Pharmaceutical Management and Health Economics
Pharmaceutical Management and Health Economics tests drug supply, inventory control, procurement and economic evaluation. The exam favours practical decisions that balance availability, quality and cost.
Core rules
- ABC analysis ranks items by value; VEN analysis ranks by vital, essential and non-essential clinical importance. Combine them so vital low-cost items are not neglected.
- Quantification uses consumption, morbidity or adjusted historical data, plus lead time and safety stock.
- Procurement should use transparent tendering, supplier qualification, quality assurance and realistic delivery terms, not price alone.
- Pharmacoeconomics compares costs and outcomes: cost-effectiveness uses an incremental cost-effectiveness ratio (ICER); budget impact asks what the payer can afford.
Worked example
Annual demand is 12,000 units, ordering cost is $50 per order and holding cost is $2 per unit per year. EOQ = √(2DS/H) = √(2 × 12,000 × 50/2) = √600,000 ≈ 775 units per order. This minimises ordering plus holding cost under the stated assumptions; it does not by itself solve lead-time or safety-stock needs.
Traps
- Choosing the cheapest supplier while ignoring quality or lead time.
- Confusing cost-effectiveness with simple cost savings.
- Forgetting safety stock, causing stock-outs during demand variability.
- Using EOQ when demand is highly irregular without adjustment.