Procedural Guidelines on the Procurement, Inspection, and Distribution of Various Drugs and Medicines under the Low-Cost Medicine Program of the DOH

December 27, 2005

DOH ADMINISTRATIVE ORDER NO. 2005-0033

 

I. Rationale

In accordance with the goals, strategies and action of the Medium Term Philippine Development Plan 2004-2010 (Chapter 12. II. a), that is to: "reduce the cost of medicines commonly bought by the poor to half of their 2004 prices and make these available nationwide through a distribution network as determined by the DOH, in coordination with PITC," the Department of Health has spearheaded the establishment of Botika ng Barangay Village Drug Outlets and DOH Botikas under the Retained Hospitals. The Department of Health, facilitates the identification and quantification of drug demands, which are procured by the Philippine International Trading Corporation (PITC), whenever their price offers are reasonable and are distributed to specific sites identified by the Department of Health. acAIES

Recent Audit Observation Memoranda (AOM) issued by the Commission on Audit (COA) to the Department of Health (DOH) revealed that there are areas in the management of the low-cost medicine program that further require fine-tuning to ensure efficiency, transparency, and to preclude unnecessary wastage of resources. Specifically there is a need to clearly define the roles and responsibilities of participating units in the program so that the right goods and services are delivered at the right time, at the right place, with right quantity to the right recipients and to provide the right information through an automatic feedback and monitoring mechanism that would help decision-making.

II. Objectives

The Objectives of this Department Order are the following:

1. To provide procedural guidelines on the procurement, inspection, distribution and accounting of various drugs and medicines under the low-cost medicine program of the Department of Health;

2. To clearly identify the roles and responsibilities of the participating units within the DOH and other partner Agencies like the PITC. EacHCD

III. Scope and Coverage

This Order shall be applicable to all participating units of the Department of Health, from Central Office to the Centers for Health Developments and the Retained Hospitals. Provisions of this Order that may affect Inter-Agency relationship and reporting mechanisms shall be reflected on or translated into the appropriate documentary instruments (e.g. Joint Circulars, Contracts, Memorandum of Agreements). Although, this Order identifies the PITC as a DOH supplier such is non-exclusive and may be subject to conditions set forth in the Republic Act No. 9184 also known as the Procurement Reform Law in identifying other suppliers which may provide goods and services that are more advantageous to the Government.

IV. General Guidelines

1. The pertinent provisions of the Republic Act No. 9184 also known as the Procurement Reform Law shall be applicable at all times to the procurement procedures set forth in this Order.

2. The procedure set forth in this Order shall be applicable only for procurements coursed through the Philippine International Trading Corporation and/or other authorized entities of the Government with mandate and technical capability to procure and distribute goods in favor of the Department of Health in accordance with Section 53 (e) of the Procurement Reform Law.

3. Technical and specific procedures on procurement not mentioned in this Order shall be subject to the pertinent provision of the Procurement Reform Law:

4. The drugs and medicines that shall be procured must be reflected on the Annual Procurement Plan (APP) or in the supplemental APP in case there is a change on the actual demands or consumption patterns of final end-user beneficiary entities (the Botika ng Barangays under the CHDs and the DOH Botikas under the DOH Retained Hospitals). aATEDS

5. The price offers from the PITC shall be at all times subject to price comparison and monitoring prior to procurement.

6. The drugs and medicines procured through PITC shall be subject to the usual inspection, sampling and testing protocols of the Department of Health and shall be subject to the usual accounting and auditing rules and regulations.

7. Only drugs and medicines that are reflected on the latest edition of the Philippine National Drug Formulary (PNDF) Volume I shall be procured in accordance with the Executive Order No. 49.

8. This Order shall be appended to and form part of the conditions set forth in the Purchase Order/Contract that will be issued to PITC or any other entities of the Government mandated or authorized to undertake procurement and distribution functions.

V. Procedural Guidelines

A. Drug Supply Management Procedure under the condition that the goods will be delivered directly to the Department of Health Central Office Warehouse and that distribution will be handled directly by the Department of Health

1. The Pharma 50 conducts a survey on the drug demands of the CHDs and hospitals using a template Requisition and Issue Slip (RIS) reflecting therein the name of drugs and medicines that are authorized to be procured. The RIS shall be accomplished by the CHDs and by the participating DOH Retained Hospitals by reflecting therein the requested quantity of the drugs and medicines. The CHDs and the DOH Retained Hospitals may reflect items not originally written on the RIS template and their corresponding quantity provided that these are in the latest edition of the PNDF Volume I and subject to the approval of the Pharma 50 Unit. The CHDs and hospitals shall thereafter submit the accomplished RIS back to Pharma 50 within the approved timelines.

2. The Pharma 50 collates the accomplished RIS from different CHDs and hospitals and prepares a drug list with aggregate quantification for each drug, using a Purchase Request (PR) form and checks their presence in the APP. If these are not reflected on the APP, supplemental APP is made for the approval of the Project Executive Officer (PEO) of PMU 50 Unit or the head of the procuring entity. The PR is then cleared by the National Drug Policy Program (NDPP) if their specifications are reflected on the latest edition of the PNDF Volume I.

3. A Certificate of Availability of Funds (CAF) is requested by the Pharma 50 from the Finance Service (FS) that would cover the items reflected on the "cleared" PR.

4. The "cleared" PR, the APP or the supplemental APP (if needed) along with the CAF shall be forwarded to the Procurement Division for review and endorsement to the Central Office Bids and Awards Committee (COBAC) for the latter to recommend the appropriate alternative mode of procurement prior to the approval of the head of the procuring entity. acADIT

5. In case, the procurement mode will be through PITC following section 53 (e) of the Procurement Reform Law, a Technical Working Group shall be activated by the COBAC composed of representatives of Pharma 50 and Procurement Division and other beneficiary end-user units within the DOH to conduct price comparison and monitoring that would validate the price offers of PITC and shall set the negotiation terms and conditions for procurement and distribution that shall be undertaken by PITC that shall be reflected or form part of the Purchase Order/Contract that will be issued to PITC.

6. A Purchase Order (PO) is prepared by the Procurement Division for submission to PITC, reflecting therein the agreed terms and conditions for procurement and distribution. The Materials Management Division (MMD) is furnished with a copy of the said document and forwards another copy to Inspection and Acceptance Committee (IAC).

7. The PITC accomplishes its own delivery order and sends it to their principal supplier. The principal supplier then issues a Delivery Receipt (DR) and Sales Invoice (SI) upon distribution of requested goods.

8. The PITC sends a Request For Delivery (RFD), and facilitates the delivery of goods to the MMD together with the following documents:

a. Delivery Receipt

b. Purchase Order

c. Sales Invoice

d. Certificate of Product Registration

e. Certificate of Analysis

f. Batch Certification (for antibiotics)

9. The MMD provides the approved schedule to the PITC to effect actual delivery. SaTAED

10. Once a delivery is effected by PITC, the MMD within twenty four (24) hours shall prepare and submit a Notice of Delivery to Finance Service (FS) and Request for Inspection (RFI) to the IAC with the following attached documents: SI and DR accomplished by PITC.

11. The IAC shall conduct inspection along with other representatives such as Bureau of Food And Drugs. The IAC with BFAD representatives will conduct physical inventory of all the goods as to quantity, verification of compliance to appropriate handling and storage condition where the goods are kept, verification on the physical condition of the goods in terms of packaging and required labels. The IAC together BFAD shall obtain representative samples of the drugs per lot no that shall be used for retention and BFAD testing. Retained goods shall be stored by the PITC but must be packed and countersigned by the representatives of the IAC. Thereafter, BFAD test results are then forwarded to the IAC. Documents attached in the said transaction include the RFI, SI, DR, and PO.

12. An Inspection and Acceptance Report (IAR) accomplished by the IAC is submitted to MMD, The MMD in turn furnishes the Pharma 50, the Commission on Audit Resident Auditor and the PITC a copy of the said report. The MMD will prepare a voucher with the following attachment: IAR, SI and DR to Finance Service so that PITC will be paid.

13. The Pharma 50 prepares and submits the Allocation List (AL) attached to PO, to the MMD necessary for the preparation of the Invoice Receipt (IR) and Bill of Lading (BL). The MMD will undertake the distribution of goods to recipient CHDs and hospitals.

14. The end-user CHDs and hospitals shall affix their signatures on the IR and BL. The MMD then collates the accomplished IR and BL from its designated forwarder and shall append these to Report of Issuance to update books in Finance Service. The MMD shall likewise copy furnish the PMU 50 of such report. aSCHIT

B. Drug Supply Management under the condition that the goods will NOT be directly delivered to the Department of Health Central Office Warehouse but will be inspected at the supplier's warehouse and that distribution to DOH identified sites will be undertaken directly by the supplier

1. The Pharma 50 conducts a survey on the drug demands of the CHDs and hospitals using a template Requisition and Issue Slip (RIS) reflecting therein the name of drugs and medicines that are authorized to be procured. The RIS shall be accomplished by the CHDs and by the participating DOH Retained Hospitals by reflecting therein the requested quantity of the drugs and medicines. The CHDs and the DOH Retained Hospitals may reflect items not originally written on the RIS template and their corresponding quantity provided that these are in the latest edition of the PNDF Volume I and subject to the approval of the Pharma 50 Unit. The CHDs and hospitals shall thereafter submit the accomplished RIS back to Pharma 50 within the approved timelines.

2. The Pharma 50 collates the accomplished RIS from different CHDs and hospitals and prepares a drug list with aggregate quantification for each drug, using a Purchase Request (PR) form and checks their presence in the APP. If these are not reflected on the APP, supplemental APP is made for the approval of the Project Executive Officer (PEO) of PMU 50 Unit. The PR is then cleared by the National Drug Policy Program (NDPP) if their specifications are reflected on the latest edition of the PNDF Volume I.

3. A Certificate of Availability of Funds (CAF) is requested by the Pharma 50 from the Finance Service (FS) that would cover the items reflected on the "cleared" PR.

4. The "cleared" PR, the APP or the supplemental APP (if needed) along with the CAF shall be forwarded to the Procurement Division for review to determine the appropriate mode of procurement subject to approval by the Central Office Bids and Awards Committee (COBAC). HAICcD

5. In case, procurement mode will be through PITC following section 53 (e) of the Procurement Reform Law, a Technical Working Group shall be activated by the COBAC composed of representatives of Pharma 50 and Procurement Division and other beneficiary end-user units within the DOH to conduct price comparison and monitoring that would validate the price offers of PITC and shall set the negotiation terms and conditions for procurement and distribution that shall be undertaken by PITC that shall be reflected or form part of the Purchase Order/Contract that will be issued to PITC.

6. A Purchase Order (PO) is prepared by the Procurement Division for submission to PITC, reflecting therein the agreed terms and conditions for procurement and distribution. The Materials Management Division (MMD) is furnished with a copy of the said document and forwards another copy to Inspection and Acceptance Committee (IAC). An attachment to the PO is the list of beneficiaries and the set of allocation for each

7. The PITC accomplishes its own delivery order and sends it to their principal supplier. The principal supplier then issues a Delivery Receipt (DR) and Sales Invoice (SI) upon distribution of requested goods.

8. The PITC prepares and submits a Notice of Delivery and Request for Inspection to MMD with the following attached documents:

a. Purchase Order

b. Sales Invoice

c. Delivery Receipts accomplished by PITC that reflects the CHD/Hospital recipient

d. Certificate of Product Registration.

e. Certificate of Analysis

f. Batch Certification (for antibiotics)

9. MMD requests the inspection of goods delivered and submits a Request for Inspection (RFI) with the attached RFI of the PITC to IAC. IAC shall in turn request the Bureau of Food and Drugs (BFAD) to conduct testing of the aforementioned goods. Test results are then forwarded to the IAC. Documents attached in the said transaction include the RFI, SI, DR, and PO. cHAaCE

10. An Inspection and Acceptance Report (IAR) accomplished by the IAC is submitted to MMD, The MMD in turn furnishes the Pharma 50 and PITC with a copy of the said report. The MMD endorses the IAR, with the SI and DR as attachments, to Finance Service, provided that it shall be stated in the IAR the condition that the delivered goods are subject to final acceptance of recipient CHDs and hospitals as well as post-marketing surveillance reports.

11. The Pharma 50 prepares and submits the Allocation List (AL) to the MMD. The MMD in turn prepares the necessary for the preparation of the Invoice Receipt (IR) based on the AL submitted. Thereafter, the MMD submits a Notice to Distribute (NTD), with the IRs as attachments, to the PITC. The PITC shall accordingly distribute the goods to recipient CHDs and hospitals, using its own forwarder.

12. The end-user CHDs and hospitals shall affix their signatures on the IR (DOH) SI (PITC) and DR (PITC) upon receipt of the goods. The PITC shall likewise furnish the recipient CHD/Hospital a copy of the PO from Central Office, and copies of the Certificate of Product Registration and Certified True Copy of BFAD analysis. The CHDs/Hospitals forwards the same instruments to PITC, through the PITC forwarder. The PITC submits the duly accomplished IR as well as the SI and DR from PITC, to MMD.

13. Upon completion of deliveries, the MMD shall prepare a Report of Issuance (ROI) for submission to FS with the following attached documents: IR, SI and DR updating of the books of accounts. The MMD shall likewise prepare the necessary voucher to pay PITC. CHTAIc

C. Essential Data Elements that must be reflected on all documentary instruments and appropriate accountable forms

1. The following data elements must be strictly reflected, in tabulated manner, on the Invoice Receipts prepared by the Department of Health and on the Delivery Receipts of authorized suppliers, which include but not limited to PITC, and on the Inspection and Acceptance Reports:

a. Generic Name of the Drug

b. Brand Name (if there's any)

c. Quantity

d. Unit

e. Unit Price

f. Total Price

g. Lot No/Batch No

h. Expiration Date

i. Manufacturing Date

j. Manufacturer/Distributor/Trader/Importer

In tabulating the said data elements, there should be one is to one correspondence insofar as the quantity, lot/batch no, manufacturing date, expiration date and principal manufacturer are concerned.

2. The following data elements must be reflected on the Purchase Orders/Contracts:

a. Approved Delivery Period

b. Remaining shelf-life of drugs reckoned from the time of receipt, i.e. at least eighteen (18) months at the time of inspection at the DOH Central Office level and at least fifteen (15) months at the time of receipt at the CHD/Hospital level. AEIHaS

c. Replacement Conditions as consequence of narrow shelf-life, i.e. for drugs which shelf life are less than fifteen (15) months at the time of receipt at the CHD/Hospital level must be replaced by the supplier five (5) months prior to expiration and upon notification of the specific end-user.

d. Penalty provision for late deliveries.

D. Specific Monitoring and Accounting Instructions

1. All goods that are to be sold by both the Botika ng Barangays and the DOH Botikas, using funds reflected on the General Appropriations Act (GAA) must be properly booked and accounted for by the concerned CHDs and Retained Hospitals, respectively.

2. The CHDs and Retained Hospitals must officially designate officials authorized to receive the goods under the low cost program and must submit the names of the same authorized officials to the Pharma 50 Operations Center, Bldg 1, Department of Health Central Office within three days from the issuance of this Order and must inform the same within the same period of time whenever there are changes on authorized officials.

3. Remittances of Participating Retained Hospitals under the Parallel Importation Scheme must strictly remit their sales every month in accordance with Administrative Order No. 69. s. 2001. The remittance shall include the equivalent cost of the drugs sold and one-tenth (1/10) of the profit to ensure sustainability of the revolving funds and to preclude effects of inflation on the real price of the drugs. A breakdown of the remittance into cost and infusion fund (1/10 of the profit earned by the DOH Hospital) must be reflected on the transmittal (report) letter of the DOH Hospital. SHIETa

4. Reports of sales and inventory reports shall likewise be submitted to the Pharma 50 Operations Center every month in accordance with the specific provisions of Memorandum No. 14 s. 2004.

5. The DOH Participating Retained Hospitals under the parallel importation scheme must submit their Requisition and Issue Slip (RIS) for re-order purposes at least a month covering the request for the succeeding quarter to the Pharma 50 Operations Center. The different CHDs shall likewise follow the same timelines for the submission of their RIS covering re-orders of the Botika ng Barangays under their jurisdiction and shall create the necessary Revolving Trust Funds, as provided for in the Special Provision No. 7 of the GAA CY 2005, that will be used to safeguard funds received from the Botika ng Barangays for purposes of re-order. The RIS from the CHD shall be accompanied with a Certification of Availability of Funds (CAF) covering the remittances from the BNBs. The DOH Pharma 50 Operations Center and the Finance Service shall clearly identify personnel who are authorized to receive the remittances and who will account for the same. A joint Task-Force composed of the representatives from the Pharma 50 Operations Center, the Finance Service, and from other concerned units within the DOH shall be formed in order to account and reconcile deliveries versus the remittances. aTIEcA

6. Drugs that were not sold (i.e. those given free to indigents, transferred to other units, or those which have expired as a consequence of imputed risk on fluctuation or sudden lack of demand) must be replaced by the DOH Participating Hospital by an equivalent amount from the Hospital's MOOE so as not to deplete the revolving funds in accordance with Department Memorandum No. 2005-0052.

7. Drugs with remaining shelf-life of at least six (6) months before expiration and are covered under replacement conditions set forth in the contract/agreement between the DOH and the authorized supplier must be accounted for and reported to the Pharma 50 Operations Center especially when the probability that these will not be sold in their entirety in the remainder of their shelf-life is high. Failure to report shall be construed as an acceptance of responsibility wherein the preceding condition IV. D. 6 shall be applied. Disposal of unutilized drugs shall be subject to the usual accounting and auditing rules that shall be observed by the CHDs/DOH Retained Hospitals. ICcDaA

8. Reports on inventory and sales of Botika ng Barangays shall be submitted by the CHDs in accordance with the format and schedules provided for in Department Memorandum No. 118 s. 2004.

VI. Annexes

A. Procedural Flow Chart of IV. A

B. Procedural Flow Chart of IV. B

VII. Separability Clause

If any provision in these guidelines or application of such provision to any circumstance, is held invalid, the remainder of these guidelines shall not be affected.

VIII. Repealing Clause

The provisions of previous issuances, which are inconsistent with those provided in this Order, are hereby rescinded and modified accordingly. aTEHIC

IX. Effectivity

This Order shall take effect immediately.

(SGD.) FRANCISCO T. DUQUE III, MD, MScSecretary of Health

ANNEX A

DOH WILL UNDERTAKE DISTRIBUTION

 

 

ANNEX B

PITC/SUPPLIER WILL UNDERTAKE DISTRIBUTION