Pharmaceutical expenditure analysis and assessment of pharmaceutical inventory control management practices in Saint Paul’s Hospital Millennium Medical College

No Thumbnail Available



Journal Title

Journal ISSN

Volume Title


Addis Ababa Universty


Background: Inadequate allocation of fund for the purchase of pharmaceuticals and inefficiencies in the supply chain are major causes of stock-outs in public hospitals. Analyzing purchased pharmaceuticals based on their budgetary consumption and importance (i.e. ABC & VEN) is expected to increase efficiency, save budget and diminish costs associated with overheads and wastages in the pharmaceutical supply chain. This study used ABC and VEN approaches to analyze medicine expenditures and explored inventory control practices of Saint Paul Hospital Millennium Medical College (SPHMMC). Objective: To conduct pharmaceutical expenditure analysis and asses pharmaceutical inventory management practices of Saint Paul Hospital Millennium Medical College. Method: Facility based descriptive cross sectional study using quantitative and qualitative data collection method was conducted. For the quantitative part, three years (2013/14-2015/16GC) Annual Pharmaceutical Expenditures (APE) were collected and Always, Better and Control (ABC); Vital, Essential and Non-essential (VEN) and ABC-VEN matrix techniques were applied for the analysis. For the qualitative part, data was collected through in-depth interview with the pharmacy professionals and analyzed thematically. Results: St. Paul Hospital allocated 12 9 million (9.4%), 24 million (13.2%) and 31. 4 million (9.04%) for pharmaceuticals from its budget for the year 2013/14, 2014/15 and 2015/16, respectively. However, 45.3 million, 49.2 million and 79.0 million Birr (ETB) were used to purchase pharmaceuticals for the financial years 2013/14, 2014/15 and 2015/16 respectively. In the year 2015/16, the share of medical supplies, medicines and laboratory reagents were 45%, 28% and 27% respectively. Of the share of medicines, endocrine medicines accounted the highest percentage (20%) followed by anti-infectives (16.7%). On ABC analysis, about 17%, 18% and 10% of the pharmaceuticals consumed 79%, 80% and 80% APE and classified as ‘class A’ from year 2013/14 to 2015/16 respectively. From class A items; gauze surgical 90x100 in 2013/14, surgical glove sterile latex no 7.5 in 2014/15, and examination glove in 2015/16 consumed the lion shares; 20%, 7.8% and 32% of the APE respectively. On VEN analysis, of 539 analyzed in 2013/14; 25.6%, 59.5% and 5.4% were ‘V’,’E’ and ‘N’ respectively while 588 pharmaceuticals were analyzed in 2014/15 out of which; 24.5%, 54.4% and 4.4% were ‘V’,’E’ and ‘N’ respectively. And of 661 items analyzed in 2015/16; 21.8%, 58.7% and 8.9% were XII ‘V’,’E’ and ‘N’ respectively. There were also pharmaceuticals; 9.5%, 16.7% and 10.6% in the respective years, that were purchased and not included in the hospital’s medicine list. On ABC-VEN matrix analysis, 35%, 34% and 27% items were found to be category I (AV, AE, AN, CV, BV) accounting more than 80% of APE in 2013/14, 2014/15 and 2015/16 respectively. About 51%, 46% and 54% items were found to be category II (BE, CE, BN) accounting about 12% of APE from 2013/14 to 2015/16 respectively. 4.8%, 3.6% and 8.3% items from 2013/14 to 2015/16 respectively, were found to be category III (CN) accounting less than 1% of APE. Inadequate storage space, lack of adequate supply of pharmaceuticals and provision of new and near to expiry pharmaceuticals were identified to be the major challenges in inventory management leading to stock-outs and expiry of pharmaceuticals in SPHMMC. Conclusion and recommendation: On ABC-VEN matrix, the study indicated; top level management for control of AV items, limiting use of N items (AN, BN and CN) and bulk purchase of CV which would help in saving costs. In general, the ABC and VEN techniques need to be adopted as a routine practice for optimal use of resources. The priority for the purchase of pharmaceuticals should be based on VEN list which again should be updated regularly. In general, poor performance of inventory control management was indicated in the hospital with arbitrary decisions on quantity and frequency of ordering leading to frequent stock-out and expiry of pharmaceuticals indicating a need for follow-up actions in order to curb the challenges and hence, efficient use of limited resources.



ABC analysis, VEN analysis, ABC-VEN matrix, pharmaceuticals, Inventory management, Saint Paul Hospital Millennium Medical Collage