and Complement Items ................................................................................................ 23 Delivery ....................................................................................................................................... 23

INTRODUCTION
Welcome to the second unit in the Certification in Humanitarian Medical Logistics Practices programme. During this unit you will be looking at the requirements for procuring medical items for medical programmes. Procurement is a key part of the medical supply chain process in ensuring that not only items are sourced and obtained, but that these items meet the quality standards required. Procurement in different organisations may be carried out by a range of people, with various job titles and because of its importance there will usually be clear procedures and rules that need to be followed. The unit will focus on the specific requirements for procuring medical items. These requirements may not be unique to medical items, but they are particularly important when procuring medical items compared to other non medical items. We will start the unit by looking briefly at the function of procurement and the procurement process. We will then look at the specific requirements for procuring medical items. We will do this by considering the stages in the procurement process where the requirements for procuring medical items are particularly important and/or require specific attention.

UNIT AIMS AND STRUCTURE

The aim of this unit is to provide an understanding of the scope of procurement and the specific requirements for procuring medical items because of the nature and characteristics of medical programmes and the items used in these programmes. This unit has been structured into three sections: Section 1: The Function of Procurement Section 2: The Procurement Process Section 3: Specific Requirements for Procuring Medical Items

SECTION 1: THE FUNCTION OF PROCUREMENT

Procurement is a key part of the medical supply chain, it determines the needs for medical items from customers and carries out all the activities and tasks required to meet those needs. Effective procurement ensures that the right items of the right quality arrive at the right place in the supply chain at the right time. (We shall be using the term customer throughout this unit - by customer we mean the person who is requiring medical items and is asking for these items to be procured.) It is important to recognise that procurement within humanitarian organisations needs to follow three important principles. These principles are important because the money that is being used to procure items has been provided by the public through donations. The three principles are: Transparency all phases in the procurement process are fair and accurately documented. Accountability accountable to donors who may require certain rules to be followed when using money they have provided. Efficiency that the money is being used in the best possible way and not wasted. This unit will be looking at the function of procurement. Procurement and the activities involved in procuring medical items may be carried out by a range of different people in various roles within humanitarian organisations. We can define procurement as: The process of identifying and obtaining goods and services The aim and objective of procurement is to carry out this process, so that the goods and services are of the right quality, from the right source, are at the right cost and can be delivered in the right quantities, to the right place, at the right time. The general aims and objectives of procurement are therefore to always work to the Six Rights: Right Quality. Right Quantity. Right Time. Right Place. Right Cost. Right Source.

By carrying out procurement according to the Six Rights we can be sure that every aspect has been considered to allow us to decide whether we are buying to the best of our ability. The priority by which the rights are applied will be dictated by organisational strategy and operational requirements and priorities may change during aid operations.

It is important to recognise that the Six Rights are interrelated and may influence each other. For example, it may be possible to obtain the right quantity but not at the right price. There may be competition for certain goods, so to get the quantities required may mean paying a higher price.

RIGHT QUALITY
Ultimately, the items must be fit for purpose. To this end, quality will be defined as the level of excellence required meeting the needs of the customer. A higher level of quality may incur unnecessary cost and return very little extra value. A lower level of quality may mean the goods or services cannot be used by the customer. Whereas the customer defines the specification of the product, ultimately the quality of the product is defined by the quality assurance policy of the humanitarian organisation.

RIGHT QUANTITY
The right quantity will attempt to balance the requirements of the customer and the supplier. This may be difficult, as the customer may only want a specific number of items. This may conflict with the suppliers terms of delivery, for example, a customer may want five items but the supplier only supplies in hundreds. Lower prices can be obtained for larger quantities, but this may conflict with storage capabilities and lead to goods taking unnecessary space in warehouses or being held for long periods of time.

RIGHT TIME
The right time should be established from two aspects: The right time to buy. It may be appropriate to buy goods when prices are low or there is excess available. Alternatively, it may be necessary to buy when market factors predict future shortages. The right time to deliver. Delivery too early or too late may also incur unnecessary costs. Delivery too early can mean goods have to be stored until needed and will incur costs whilst being stored in warehouses. Delivery too late can mean the costs of setting up facilities, for example, clinics and having people ready to provide health services is wasted because the items have not been delivered. Late delivery can also mean more costly transport, for example, aircraft/helicopter has to be used to move the items more quickly to the next stage of the supply chain. In disaster/emergency relief situations, timing of delivery can have a serious impact on the relief operation and on the beneficiaries. This can be even more significant where the relief operation is dependent on certain specific goods or services being available at a specific time - or where the use of one particular item is dependent on the delivery and availability of another item.

RIGHT PLACE
It is the responsibility of procurement to ensure that items are delivered to the right place. As well as asking the customer where they want goods to be delivered, it is important to look at the total supply 5

chain and where other goods are being delivered and stored. For example, a customer may want delivery to a local warehouse as near to the beneficiaries as possible, but to enable the goods to be consolidated with other goods, and to avoid holding unnecessary amounts of the goods at the local warehouse, the right place for the supplier to deliver to could be a regional warehouse. The goods can then be consolidated and moved to the local warehouse for onward movement to the beneficiaries when needed.

RIGHT COST
We use the term right cost rather than right price, as the price on its own does not reflect how much particular items will cost the organisation. The aim of procurement should be to look at the total cost of obtaining items and total supply chain costs, which would include storage, handling and ongoing maintenance (also known as cost of ownership). What may seem a good initial purchase price may become a poor total cost because the supplier may add extra costs for packing the goods or transporting the goods. For other items, such as equipment, a good initial purchase price may become a poor total cost with expensive operating or maintenance costs.

RIGHT SOURCE
Goods and services can often be procured from a number of different sources and associated suppliers. The decision on which to use is an important one to ensure the right source is being used. Organisations may have specific strategies for sourcing goods and services internationally. This can include specifying certain goods that must be sourced internationally and not locally. This strategy is adopted particularly in organisations that have a central procurement operation, often based at an organisations head office. This central operation will source goods internationally from global suppliers. Field procurement operations may then either source from these global suppliers, or from the central procurement operation which in turn sources from the global supplier. The advantages of sourcing internationally include potentially lower prices, and internationally recognised standards and quality of goods. The disadvantages include delays due to longer lead times, costs involved in transporting the goods, and delays and costs involved in importing goods. The right source can be a source that must be used, either because the organisations procurement strategy and policy, or the rules and requirements of a donor, dictates what the source must be. The right source can also mean a reliable, ethical supplier that is able to meet the requirements of the organisation. It is the responsibility of procurement to ensure that the right and best source is used. The ability of people in procurement to identify the sources that are available, assess these sources, understand any organisation or donor requirements, and then select the right source is therefore important.

SECTION 2: THE PROCUREMENT PROCESS

At the beginning of this programme we defined procurement as: The process of identifying and obtaining goods and services Whether it is procuring goods, materials, products or services, there is a fairly standard generic process that can be followed to ensure they are identified and obtained, and they meet the aims and objectives of right quality, right quantity, right cost, right place, right time, and right source. In most organisations, the customer creates the initial need. The customer could be anyone in the organisation that requires goods and/or services. Once the customer begins to specify what is required, the people responsible for procurement start to play an important part in the process and they either lead or guide the other stages of the process. The process follows the following stages:

The following is a brief description of the process.

NEED
The procurement process has to start with a need. This need will be identified by a customer, but the need may not be for specific goods or services at this stage. A customer may know broadly what her/his need is, but not what they can get to meet that need. Many customers will know what specific goods or services they need and will make a request or complete some form of requisition order. At this stage the customer may have an immediate need for goods and services, or they may be forecasting their future needs.

SPECIFY
The need is then converted into a specification that can be sourced and purchased. This is the stage when the person responsible for procurement is helping the customer to identify and specify exactly what they need, so that goods or services that are then sourced and purchased are fit for purpose. Even where customers have completed a detailed requisition order, there can still be opportunities to help or advise the customer by providing information to enable them to better specify their needs and to complete the requisition order.

SOURCE
On completion of the specification stage and the completion of any requisition order, the goods or services can now be sourced. If the goods are standard items that have been previously purchased from a selected supplier, or if the organisation has an established long-time agreement (LTA), then it may be possible to place a repeat order and there is no need to follow the next three stages in the process. (Humanitarian organisations will have different rules on the use of repeat orders and whether they are allowed.) If the goods are not standard, or if there is the need to look for a different way of sourcing the goods or services, then this stage of the process is about identifying and validating the potential sources available.

METHOD
The method of procurement should then be determined. There are a number of different methods available and organisations will have policies, procedures and strategies that will usually determine which method should be used for different situations, goods or services.

ENQUIRY
The enquiry stage involves contacting possible suppliers, identified in the sourcing stage, with details of the specifications of the goods or services required that would enable them to produce a quote to supply. This could be in the form of a request for quotation or a tender.

EVALUATION
The quotes received from possible suppliers can then be assessed and evaluated. These can then be compared with each other and against the enquiry to determine the most appropriate supplier(s). Involving the customer in this evaluation stage can ensure that the decision on how to source and which supplier to use is agreed and bought into by the customer.

ORDER
A purchase order will now be issued to the validated supplier, whose quotation is the most acceptable. The order should be placed in writing containing details of the specifications, delivery information, etc., and the terms and conditions of the order. An order acknowledgement should be requested to show that the supplier has accepted the order and the terms and conditions.

PROGRESS
The procurement process doesnt stop as it includes obtaining the goods and services. There may be the need to monitor the order to ensure that delivery dates are met or overdue orders are chased up and delivery made. It is also important to keep the customer of the goods or service informed of the progress of the order, particularly if delivery dates are changed and adjustments of the order are needed.

DELIVERY
On receipt of the goods they need to be inspected to ensure that what has been delivered is the same as what was ordered. They will need to be inspected and checked for quality, quantity and that they meet the specifications that were ordered. A record of receipt is made, so that this can be compared against the original order. If the delivery is not satisfactory and does not satisfy the order requirements, the supplier must be contacted to make arrangements for goods to be exchanged or replaced, or quantities filled so as to complete the order, before payment is approved.

PAYMENT
Once the delivery has been confirmed the goods or services can be paid for. Suppliers should be required to submit an invoice that can be compared with the original order and with the record of receipt. Payment can then be made.

REVIEW
The final stage of the procurement process, the review stage has got three objectives: A review with the original customer that the goods they have received have met the original needs they had, and are fit for purpose. A review of the suppliers performance in supplying the goods to the organisation. A review of the procurement process. If the goods received do not meet the original needs of the customer, it is important to review where the process failed. Once the process failure has been identified, appropriate actions can be taken.

SECTION 3: SPECIFIC REQUIREMENTS FOR PROCURING MEDICAL ITEMS

The nature of medical programmes, and the characteristics of the medical items used in these programmes, means that certain parts of the procurement process are particularly important and require more attention than for other non-medical items. This is mainly driven by the importance of quality assurance in the procurement stage of a medical supply chain. One of the main aims of medical procurement is to reduce and manage the risk of poor quality items being procured and entering the supply chain. This includes counterfeit and substandard medical equipment, medical devices and particularly drugs. It is for this reason that many organisations have centralised procurement services. They also have strict rules requiring that procurement is done only from manufacturers in countries with strong regulatory conditions for drug manufacturers and suppliers. In many cases, it is this distinction that is meant when we say domestic or international procurement. The main point is to ensure quality assurance.

The parts of the process we will consider are: Need Specify Source Method Order Delivery

NEED

In an earlier unit we identified that one of the activities that affects the performance of a medical supply chain involves understanding the programme needs and items required. This involves communicating and understanding the specifications and characteristics of the medical items required and the processing of requests for these items. Whoever is procuring the items has to understand the needs of their customers so that they can process requests for medical items. The role of procurement is to help the customer to clarify what their requirements are, so that there is enough information to be able to process the request. Requests may be in the form of a specific order requisition or it may be a verbal request. Best practice requires the verbal request is always followed by a written confirmation. The request may 10

be very specific where the customer knows exactly what they need in terms of specifications, quantities, delivery details etc. These requests may also include the item code that specifies an item in an organisations item list. Or the request may be less specific, with the customer not being able to provide exact information on specifications, quantities etc. Many organisations will have a standard pre-printed requisition order form that customers need to complete. Forms should contain all the information required by the people who will procure the items, and the necessary authorisation needed for that purchase to be made. An example is shown in Figure 2.1. As well as information provided by the customer, there will be other information required to enable a request to be processed (e.g. organisation procurement rules and supply lead times). To ensure that the right items are procured the information needed to process a request for medical items includes: Recognised item code, belonging to a pre-defined standard list of items based on the defined medical program Organisation standard list of item codes (such as a catalogue), descriptions and characteristics International non-proprietary name (INN) for drug products or the generic name. Branded (or Proprietary) names are specific to a manufacturer Item description Quantities required and packaging unit (e.g. box of 1,000 tabs) Required delivery dates Item purpose, use, characteristics and tolerances some organisations will have their own coding system that identifies items with particular characteristics e.g. controlled substances, items requiring cold chain. Suitable substitutes items that can be purchased as alternatives Any complement items items that must also be purchased for use with the item Any packaging, marking, labelling requirements these may be requirements of beneficiaries, donors or legal requirements Programme requirements understanding the needs of the programme enables an understanding of what items will be required and how the quantities being requested fit with the overall quantities needed for the programme. Usage rates this enables an understanding of and a discussion on quantities being requested (e.g. monthly consumption) Buying quantities there may be supplier minimum or maximum order quantities Organisation policy/rules on procuring medical items National drug lists National legislation or rules on importing medical items - many countries will have national laws and regulations regarding the importing of medical items including what can be imported, procedures to obtain authorisation to import and entry and handling requirements. There could also be specific import/export procedures for identified items (e.g. narcotics). Lead times this will include order lead times and supply lead times Documentation or Certifications needed for items to be supplied The importance of organisation policy/rules on procuring medical items requires that we consider these in more detail.

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REQUISITION ORDER

Type

Country

Site

Year

Number

RO
Today's date
/ Date du jo ur

Required delivery date / Date de livraiso n demande

Partial delivery acceptable

/ Livraiso n partielle accepte

YES Requester and Department

/ Demandeur et dpartement

NO Accounting data

Account no: Cost center:

Name & full delivery address (street, building, etc.)
/ A dresse co mplte

Financial org. unit : Programme : TP/Project : Objective code: Yes No

Contact name: Notify name: Address:

Tel: Tel:

Budgeted: AoE required:

c c

c c

Authorisation of Expenditures :

Comments / justification (beneficiary, packing / marking instructions, etc.)

Commentaires et justification (bnficiaires, instructions d'emballage , de marquage...)

Green light required

Feu vert requis

Item code
Co de article

Item description
Descriptio n de l'article

Quantity
Quantit

Unit
Unit

Unit price
P rix unitaire

Total price
P rix to tal

1 2 3 4 5 6 7 8 9 10 11 12 Date RO received by LOG

/ Date de rceptio n du RO par LOG

0 0 0 0 0 0 0 0 0 0 0 0
Currency / devise Total value / valeur totale

For action
Ordered by Approved by (1) Approved by (2) Approved by (3)

/ po ur traitement

0
Date Function Name Signature

Co mmand par A ppro uv par (1 ) A ppro uv par (2) A ppro uv par (3)

Figure 2.1 Example of a Requisition Form 12

ORGANISATION POLICY/RULES ON PROCURING MEDICAL ITEMS

Humanitarian organisations have procurement policies that determine how the procurement of items will be performed in the organisation and how people working in procurement should behave. Many of these organisations have specific policies and rules on the procurement of medical items. These determine how medical items can be selected and procured. Procurement policies will include: Internal Policies Policies on Ethics in Procurement

INTERNAL POLICIES AND RULES

Internal organisation procurement policies are usually expressed as rules, procedures or guidelines. These will include rules covering: Authority to purchase medical items these may stipulate who in the organisation is authorised to procure medical items. They may also include authority limits based on the monetary value of items. Different financial limits will require different levels of authorisation. Authority to make decisions on supplier selection - authority will be restricted to certain people, in particular roles, to be able to make decisions on which suppliers the organisation will use. Procurement documentation - the documents that will be used during the procurement process. These will include requisition orders, purchase order forms, enquiry forms and supplier evaluation forms. Earlier in the programme when we considered a number of supply chain characteristics, barriers and constraints, we identified one of these as an organisations procurement rules, procedures and processes. We considered some examples of these rules. The following include these examples and are considered as best practice: Country offices are not authorised to procure locally, nor initiate the procurement process for a specific list, or category, of medical items. Exceptions may be granted on a case-by-case basis. Products, such as vaccines and drugs, which must meet stringent quality standards, may not be procured locally because of the inadequacy and unavailability of quality control/testing facilities in many of the countries in which the organisation operates. Requests to purchase medical items locally need to be approved by Headquarters Authorisation is required for purchasing medical items not on standard item lists. It needs justification based on the medical program before being authorised by Headquarters A professional pharmacist has a critical role to play throughout the procurement process, such as during sourcing. These types of policies and rules are developed for a reason; either to protect against possible adverse consequences or to facilitate getting the job done. They will often reduce the risk of the organisation purchasing substandard or counterfeit drugs. Whilst people should obey the rules of their organisation it is particularly important that they follow the rules on procuring medical items. Some humanitarian organisations will also have specific policies covering the ethics in procurement. 13

POLICIES ON ETHICS IN PROCUREMENT

These policies are mainly to ensure fair-trading and professionalism on the part of the people carrying out the procurement process, and the suppliers used to provide goods and services. Ethics in any type of procurement is important. The application of the highest ethical standards will help ensure the best achievable procurement outcome. Procuring medical items can involve considerable amounts of money. Medical items can be of high value and can be prone to fraud and corruption, so ethics are important. Ethics are about how the procurement process is conducted and it should be considered in two different ways: Ethical sourcing and conduct of suppliers. Ethical conduct of people carrying out procurement.

Ethical Sourcing and Conduct of Suppliers

To ensure that procurement is carried out in an ethical way, organisations will include in their policies and procedures specific policies or principles that explain how suppliers need to behave. These policies can include codes of practice covering: Labour Standards, Environmental Standards and Business Behaviour.

Ethical Conduct of People Procuring

Ethics are important in procurement, as people who are buying goods are probably subjected to greater temptation to act unethically than most other people employed by organisations. The people are also representing their organisation when dealing with suppliers and their actions will reflect on the way that organisation is regarded by those suppliers. Many organisations will produce written codes, rules or guidelines, on the standards of behaviour they expect from people carrying out procurement on behalf of the organisations. Some humanitarian organisations have established their own codes of conduct. For example, some are based on the codes of professional purchasing institutions; such as the National Association of Purchasing Management in the USA and the Chartered Institute of Purchasing and Supply in the UK. A typical code will state that people: Should not use their authority or position for personal gain and shall uphold the standing and reputation of the organisation. Will demonstrate an unimpeachable standard of integrity in their relationships with suppliers. Will comply with the letter and spirit of the law of the countries they are operating in and the contractual obligations they have with their suppliers. Will reject any business practices, which might reasonably be deemed improper.

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SPECIFY

To be able to purchase goods or services we need to have a clear description of what the customer requires. The specification can then be used to tell a supplier what it is we want to purchase and what we want them to supply. It is therefore important to have correct, accurate specifications. The specification may be very precise and very simple, such as a part number in a catalogue or an international non-proprietary named drug (commonly known as a generic drug). To meet their needs, customers may therefore have to use specifications that are already developed and written. The people in procurement will be required to procure goods using this specification. Where there is not a specification for the goods and services required one will need to be produced. Humanitarian organisations often have their own standard request form with pre-established items description, detailed in their catalogue. A specification should: Be clear and unambiguous. Contain enough information so that an order can be placed and suppliers will understand what is required. Contain the essential features and characteristics of what is required. A specification should not: Overestimate or underestimate the requirements. Contain non-essential features that can directly or indirectly discriminate against or favour any supplier. Specify a specific brand or proprietary product if this is not necessary. Adding or equivalent demonstrates it does not have to be that specific brand/product. Fitness for purpose means the goods or services are suitable for use in the programme for which they are intended. Helping a customer to identify, what they are going to use the goods or services for can eliminate non-essential features and the over and underestimating of requirements. Specifications that are not clear, or are incorrect, will lead to goods and services being purchased that dont do what people want them to do. These will either mean that they have to be used even though they are not right for the job or that new specifications have to be produced and more items purchased. The following are the main types of specifications: Quality specifications Technical specifications Functional specifications. 15

QUALITY SPECIFICATIONS
The quality of the items is based on a standardised requirement such as ISO or CE marking for medical devices, or for drugs, based on a pharmacopoeial standard.

TECHNICAL SPECIFICATIONS
These specifications concentrate on the technical aspects of the items required as these are critical to the purchase. These might include the materials to be used, power inputs and outputs or the manufacturing process to be used. Goods where the design, ingredients, materials, etc are essential or important should have a technical specification.

FUNCTIONAL SPECIFICATIONS
A functional specification is similar to a performance specification. It describes what it wants the item to do/achieve, i.e. its function. It also gives the supplier the opportunity to provide a solution. The potential benefits of using performance and functional specifications are: The suppliers expertise is used. The supplier can offer alternatives. There will be a wider choice of suppliers available who could supply. It provides access to goods and services that both the customer and the people in procurement may not know existed or know are available.

SOURCE

Sourcing involves identifying, validating and selecting the suppliers that will be used to supply the medical items needed. Because of the nature of medical items, particularly drugs, humanitarian organisations will have specific strategies for sourcing medical items. There are a number of different sourcing strategies that organisations will adopt when sourcing medical items. The decision will be affected by the different types of suppliers and the range of different sources of supply available.

DIFFERENT TYPES OF SUPPLIERS

When looking at the market and identifying sources of supply it needs to be recognised that there are different types of suppliers. The main types of suppliers of medical items are: Manufacturers are the source of items and will be actually producing the items. They will sell items through wholesalers or distributors, and some will also hold stocks which they will sell 16

directly to organisations. This is the preferred type of supplier for many humanitarian organisations particularly for procuring drugs and some disposable medical devices. Some organisations will require any manufacturer they use to supply drugs and certain medical devices to be GMP (Good Manufacturing Practice) compliant. (We will look at GMP in detail later in this unit). Others will not require compliance but will use GMP as guidelines when assessing the suitability of suppliers. If a domestic manufacturer is producing good quality items at competitive prices then that can be a strong reason for sourcing medical items locally. However problems can arise if either the price is not competitive or more importantly the quality of the domestically produced product is in doubt. Medical items which do not meet the required quality standards should not be sourced simply to support local manufacturing. We have already discussed that many humanitarian organisations will have strict rules on sourcing medical items, particularly drugs, in country. These rules may allow some medical items to be sourced in country and best practice requires the items are sourced with the approval of headquarters. The advantages of sourcing in country include reduced transport costs, improved availability (shorter lead times) in situations where time is important, and social responsibility shown by supporting local businesses and spending money in the local area. In all cases, quality will remain the main factor. Wholesalers, Distributors, Trading Houses and Local Agents are not at the source of goods and do not produce the actual goods. They do not have any production capacity but will purchase products from a manufacturer and then sell these products to organisations or to individuals. They may hold a certain level of stock. Distributors may only supply goods from one manufacturer, but it is more usual for distributors, wholesalers and trading houses to supply goods from a range of manufacturers. Trading houses may repackage and relabel items. In some countries only local agents can import drugs from foreign countries. Donors can include Corporations and Manufacturers or Government Organisations. The quality of drug donations and donations of medical equipment are so important that guidelines have been developed to improve the quality of these donations. We will consider these in the next section. Centralised Procurement Services. Some of the larger humanitarian organisations have centralised procurement services that procure and supply their organisation with medical items. Other Humanitarian Organisations and Agencies. Organisations may source certain medical items from other humanitarian organisations and agencies. Some organisations have relationships or agreements with other organisations and United Nations agencies to work in partnership and to distribute items on their behalf. Loans. Organisations may also borrow items from another of their programmes or from stock held in another country or region. Best practice requires when replacing medical items loaned by an organisation that one should comply with the quality assurance standards and item specifications of the organisation that made the loan.

GUIDELINES FOR DRUG DONATIONS

The following guidelines for drug donations were developed by the World Health Organisation (WHO) in cooperation with a number of humanitarian organisations. These guidelines are not international regulations, but they are intended to serve as a basis for national or institutional guidelines, to be reviewed, adapted and implemented by governments and organisations dealing with drug donations.

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The aim of the guidelines is to improve the quality of drug donations not to hinder them. Drugs are an essential element in alleviating suffering and humanitarian medical programmes can greatly benefit from donations of appropriate drugs. Unfortunately, some of the drug donations are not helpful and can cause problems for the programme and the supply chain. These include: The donated drugs are not relevant for the situation, or disease or level of care that is available. They may not comply with local policies and treatment guidelines. They may even be dangerous. The drugs arrive unsorted and labelled in a language not locally understood. The quality of the drugs does not comply with standards in the donor country, and/or the receiving country. The drugs are donated in the wrong quantities and some may have to be destroyed The shelf live is not long enough to ensure proper use when reaching the beneficiaries and will induce a destruction process and burden. Inappropriate drug donations often create extra work in storing, sorting, handling and transporting. The costs of handling and safely disposing of these inappropriate drugs can also be greater than the value of the goods themselves. The twelve articles of the Guidelines are based on four principles. The core principles for a donation are: Maximum benefit to the recipient this implies that all donations should be based on an expressed need and that unsolicited donations are to be discouraged Respect for the wishes and authority of the recipient they should be supportive of existing government health policies and arrangements No double standard in quality if the quality is not acceptable in the donor country it is also unacceptable as a donation Effective communication between donor and recipient donations should be based on an expressed need and not be sent unannounced. Further information can be accessed at http://www.who.int

GUIDELINES FOR DONATIONS OF MEDICAL EQUIPMENT

These guidelines were also developed by WHO in cooperation with a number of humanitarian organisations and are not international regulations, but they are to be used to develop national and institutional guidelines. The guidelines follow the same four core principles discussed for drug donations. The reason for these guidelines is that medical equipment donations sometimes do not achieve their intended objectives and can even become a burden on the supply chain and the medical programme. Medical equipment has particular characteristics and requirements which if not considered when equipment is donated can mean the equipment cannot be used or may even be dangerous to use. This involves considering the appropriateness of the equipment and of the technology for the environment in which it will be used and includes local availability of:

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 Trained people to operate and maintain the equipment Maintenance, operation manuals Spare parts, consumables or operational supplies (e.g. microcuvette for laboratory equipment) Installation , commissioning and calibration procedures Equipment requirements e.g. electrical power, cooling, radiation shielding, specialised software. Donations may include second hand equipment. Obsolescence, availability of spare parts, safety and performance are additional factors that can mean they cannot be used or may be dangerous. Without proper management over the long term you can have an equipment cemetery.

GOOD MANUFACTURING PRACTICE (GMP)

The quality of drug manufacturing is difficult to assess and requires the work of professionals. Good Manufacturing Practice (GMP) is the most fundamental element of quality assurance. Internationally recognised, basic standards of GMP and detailed guidelines for good manufacturing practice have been developed and published by WHO. Many countries have formulated their own requirements for GMP based on WHO GMP. The WHO guidelines provide minimum standards to which all drug manufacturers should adhere. Some companies work to more demanding standards imposed by National Drug Regulatory Authorities (NDRA) in different countries as well as their own internal guidelines. GMP is that part of quality assurance which ensures that products are consistently produced and controlled to the quality standards appropriate to their intended use. GMP rules are directed primarily to diminish the risks, inherent in any drug production that cannot be prevented completely through the testing of final products. The main risks are: Contamination of products Incorrect labels on containers Insufficient or too much active ingredient GMP has three main uses. They are: Used by drug manufacturers as the standards they need to meet to be recognised as GMP manufacturers. Used by regulatory authorities for inspecting and validating manufacturing plants. Used by experts in humanitarian organisations to assess the suitability of manufacturers as suppliers of drugs GMP covers all aspects of production, from the raw materials to final product,, and including manufacturing processes and procedures testing, documentation, premises, and equipment to the training and personal hygiene of staff. Under GMP: All manufacturing processes are clearly defined and are capable of consistently manufacturing items of the required quality. All necessary resources are provided i.e. suitable premises and equipment, suitable storage and transport. 19

 Instructions and procedures are written in clear and unambiguous language. Operators are trained to carry out procedures correctly. Records are made during manufacture to show conformance to procedures and that the quality of items are as expected. Records are kept to enable complete history of a batch to be traced, including laboratory testing all along the production chain. Items are stored and transported in a way that minimises any risk to quality. A system is in place to recall any batch of product from sale or supply. Complaints are examined, the causes of quality defects investigated and measures taken to prevent recurrence. Non compliant products are disposed of and properly documented internally and with the Ministry of Health. Non compliant products, already on the market, are recalled and disposed of with documentation. Further information on GMP can be accessed at http://www.who.int/publications

METHOD

After identifying potential sources of supply there is the need to qualify potential suppliers (i.e. to qualify the manufacturer, the manufacturing plant and the product). The amount of time and effort and the type of supplier qualification will depend upon the importance and potential risks of the items being procured. Because of the importance and potential risks of many medical items time and effort will be required which can include supplier questionnaires, gathering information from other humanitarian organisations using the supplier, supplier visits, and testing of samples. Suppliers can then be registered as potential suppliers or become qualified suppliers.

QUALIFICATION OF SUPPLIERS
Qualification of suppliers is the procedure by which products, manufacturers and suppliers are assessed before bids are solicited for specific products. It evaluates supplier capacity and reputation. This is usually regarded as best practice when procuring drugs, but it may also be applicable for procuring other medical items. Qualification helps to eliminate substandard suppliers. Qualification will usually involve an inspection of the suppliers manufacturing facilities by trained and qualified inspectors. This inspection will usually be to compare the manufacturing facilities against Good Manufacturing Practice. It may also include sampling and laboratory testing of products. Qualification ensures that the supplier is a registered company; that the products offered are manufactured in compliance with GMP and that marketing authorisation in the country of origin has been obtained for those products. Best practices require the qualification is carried out by a qualified pharmacist designated by the humanitarian organisation for the role. The qualification will usually be giving approval for a supplier to supply a specific product. Many organisations will only use qualified suppliers for certain medical items, particularly drugs. They will 20

have a list of qualified suppliers which then speeds up the procurement process. The qualification process is repeated periodically in order to monitor the quality consistency. If we consider the range of different procurement methods then the preferred method for procuring medical items would be the use of restricted tenders open to qualified suppliers. This method should be used whenever possible. In a restricted tender (sometimes called a selective tender) bids are invited from qualified suppliers which provide a better system for quality assurance than other procurement methods i.e. open tender and direct procurement.

ORDER

The purchase of any medical items should be supported by a contractual document. In most cases this will be in the form of a Purchase Order. The purchase order will either contain a standard set of terms of contract or there will be a separate document sent with the purchase order. The purchase order should contain details of any specific requirements on the way that the items are supplied by the supplier. This will include requirements for: Packaging and Labelling Documentation Spares and Complement Items

LABELLING AND PACKAGING

People operating a medical supply chain and people who will be using and administering the medical items need to have information on the items to enable them to carry out their roles effectively. Patients also need information on how to use items. As many medical items should not be removed from their packaging until they are used then it is important that the information they need is provided on the packaging. The information required on labels (See Figure 2.2) will vary but will include: Contents if drugs, non-proprietary names, strength and dosage form, Manufacturers name and address Manufacture dates and expiry dates Batch number, lot number or serial number Any specific characteristics or care that needs to be taken when storing or moving e.g. fragile, hazardous material, store between +2C and +8C, sterility

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Figure 2.2: A label containing information on contents, manufacturer, lot number, manufactured date, expiry date and storage requirements. The information will enable: Items to be identified when being despatched Items to be identified when being received at warehouses and stores Storage requirements to be understood Transport requirements to be understood Help to combat counterfeiting Items to be tracked, traced and recalled Prevention of errors in dispensing Stock rotation and usage based on shelf life Items to be used safely (e.g. medical devices)

The labels need to be visible, with text that is large enough to be read and in the language(s) commonly understood in the receiving country. The information needs to be accurate and current, using pictures and diagrams where appropriate. The symbols for some package handling instructions are internationally standardised in ISO R/780 (International Organisation for Standardisation) Packaging Pictorial Marking for Handling of Goods. These are not specific to medical items and do not include handling of dangerous goods. The way that the items will be stored, moved and used may require the items to be packaged in a particular way. This may be different to the way the items are normally packaged, so suppliers need to know these requirements.

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DOCUMENTATION
As well as information contained on labels there may also need to be other information which will be provided in other documents/leaflets/manuals/package inserts. These will include: Consignment documents we will consider these in a later unit Usage and patient information (package inserts) (e.g. indications and potential adverse reactions) Instructions for administration For equipment, instruments and medical devices: o Assembly set up and calibration instructions o Operating instructions o Maintenance instructions Details of any further treatment or handling needed before the item can be used (e.g. assembly, calibration.) Precautions to be taken (with medical devices) as regards exposure to conditions e.g. magnetic fields, electrical interference, and proximity to other devices.

SPARES AND COMPLEMENT ITEMS

Some medical equipment, instruments and devices will require spares which will be needed to maintain them or should be ordered with the item for use in common breakdown situations. Some medical items require other items to enable them to be used (these are commonly called complement items). It is important that these are ordered together so that they are available for use together. For example, with injectable antibiotics in powder form which need to be diluted before injection, all of the materials required for administration of the antibiotic need to be included in the order, such as the solvent in the vial, the syringes and the needle.

DELIVERY

If supplier selection is managed effectively it is not necessary to carry out laboratory testing on every batch of drugs received from a supplier. Testing may be carried out for new suppliers and for particularly sensitive drugs. All shipments from suppliers though should be physically inspected upon receiving. People carrying out these physical inspections need to be trained to identify potential problems that can indicate quality problems (e.g. damaged packaging). Where there is the need to carry out laboratory testing (e.g. new supplier, sensitive drugs, potential problems identified by physical check) organisations need to have access to quality control laboratories to test drug products. These may be government operated laboratories, or in some countries a college of pharmacy or an independent laboratory may have the required facilities. If there is a doubt with a product, it will remain under quarantine and not available for dispatch until a technical expert resolves the problem. 23