Comparison of economic loss between generics and patented drugs in Indonesia Posted 17/04/2020

Poor management of the drug inventory in hospitals can be caused by stagnant and stock-out conditions, which might lead to economic loss. In order to investigate this phenomenon, researchers from Indonesia compared the economic loss between generics and patented drugs in stagnant and stock-out conditions at the Surabaya Islamic Hospital [1].

Hospitals use two types of drug: generic and patented, in the clinical pharmacy. In Indonesia, generics are used as much as 70% for patients with national health insurance (the healthcare and social security agency), while patented drugs are used as much as 30% for patients without insurance.

The management of the clinical pharmacy plays an important part in the hospital’s revenue. Therefore, pharmacy logistics must be organized carefully and with full responsibility in order to be efficient and effective. The conditions of stagnant and stock-out might cause economic loss and indicate ineffective and inefficient drug inventory management in the hospital.

Rochmah and colleagues therefore carried out an observational study with a descriptive and cross-sectional design to compare the economic loss between generics and patented drugs in stagnant and stock-out conditions at the Surabaya Islamic Hospital. The study compared 148 generics and 299 patented medications between July 2015 and March 2017.

The study analyzed data collected from the documentation of the hospital’s clinical pharmacy. They used an independent sample t-test to compare the economic loss between patented and generic medication in both stagnant and stock-out conditions. The results showed a difference in both stagnant (p = 0.00) and stock-out (p = 0.00) conditions in the drug inventory between generics (70%) and patented drugs (30%). The t-test for economic loss showed no difference between generics and patented drugs: stagnant (p = 0.75) and stock-out (p = 0.86).

The economic loss from the stagnant condition was incurred by holding costs and the ordering costs of stagnant medication. Meanwhile, the stock-out condition caused loss in opportunity costs. The economic loss for generics that experienced stagnant and stock-out conditions in July−December 2015 was up to US$6,463, while patented drugs experienced loss for both the stagnant and stock-out conditions of up to US$6,603 in October 2016−March 2017.

The authors concluded that both conditions were disadvantageous for the hospital’s revenue and inventory management. They therefore recommended improving the hospital’s information system, writing reports for consumption adjusted to disease trends, improving the drug-planning system by using certain methods and determining the safe level of stock.

Conflict of interest
The authors of the research paper [1] declared that there was no conflict of interest.

Abstracted by Thinni Nurul Rochmah, Department of Health Policy and Administration, Faculty of Public Health, Universitas Airlangga, Surabaya, Indonesia.

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1. Rochmah TN, Ratnasari D, Robby HD. Comparison of economic loss between generic drug and patent drug in stock-out and stagnant condition at Surabaya Islamic Hospital, Indonesia. J Public Health Afri. 2019;10(s1):1169

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