E-drug: E-commerce in drug sales and procurement (cont)
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Dear Dr. Haichao Lei,
Thank you for clarifying your request. I apologize for the delay,
but I have to divide your request up into individual ones because it
is still quite huge for one email. Also, please note that this
response does not include the myriad of situation-specific issues
that are involved in transferring such technology from a high-income
country to a mid-income country such as China. The effects on your
labor force, pressures on institutional capacity, quality assurance,
etc., are all issues that I trust you are looking at very closely
before undertaking such proposed reform. Please let me know if I
have not answered these first two questions to your satisfaction.
You specified:
1. The international module of drug sales and procurement: how the
pharmaceutical products flow from manufacturers to the doctors and
consumers (the supply chain);
2. How does they use E-commerce in drug sales and procurement; MOH of
China is pushing a reform on drug procurement around the country. This
study is to inform the policymakers of the international experience
in this field. I will inform you the advancement as my study goes on.
The best example I could find is from Australia, where the
Pharmaceutical Electronic Commerce and Communication (PECC) project
is introducing Internet Commerce into the pharmaceutical supply
chain. Initially, the participants are six wholesalers (both domestic
and international) who supply to hospitals, and the 700 manufacturers
that they purchase from. The project is based on two important
premises:
a) The use of common numbering for all products, based on an
international product numbering scheme; and
b) The use of the Internet to distribute orders by wholesalers and
receive acknowledgments from manufacturers.
The project is based closely on the supermarket model, where products
are barcoded and scanned on purchase. In time, the pharmaceutical
supply chain will be extended to include end-users, namely hospitals,
so that pharmaceuticals can be scanned by the bedside on consumption.
This will reduce 'shrinkage' - theft and products going out of date.
Their overall goal over lower cost of health deliver is to be
achieved by following business objectives: reduce costs in logistics
supply of pharmaceuticals to wards reduce non-value added repetitive
activties, e.g, accounts reconciliation; and improve customer service
PECC is funded by a number of government agencies and many industry
participants and associations.
Pecc has had coverage in the news discussing the benefits of the
implementation of electronic commerce in the pharmaceutical industry.
An excellent overview of the Efficient Healthcare Consumer Response
(EHCR), a benchmark report prepared in the United States provides an
excellent introduction to the aims of the PeCC project. The objective
of EHCR was to analyse the healthcare delivery system- specifically
supply chain management issues-- for the purpose of reducing
management and distribution costs and improving the quality of
healthcare. The PeCC project has a number of demonstration projects
showing the ability to
implement electronic commerce in the healthcare industry today. You
will find a plethora of information, including your first question
above, the international model of how the pharmaceutical products
flow from manufacturers to the doctors and consumers (the supply
chain) at:
http://www.noie.gov.au/projects/ecommerce/pecc.htm
One of the projects they list there is the Pharmaceutical Extranet
Gateway (PEG) Project http://www.pecc.org.au/demosite.html, which is
the result of a joint government and private sector initiative to
decrease costs from the healthcare supply chain. With this
standardized system, supplier or manufacturers can trade with
wholesale cusomers without the need to implement an expensive
electronic data inventory (EDI) system. There is virtually no
implementation time and the cost is iminal as information is
transmitted on the internet.
Benefits are order processing accuracy, advanced delivery
notification, timely and accurate shared business information, and
streamlined payments.
If you read the full report on the VHA/Ballarat hospital system at
http://www.pecc.org.au/projectp.html, it takes you through the full
cycle of developing the product, the teams and infrastructure
necessary and the technical specifications for each step of the
process:
a) labelling and documents at both 'shipment level' and 'shipper'
level with code identifiers and bar labels
b) electronic notification of hospital of each shipment in form of
eletronic invoice, using above coding to identify
c) automates order-delivery checking and stock 'put away' and payment
authorization
d) improves methods of identification of shipment status, location,
incoming goods scanning, and contents
e) uses open standards thus improving quality assurance,
transparency, and accountability
...the lists and process go on and on....You can see what the
benefits are such as drop in delivery errors, saved time in
correction of errors, reduced warehouse picking errors, improved
stock management, improved tracking of shipments (esp those on the
road), and facilitation of use of internet and web for reference and
info access to pharmaceutical info, the Centre for Disease Control,
etc. The report also has detailed evaluation criteria set against
baseline benchmarks such as...'reduction in overall picking errors by
warehouse detected by hospital', which is then measured by a pre- and
post-implementation
manual stock inventory in present card system, and manual stock
inventory and check against computer stock records, with the
predicted results being that there will be quantifiable improvements
in the accuracy of stock records because of the reduced relizance on
manual maintenance of stock info.
Next, for the full pharmaceutical purchasing and supply chain
processes, see section 6.2 of the Scoping Study for in New South
Wales Central Coast Area Health Service (CCAHS), which was also done
by the PeCC project.
http://www.pecc.org.au/nswreport.html This report also looks at IT
infrastructure needed for a project of this size, as well as the types of
software applications that were most user-friendly (Oracle,
Trendstar, RxVision, etc.). There's a nice diagram on page 24 of 106
of the supply chain. This is really an excellent report that looks
at costs, benefits, and outcomes for all the different institutions
(including accounting) involved in pharmaceutical supply chains for
Australia. Important to note that the report acknowledges that the
pharmaceutical sector in Australia performs more than just drug
dispensing -- they are involved in patient counseling, clinical
reviews, and other services, which are also taken into account in the
process of shifting to e-procurement. One dimension of the sector is
not analyzed in isolation from the others.
The report notes that it's a complicated process, whereby commitment
of all stakeholders (especially the human ones) must be taken into
account for the system to be implemented effectively. See p. 100 of
106.
More to come on your other questions.....
All the best,
Homira
The World Bank
1818 H Street, NW, Wash., D.C. 20433
email: <healthpop@worldbank.org>
tel: 202-473-2256 fax: 202-522-3234
http://www.worldbank.org/hnp
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