The Chairperson for the Malawi Parliamentary Committee on Health, Dr. Matthews Ngwale says a stakeholders consultative meeting held at Capital Hotel in February 2021 observed that stock outs of medicines at the Central Medical Stores Trust (CMST) and consequently in public health facilities were due to inadequate funding. The consultative meeting therefore resolved that recapitalisation of the institution is a key intervention that would sustainably address persistent drug stock outs in Malawi.
Dr. Ngwale presented the viewpoint at another consultative meeting held at Mpatsa Lodge in Salima on 19th May, 2021. The meeting was convened by the Network of Journalists living with HIV (JONEHA) funded by the Bill and Melinda Gates Foundation through AVAC under the COMPASS Project. Between March and May 2020 JONEHA through its District Monitoring and Evaluation Committees (DMECs) in five targeted districts of Mulanje, Mangochi, Chiradzulu, Mzimba South and Phalombe identified persistent drug stock outs as an issue affecting quality service delivery in Malawi.
The meeting in Salima was attended by the Chairperson of the Parliamentary Budget and Finance Committee, representative of the Secretary for Health, Chairperson and Acting Chief Executive Officer for Central Medical Stores Trust, Directors of Health and Social Services in Mulanje and Mangochi districts and Director of the Department of HIV and AIDS.
All agree drug stock out is a national problem
Making her presentation on behalf of the Secretary for Health Ms. Benardette Chibwana said while the Health Sector Strategic Plan 2 states availability of quality medicine and medical supplies as one of the objectives; stock outs of medicines and supplies was a daily reality in public hospitals. She thus; agreed with Dr. Ngwale that among the reasons was inadequate funding. She said among key players on the issue of availability of drugs in health facilities was the ministry of finance for funding and Central Medical Stores (CMST) for procurement, storage and distribution.
The CMST whose delegation at the meeting was led by the chairperson of the board of directors Mr. Josiah Mayani acknowledged that their role of procuring, warehousing, selling and distributing medicines and supplies was key in the delivery of quality health service in the country. However; he said upon its creation in 2010 and operationalisation in 2012; “the entity inherited many challenges like lack of a start-up capital to run major tenders, years without major procurement which led to loss of earnings, huge stocks of expired/short dated items and mis-procured products. Despite these challenges; Josiah said CMST has improved its role over the years. Availability of medicines has recently been around 65-76%. This however means not being able to supply 24% of the needed medicines due to inadequate funding. Reflecting the ground situation of drug stock outs in Malawi; Dr. Henry Chibowa jnr; the Director of Health and Social Services in Mangochi had this to say. “Stock-outs are real; districts sometimes go months with completely no stocks of some essential life-saving drugs. The approved drug budget is not enough; on average, districts are given less than MK750 per person per year to provide treatment. There is pre-district inefficiency; the approved drug budget is not purchasing the right amount and type of medical supplies. There is drug loss at district level; drugs are being lost through preventable expiries, poor storage, and theft”
During the same meeting Dr. Alinafe Kalanga; the Mulanje Director Of Health and Social Services added salt to the injury of inadequate funding for drugs in Malawi by stating that “compared to the 2019/2020 allocation; the district had a 12.2% reduction in the 2020/21 budget. She said the district normally experiences a fill rate of an average 50-60% for the period 2020/21 financial year but even this dropped by 40% in April 2021” In the drug chain supply management system; a fill rate is the fraction of customer demand that is met through immediate stock availability, without backorders or lost sales.
CMST chairperson speaking at the same meeting put district hospital fill rate as being at 59% while central hospitals are at 48% due to their need for specialised items. He further agreed to the observation that drug funding to hospitals is low and needs increasing. Because of this scenario; Mayani said “even if CMST had adequate stock; district hospitals would not be able to pay for all essential drugs due to their inadequate budgets. Hospitals already overshoot their budgets even by the middle of the year.”
By the time of writing this story JONEHA had a copy of the letter from Secretary to Health addressed to the Executive Director of National Local Government Finance Committee dated 18th May 2021 indicating Treasury’s inability to provide additional resources to district hospitals as earlier requested. “….it is not possible to provide extra resources due to fiscal constraints government is currently faced with. Treasury advised district health offices to work within the medical drugs budget as earlier discussed” …reads part of the letter validating CMST and DHSS views at the meeting. Mayani said CMST usually stops further supplies until clearance is sought from national local government finance committee. During such times facilities may experience stock outs.
Dissecting the problem
CMST further observes that the trend leading to annual inadequate funding has been that together with Ministry of Health they quantify annual drug budgets. But what is usually allocated is half. This means each year CMST starts on a deficit; hence the recorded stock outs in health facilities across the country. For example, in the 2020/21 financial year CMST budget was at MK40 billion but only got MK19 billion. This is 40% funding allocation or a 52% shortfall on needed funds. In addition, CMST says it has to date effectively accumulated a debt of MK17 billion. This normally increases as further contracts are awarded to suppliers. The other negative effect is that suppliers lose confidence and so they refuse to take new contracts. Suppliers also resort to litigations; a process of taking legal action which drains more funds. CMST also attributes drug stock outs in the country to approval delays from accountability organisations especially the Public Procurement and Disposal of Assets Authority (PPDA) which can take as much as 5 months instead of the expected one week. In addition; CMST bemoans the effect of the Buy Malawi Strategy which makes drugs very expensive as it is abused by politicians but most importantly spikes the cost of drugs. This is so because those using the strategy are middle men/ women/vendors not manufacturers of the drug.
Recapitalisation recommended
An independent report on the financial needs assessment published in October 2020 conducted jointly by the Global Fund and Chemonics; a global consulting expert firm on supply chain management says; “CMST hardly meets the demand for pharmaceutical supplies by its customers: its deliveries to facilities average only 63% of what is ordered”. The report while recommending recapitalisation further advises “addressing the inefficiencies as an declaration on implementation of integration.
CMST therefore needs MKK40 billion between 2020-2023 to reduce creditor days from 265 to 60, settle pipeline orders, increase working capital for procurements, increase working capital for supply chain integration and complete an ongoing enterprise resource planning. CMST board and management supported believe recapitalisation will ensure that the national supply chain is well resourced to adequately and efficiently serve the population. On their part Directors of Health and Social Services while agreeing on the need for recapitalization of CMST; demand central government to partially or completely decentralize the drug budget and increase drug budget to districts. The strength of the recommendation to recapitalize CMST is that so far both the chairperson of the parliamentary budget committee and the chairperson for parliamentary committee on health support it as a game changer.
