Drug stockouts affect hospitals

The Central Medical Stores Trust (CMST) and most public health facilities are struggling to stock half of essential medicines due to lack of funds, which could lead to a full-blown health crisis in the country, Nation on Sunday has established.

Our investigation, which involved analysing reports and interviews with officials from 10 district hospitals and four referral facilities as well as patients has revealed a set of problems that have led to drug shortage–chief among them being poor funding and a bureaucratic procurement system, especially for district hospitals.

In just four months this year–between July and November—at least 60 percent of all districts in Malawi had spent over half of their drug budget for the 2021-22 fiscal year.

The worst affected districts on the list are Salima, Nkhotakota, Likoma and Kasungu which have consumed over 70 percent of their annual drug budget in four months.

District health director of one of the districts, who spoke on condition of anonymity, said the development is a result of inadequate funding.

Said the director: “This does not mean we have overspent, but it is because we have more needs compared to funding. Actually, we go for most basic medicines and supplies just to have something to run the hospital. We usually operate at less than 50 percent of what we require, otherwise if we procured all our requirements the budget would be blown in a week.”

Various medical personnel in a number of health facilities corroborated that while funding is an issue, availability of drugs at CMST is another serious challenge.

The hospital officials said perhaps, like central hospitals, they should be allowed to manage part of their drug budget to be able to procure from private suppliers in case CMST has run out of stock.

Government, through the National Local Government Finance Committee (NLGFC) has given each district a ceiling on how much they can spend on drugs in a year. Unlike central hospitals which manage their own budget and are free to buy from anywhere, district hospitals can only procure from CMST, whose stock levels are equally low to meet their demands.

In an interview, CMST board chairperson Josiah Mayani admitted the low stock levels of drugs, attributing it to government’s failure to pay for the drugs that the trust supplies to hospitals, leading to piling of debt.

The board chair said CMST is now at the mercy of suppliers– whom they owe over K19 billion.

Said Mayani: “Health facilities use their drug budget to purchase commodities from us and we use the same money to replenish our stock. But what has been happening is that we supply commodities and then we are not paid for it. How do we replenish stock without money?”

Procedurally, hospitals place orders to CMST based on their needs and funds and then the CMST will supply and claim payment from NLGFC.

“Think of it–we have the stocks but we cannot supply health facilities because they have not paid us. So, on humanitarian grounds and for political reasons, we have gone ahead to supply just to save the situation because our products are critical in saving life,” added Mayani.

Meanwhile, Pharmacists Association of Malawi (Phasom) president William Mpute has said it is important to allow district hospitals to buy drugs from other suppliers besides CMST.

He said while the policy to buy only from CMST was done to standardise the quality of supply in public hospitals, experience has shown that this has not worked satisfactorily.

Said Mpute: “So, if the CMST does not have a medicine or medical item, most public facilities in the country will in turn not have that item. Sometimes a life-saving medicine can be out of stock for a year simply because the CMST does not have it.”

CMST stock is based on hospital orders, and the procurement of medicines and supplies in the country is guided by the Malawi Standard Treatment Guidelines 5th Edition of 2015. The guidelines outline which medicines are most needed and for which health facility–from central hospitals to health centres.

The must-have list includes life-saving drugs and those that are generally required by a large of people. But even these are largely in short supply in all public hospitals.

Buy Malawi policy knocks down hospitals

The Public Procurement and Disposal of Assets Act (2017) compels government ministries, departments and agencies (MDAs) to give preference to local suppliers over foreign ones (60-40) as part of the Buy Malawi Strategy (BMS).

But in an interview after meeting with Parliament two weeks ago, CMST chief executive officer Chikaiko Chadzunda said the strategy has exposed them to exorbitant prices.

He said: “Prices of medicine are higher under BMS and when such prices are passed on to hospitals–their purchasing power is reduced. So, they end up buying just a fraction of what they want and this has to be considered.”

On his part, Society of Medical Doctors president Victor Mithi also said while drug budgets are inadequate, the price at which CMST sells the products to district hospitals is too high to enable the facilities buy other essentials.

He said the problem is not CMST, but local suppliers who abuse the BMS to charge exorbitantly, urging government to allow CMST to import drugs at prices lower and affordable to hospitals.

Argued Mithi: “Most local suppliers charge exorbitantly. They know, after all, that even if they are expensive, CMST will still buy from them. We think the trust must not be compelled to buy local all the time but from anywhere to make prices affordable.”

Meanwhile, the Public Procurement and Disposal of Assets Authority (PPDA) has confirmed suspending application of BMS to CMST procurement as part of the solution to persistent drug stock outs.

In an interview, PPDA public relations officer Grace Thipa said: “The PPDA has suspended procurements under the Buy Malawi Strategy-Pharmaceutical Manufacturing Malawi [BMS–Phamam] pending a detailed audit of the performance of a memorandum of understanding that was being used to make the procurements.”

And according to a report submitted to the Parliamentary Committee on Health, CMST further wants government to consider providing waivers for public procurement processes for medicines and medical supplies where, sometimes, procedures tend to delay supply.

The trust has also requested for ring-fencing forex for procurement of medicines and medical supplies by the Reserve Bank.

Mpute, however, thinks that buying local is not a problem but perhaps Malawi needs to have more manufacturers of pharmaceuticals that will make products easily accessible and possibly cheaper.

The Phasom president said this will reduce incidences of stock-outs associated with logistical hiccups when importing medicines and medical supplies.

He argued: “We must recapitalise CMST to get it back on its feet. We should also certify more than one supplier for public facilities. If we have more, it will give the public facilities options and prices are likely to be competitive, to the advantage of financially-struggling health facilities.”

Drugs rot as people lack medicines

Another cause of drug stock out, we have established, is expiry of drugs. According to Mayani there are times when CMST has a product but it does not have the market.

But Mithi argued that the trust must not keep drugs that are out of stock in hospitals simply because the hospitals cannot afford them.

He said: “Why not supply to district hospitals on credit? They can even donate to facilities that need it the most. How does the trust benefit from allowing drugs to expire when district hospitals are having shortages?”

Mayani, however, said donations have affected CMST’s sales, adding that sometimes government accepts donations even for medicines that are already in stock.

He explained: “We have cases where government has received donations of drugs that we already ordered and this affects our market because we order based on requests from hospitals. Ideally, donations mean hospitals are saving and we are losing. So, we need proper coordination and better still, we must be coordinating donations.”

Since 2012, when the trust was established, drugs worth about K20 billion have expired–an amount which is equal to what CMST currently owes suppliers.

Meanwhile, as a response to persistent drug shortages, Treasury has promised to recapitalise CMST with K12.5 billion.

The trust is optimistic that the recapitalisation will help improve the drug supply challenge.

A report submitted to Parliament by CMST chief executive officer Chadzunda last month reads: “We have fast-tracked procurement of some items… and the situation is likely to progressively stabilise by January 2022.

“CMST is implementing turnaround strategy to improve financial sustainability and operational efficiencies, especially in procurement, warehouse and inventory management.”