BSc PhD MPA MPSNI MCIPS
Regional Procurement Pharmacist
BSc PhD FPSNI MCPP CertMgt CertHealthEcon
Trust Chief Pharmacist
United Hospitals Trust, Antrim
BA MSc MCIPS
Professor of Public Policy and Management
University of Ulster
Public procurement is the process of the acquisition, usually by means of a contractual arrangement after public competition, of goods, services, works and other supplies by the public service. The National Health Service (NHS) spends around £15bn annually on nonpay goods and services, making the NHS a key player in local and regional economies.(1) In the UK, medicines represent £8–9bn (12–13%) of NHS expenditure and the largest single element of nonpay expenditure after estates.(2)
Pharmaceutical procurement is an integral part of medicines management. Medicines management in hospitals encompasses the entire way that medicines are selected, procured, delivered, prescribed, administered and reviewed to optimise the contribution that medicines make to producing informed and desired patient outcomes.(3) The Audit Commission Report A Spoonful of Sugar seeks to place medicines management at the heart of Trusts’ clinical governance responsibilities, and it highlighted the increasing importance of pharmaceutical procurement in the NHS.(3)
Pharmaceutical procurement is a specialist area within a complex NHS organisational structure and dynamic pharmaceutical market. It is subject to a range of professional and regulatory controls and has significant clinical implications, risk management and critical supply chain issues. Effective financial control can, in part, be achieved by pharmacists influencing clinicians at the point of prescribing.(3) Therefore, pharmaceutical procurement must be linked to clinical services. Pharmaceutical staff are required to make ever more complex purchasing and supply decisions, linked with the provision of clinical pharmacy services in an increasingly more dynamic pharmaceutical market.
Health provision within Northern Ireland (NI) is treated as an integrated service, the Health and Social Services (HPSS), which is administered by the Department of Health, Social Services and Public Safety (DHSS&PS). Four HPSS Boards commission health and social care services. They assess local needs, negotiate contracts and arrange services. They are also responsible for ensuring that services are provided to a high standard and are clinically and cost-effective.
Nineteen Trusts in NI provide the services agreed through the commissioning arrangements with the HPSS Boards. The Trusts provide hospital (acute and psychiatric), community and social services, either individually or in combination. There are 15 acute hospitals in NI providing hospital services to patients. A number of community hospitals also provide a range of nonemergency services, and are often supervised by GPs. On 22 November 2005, Minister for Health Shaun Woodward announced the reorganisation of Northern Ireland’s Health and Social Services (HPSS), as part of the Review of Public Administration (RPA). A new strategic health and social services authority with seven commissioning teams will take the place of the four HPSS Boards. The existing HPSS Trusts will be reduced to five organisations.
The DHSS&PS Controls Assurance Standard for Medicines Management places responsibility on Trust Chief Pharmacists for the control of medicines, including procurement.(4) In HPSS Trusts, Chief Pharmacists (on behalf of their Trust Chief Executives) manage pharmaceutical procurement. The annual expenditure on medicines by HPSS Trusts in NI is approximately £52m, and primary care prescription expenditure is approximately £330m.(5) All hospital pharmacists also purchase surgical dressings, including wound management products (annual expenditure £3.5m) and, within three HPSS Boards, a range of medical and surgical disposable items (annual expenditure £8.3m).
Policy and strategy
In May 2002, the Executive agreed to a revised Public Procurement Policy for NI Departments, their Agencies, non-Departmental Public Bodies and Public Corporations.(6) There are 12 guiding principles to govern the administration of public procurement, namely accountability, competitive supply, consistency, effectiveness, efficiency, fair-dealing, integration, integrity, informed decision-making, legality, responsiveness and transparency. The revised Policy applies to all goods and services, including pharmaceuticals.
Strategic purchasing has been defined as the process of planning, implementing, evaluating and controlling strategic and operating purchasing decisions for directing all activities of the purchasing function towards opportunities consistent with the firm’s capabilities to achieve its long-term goals.(7) Strategic procurement is described as the purchase of high-value, high-risk, strategically important and complex goods, services, works and other supplies by the public service.(8) The Pharmaceutical Contracting Executive Group (PCEG) is responsible for the strategic management of the procurement and supply of pharmaceuticals. Its fundamental role is to ensure that regional contracting for pharmaceuticals is fully effective in securing the optimum value for money and appropriate management of risk for the HPSS. The Group reports to Trust Chief Executives and is chaired by the Chief Pharmaceutical Officer of the DHSS&PS. The membership of the group includes the Regional Supplies Director, Trust Pharmacy Managers and a commissioner (HPSS Board) representative, with specialist support provided by the Regional Procurement Pharmacist.
On 20 August 2004, DHSS&PS issued the Procurement Strategy for Health, Social Services and Public Safety.(9) This Guidance requires the Department and its bodies to develop a procurement strategy, to include key strategic procurement requirements, to deliver better and more efficient procurement. In September 2004, the PCEG published the Ensuring Best Practice in Pharmaceutical Procurement Report,(5) which made 22 recommendations, including new models of procurement for different product categories (eg, therapeutic tendering), linking therapeutic tendering with primary/secondary care and the integrated medicines management service,(10) creation of a Centre of Procurement Expertise for pharmaceutical clinical technologies(11) and further development and training in pharmaceutical procurement. Therapeutic tendering allows different chemical entities for the same therapeutic indication to be considered simultaneously, thereby creating greater competitiveness in the market. A fully integrated medicines management approach linked with therapeutic tendering can achieve quality, safety, patient compliance and improved health outcomes for both primary and secondary care. Pilot work on therapeutic tendering in a number of therapeutic areas is ongoing.
The Report(5) also identified the critical success factors for pharmaceutical procurement (see Table 1).
Education and training
One of the implications of adopting the guiding principles of the revised Public Procurement Policy will be to improve the training and management of professional procurement teams.
“The Executive expects procurement staff to be effective, meeting the commercial, regulatory and socioeconomic goals of government in a balanced manner appropriate to each requirement, and to carry out procurement as cost-effectively as possible.” (Dr Sean Farren, MLA, Minister of Finance and Personnel, Public Procurement Policy Statement to the Assembly.)
The Procurement and Distribution Interest Group (PDIG) of the Guild of Healthcare Pharmacists have worked cooperatively with the London Metropolitan University to develop a two-year bespoke procurement course for pharmaceuticals.(2) In recognition of the need for local formal training in pharmaceutical procurement, a new module was developed in conjunction with the University of Ulster as part of the existing Advanced Diploma in Management Practice (ADMP) – Procurement. The new module aims to provide the knowledge and assist in the development of skills to enable students to demonstrate an understanding of, and competence in, the specialist aspects of pharmaceutical procurement, including the purchasing environment, regulatory and professional controls, risk management and aspects of supply chain management unique to the NHS.
The ADMP (Procurement) provides both a university qualification and full exemption from the Foundation stage of the Chartered Institute of Purchasing and Supply (CIPS). It may also lead on to the final year of the University of Ulster’s BSc Hons Government with Procurement, completion of which provides full exemption from CIPS. Modules on both the ADMP and degree are available via web-based distance learning.
In December, 14 graduates were awarded the Advanced Diploma in Management Practice – Procurement from the University of Ulster. Students included pharmacists, technicians and supplies personnel employed in the NHS and pharmaceutical wholesaler personnel from both Northern Ireland and the Republic of Ireland. The course commenced again in February 2006 and will be further developed for distance learning.
In June 2005, the Regional Procurement Pharmacist became a member of the Chartered Institute of Purchasing and Supply (CIPS).
The NHS is operating in a dynamic complex environment, and it is therefore critical that procurement of pharmaceuticals is a strategic process, capable of achieving the long-term goals of the NHS in improving the health of the public. In NI, the revised policy and strategy has highlighted new challenges and a higher profile for all public procurement professionals, particularly in the specialist area of pharmaceutical procurement.
The future pharmaceutical procurement strategy adopted by the PCEG will aim to meet and protect the needs of patients and the whole NHS organisation and improve health outcomes. This must also be achieved in compliance with the new consolidated EU Public Procurement Directive and the new NI Public Procurement Policy. The RPA is the biggest shake-up of public services that NI has seen in almost 30 years. The complex changing HPSS organisational structure and dynamic nature of the pharmaceutical market will also significantly influence the procurement strategy. Linking therapeutic tendering to the Integrated Medicines Management Service(10) has the possibility of achieving improvements in quality, patient safety, patient compliance and ultimately health outcomes. It may also deliver Best Value for Money for both primary and secondary care in the new structure. However, there are significant challenges ahead for pharmacists and further development of the necessary skills and experience in pharmaceutical procurement is an important element of the future strategy.
- Healthcare Industries Task Force Better healthcare through partnership: a programme for action. Healthcare Industries Task Force, Final Report, November 2004.
- Karr A. Specialising in procurement. Hosp Pharm 2004;11:9:379-82.
- Audit Commission Report. A spoonful of sugar – medicines management in NHS Hospitals. London: Audit Commission; 2001.
- Department of Health, Social Services and Public Safety. Controls Assurance Standard – Medicines Management Standard (Safe and Secure Handling of Medicines); April 2005.
- Pharmaceutical Contracting Executive Group. Ensuring Best Practice in Pharmaceutical Procurement; September 2004.
- Department of Health, Social Services and Public Safety. Revised Public Procurement Policy for the Public Sector, HSS(PPM) 8/2003; 29 May 2003.
- Carr AS, Smeltzer LR. An empirically based operational definition of strategic purchasing. Eur J Purch Supply Manag 1997;3-4:199-207.
- Department of Finance and Personnel. Strategic Procurement Procurement Guidance Note 07/04. Central Procurement Directorate; 2004.
- Department of Health, Social Services and Public Safety. Procurement Strategy for Health, Social Services and Public Safety. HSS(PPM) 7/2004; 20 August 2004.
- Clark C. Northern Ireland integrated medicines management. Pharm J 2004;272:329-30.
- Wertheimer A. Pharmaceutical clinical technology – an opportunity pharmacists should ensure they do not miss. Pharm J 2003;271:428-9.
Details of the ADMP course are available from Professor Andrew Erridge,
Course Director, School of Policy Studies
T:+442890 366597 or +442890366378
Chartered Institute of Purchasing and Supply (CIPS)
Department of Health, Social Services and Public Procurement
EU Public Procurement Directive
Review of Public Administration (RPA)
Procurement and Distribution Interest Group of the Guild of Healthcare Pharmacists