ABSTRACT
Background:
Drug inventory system is an essential component of a healthcare system as it assists in procurement of drugs in adequate amounts at the right time at minimal cost. The methods utilized are Always, Better and Control (ABC), Vital, Essential and Desirable (VED) and Matrix of ABC-VED.
Methods:
Information on medications procured in the hospital during the financial year 2022–2023 was evaluated. The drugs were classified as VED depending on the National list of essential medicines (NLEM) and local hospital formulary. These drugs were analysed as per ABC, VED and ABC-VED matrix.
Results:
31,221,421 INR (Indian rupee) is the Average Drug Expenditures (ADE) for 225 drug items purchased. Categories A, B, and C comprised 12.89%, 23.12%, and 64% of the total drugs, constituting 63.55%, 23.55%, and 12.88% of the hospital’s ADE, respectively. Items categorized as VED constituted 23.56%, 52.89%, and 23.56% of the total drugs, constituting 25.88%, 44.62%, and 25.88% of ADE, respectively. According to ABC-VED matrix analysis, the items in categories 1, 2, and 3 comprised 41.78%, 44.89%, and 13.34% of the total drugs constitute 79.29%, 17.55%, and 2.08% of ADE, respectively.
Conclusion:
The ABC-VED matrix analysis seems to be the best approach to adequate inventory management.
KEYWORDS: ABC–VED matrix analysis, drug procurement, inventory management
INTRODUCTION
Drugs constitute one of the most essential components of a healthcare system. Inadequate medication supply can result in subpar medical service and an adverse image of the healthcare setup. In addition, medications frequently go out of supply and expire prior to being used. Hence arises the cruciality of the proper functioning of a standard drug inventory management system and drug procurement process. This helps in maintaining the quantity of drugs in a manner that effectively balances demand and supply at an affordable cost. This process includes proper selection of drugs, storage, distribution, stock management, data generation about the usage of drugs, and using that data for further budgeting and forecasting.
The methods utilized are Always, Better, and Control (ABC) analysis, which focuses on drug prices, and Vital, Essential, and Desirable (VED) analysis, which focuses on the criticality of drugs. The matrix of ABC-VED is an integrated approach utilizing both the above methods. The ABC approach aids in determining which items need more consideration in maintaining drug inventory, and 70 percent of the allocated funds are usually spent on Group A.[1] The other 10 percent of funds are spent on Group C, whereas Group B storage products consume 20% of the finances.[2] While this approach ensures stringent oversight and regulation of the most expensive drugs, it fails to adequately address the criticality of drugs that fall into the B and C categories. VED analysis categorizes drugs based on their criticality to patient care. Vital (V) drugs are essential for patient survival, essential (E) drugs are necessary for effective treatment, and desirable (D) drugs, while beneficial, are not critical. However, this method may overlook the financial implications of drug procurement, focusing solely on clinical importance without regard to cost. The integration of ABC and VED analyses addresses the limitations of applying each approach in isolation. It combines the ABC and VED studies, a matrix is produced, which is classified into the following categories: I, II, and III. Category I consists of subgroups AV, AE, AD, BV, and CV. The BE, CE, along with BD subcategories, in category II. Category III consisted of the remaining in the CD subcategory.[3] Data pertaining to drug procurement in a tertiary healthcare setup is scarce. Hence, we envisaged this study to evaluate the drug procurement pattern in our institute.
MATERIALS AND METHODS
The study was commenced after obtaining institutional ethics committee approval. Information pertaining to yearly usage and expenses of each drug for the financial year 2022–2023 was gathered from the drug store records. The data was transcribed on Microsoft excel sheet software and analysed. During the aforementioned period, there were 225 medications included in the drug inventory.
All the prescribed drugs underwent an ABC evaluation. The yearly cost of every product was put in descending order, and the total cost of each product was determined. Calculations were made to determine the total expenditure and the proportion constituted by each product. The overall expense of the percentages 70, 20, and 10% was subsequently utilized to break this list into three groups, A, B, and C. All of the elements on the list were classified according to the vital (V), essential (E), and desired (D) groups to complete the VED analysis. Lastly, ABC- ABC-VED matrix was produced. The resultant permutations were sorted into the following categories: I, II, and III. Category I consisted of 94 items from the subgroups AV, AE, AD, BV, and CV. The BE, CE, and BD subcategories together accounted for 101 items in category II. Category III consisted of the 30 remaining goods in the CD subcategory.
RESULTS
31,221,421 INR represents the aggregate Average Drug Expenditure (ADE) for 225 goods purchased in 2022–2023. The details of ABC analysis are shown in Table 1 and Figure 1, and those of VED and matrix in Table 2 and Figures 2 and 3. Category I items (AV, AE, AD, BV, and CV) make up 41.78% of all drug products.
Table 1.
ABC analysis
| Category | Number of items (% of items) | Annual Drugs Expenditure (%) |
|---|---|---|
| A | 29 (12.89%) | 63.55% |
| B | 52 (23.12%) | 23.55% |
| C | 144 (64%) | 12.88% |
Figure 1.
ABC Analysis cumulative curve
Table 2.
VED and ABC-VED matrix analysis
| Category | Number of items | Percentage of items | Percentage of ADE (Annual drug expenditure) |
|---|---|---|---|
| V | 53 | 23.56% | 25.88% |
| E | 119 | 52.89% | 44.62% |
| D | 53 | 23.56% | 25.88% |
| Category I | 94 | 41.78% | 79.29% |
| Category II | 101 | 44.89% | 17.55% |
| Category III | 30 | 13.34% | 2.08% |
Figure 2.
VED analysis cumulative curve
Figure 3.
ABC-VED matrix cumulative curve
DISCUSSION
The results of the study reflected that the majority of items fall under Category A, with percentages ranging from 63.55% to 74.87%.[4] This trend is consistent across several institutes in India, indicating a focus on critical items. Similar findings are seen for category B, ranging from 19.95% to 23.55%.[5] The Category C percentage remains relatively low, ranging from 5.03% to 12.88%.[6] Vital (V) items consistently make up a significant portion of the total inventory, with values ranging from 17.14% to 28.23%. The percentage of Essential (E) items fluctuates significantly, with the highest being 72.38% and the lowest 44.62% at our institute. Desirable (D) items range from 10.38% in PGIMER to 25.88% in this study.[7]
The data from the study shows that Category I items consistently represent the majority of the inventory, with percentages ranging from 68.57% to 83.76%.[8] This highlights the critical need for institutions to focus on the timely availability of essential items. Category 2 and Category 3 items, while less significant, also show noteworthy proportions. For example, this study reported 79.29% of its items as Category I, emphasizing the importance of ensuring that urgent and high-priority resources are readily available.
Comparison across ABC-VED analysis of various studies has led to the following implications. Firstly, consistent focus has been given to the critical items (Category A and Vital items) across all institutions. Secondly, there is increased focus on Vital items in recent years, which is likely a response to evolving healthcare needs and the increasing importance of life-saving treatments and medicines. Thirdly there exists a variability in Essential item allocation, such that the institutes seem to prioritize supplies based on their patient demographics, medical specialties, and available resources.
CONCLUSION
The ABC-VED matrix analysis seems to be the best approach of adequate inventory management. Such studies done regularly will guide in maintaining a standard drug procurement policy.
Conflicts of interest
There are no conflicts of interest.
Funding Statement
Nil.
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