A Study of Drug Expenditure at a Tertiary Care Hospital: An ABC-VED Analysis

This article analyses the annual drug expenditure at Goa Medical College Hospital using ABC-VED analysis in order to identify drug categories requiring greater supervisory monitoring. Inventory control techniques ABC, VED and ABC-VED matrix analysis were utilised to study the drug expenditure at the hospital. The data was collected for the financial year 2005-6. Out of the 348 drugs, around 12.93 per cent of the drugs were found to account for 69.45 per cent of the annual drug expenditure (45 drugs) and were classified as category A drugs. Another 19.54 per cent of the drugs (68 drugs) consumed 20.48 per cent of the budget (B category), while the remaining 67.53 per cent (235 drugs) accounted for only 10.07 per cent of the annual drug expenditure (C category). Forty-three drugs (12.36 per cent) were classified as vital drugs, and 164 (47.12 per cent) and 141 (40.52 per cent) were considered essential and desirable drugs respectively. Based on ABC-VED matrix analysis, around 22.99 per cent of drugs were classified as category I, accounting for 74.80 per cent of the total drug expenditure. Category II drugs (41.67 per cent) consumed 21.68 per cent of the total drugs budget, while the remaining 35.34 per cent drugs (category III) accounted for only 3.52 per cent of the total drug expenditure. It was concluded that the use of inventory control techniques needs to be made a routine practice in health care. Substantial improvement could be brought about not only in patient care, but also in the optimal use of resources by judicious practice of these methods.