Specialised Toolkit: Pharmacy

Introduction to the retail pharmacy operating model

In this section, you will learn:

  • The role of retail pharmacies
  • The functional framework of the healthcare supply chain
  • About three models for outsourcing distribution to pharmacies and pick-up points

Description of the retail pharmacy operating model

In this context, pharmacies are defined as outlets where medicines are prepared and dispensed to patients. These outlets are either public entities found at hospitals or are private entities that offer their services for a fee and are referred to as retail pharmacies. Retail pharmacies are typically found in urban areas in most African countries. They provide trusted and convenient access for patients seeking medical advice, access to drugs, pharmaceutical products, and chronic medicines to treat diseases and co-morbidities. The retail pharmacy distribution model utilises pharmacies as pick-up points for medicine dispensing that decongests health facilities and improves service delivery. The model primarily focuses on urban areas where pharmacies and populations are more densely populated. The implementation of this model works well for the distribution of chronic medication to patients.

Generic supply chain flow of the retail pharmacy operating model

What is the role of retail pharmacies in public health?

Retail pharmacies can provide an additional network of pick-up points to decongest health facilities and improve service delivery. The retail pharmacy channel offers a network of pick-up points that can act as alternative drug distribution sites for medication refills at the last mile. Their role can be complementary to the mainstream public health facilities in a country supply chain system. There are various implementation models for review for ministries of health in the African context, which will be discussed in this toolkit.

The impact of retail pharmacies on the public health supply chain

  • Retail pharmacies can improve healthcare service delivery by decongesting public healthcare facilities.
  • They provide improved accessibility of medicines to patients by reducing waiting times and travel times. This can improve adherence levels in support of national strategic health goals.

Focus areas within the supply chain functional framework

This retail pharmacy outsourcing analysis emphasises changes to warehousing, transportation, and supply chain strategy design, as depicted in the functional framework below.

The functional framework encompasses the main groups of activities along the healthcare supply chain. Within this framework, the retail pharmacy model will significantly impact the following activities:

  • Warehousing: The warehousing and storage of medication assigned to this distribution model and physical inventory at the retail pharmacies.
  • Transportation: The physical distribution of medicines between warehouses, storage facilities, central dispensing units, health facilities to retail pharmacies who then dispense the medicine to the patients.
  • Supply chain strategy design: Implementing the retail pharmacy model will require changes in the supply chain strategy design. It will also require new processes and tools for performance management, analysing and reporting, supply chain technology systems, and the supply chain human resources (skills and capabilities).

The outsourcing process must align with the National Healthcare Supply Chain Strategy and Universal Health Coverage goals. If publicly procured products are used in the retail pharmacy channel, strong integration to demand and supply planning and procurement processes will be required. Integrating new channels into demand and supply planning and procurement processes will depend on the supply chain strategy design choices.1

Models for outsourcing distribution to pharmacies and other pick-up points2

There are three models for outsourcing distribution to pharmacies and other pick-up points.

The Central Dispensing Unit (CDU) model

The health facility driven model

The fee-paying fast track clinic and retail pharmacy model

1Source: Lighthouse Strategic Leadership (LSL) Team Analysis 2020 drawn from Supply Chain Operations Reference (SCOR) ModelReferences

2Source: CCMDD Project Last Mile, Lighthouse, Antiretroviral therapy in community pharmacies - Implementation and outcomes of a differentiated drug delivery model in Nigeria https://www.sciencedirect.com/science/article/abs/pii/S1551741120300632 For further reading, please view the case studies.