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The development of a prime vendor system of pharmaceutical procurement and distribution in the Department of Veterans Affairs (VA) is described. The traditional system of pharmaceutical procurement and distribution in the VA required large stockpiles of the pharmaceuticals that had been needed the previous year, a system that was inefficient and full of hidden markups and other unnecessary fees. In late 1991, the VA began a pilot test of a prime vendor system, in which three wholesalers were selected to provide pharmaceuticals to 33 VA medical centers. Under the new system, pharmacies placed orders electronically, directly with the prime vendor, and payments were taken from funds obligated in advance. The benefits of the new system included reduced costs, faster turnaround of orders, higher fill rates, and higher satisfaction among users. In 1994, the VA ceased operation of its traditional depot system for pharmaceuticals. The implementation of a prime vendor procurement system for pharmaceuticals within the VA improved system responsiveness, increased satisfaction of system users, and reduced expenses.

Careful planning of the procurement and maintenance of equipment is essential if the potential benefits of medical technology are to be realized.

Factors that have affected hospital pharmacy purchasing and inventory control functions are discussed, and future trends are suggested. The concepts of the pharmacy and therapeutics committee and the hospital formulary system stemmed from early hospital pharmacy practice standards that were promulgated about the time drug products began to proliferate. Brand standardization, restricted drug-use policies, and selection of therapeutic alternates are among the approaches P & T committees have devised to hold down hospital drug costs; these efforts will expand. Brand-comparison advertising, use of various incentives to physicians and pharmacists, premarketing publicity about new products, improved product packaging, and support of research studies are among the promotional tactics pharmaceutical manufacturers have employed and are likely to expand. Government legislation and regulations that have had the effect of increasing the cost of drugs may be modified. Hospital pharmacists should monitor developments such as these to prepare themselves for the challenges in their purchasing and inventory control responsibilities.

The results of the hospital pharmacy purchases and inventories portion of a 1978 national mail survey of pharmaceutical services in short-term hospitals are reported. A sample of 815 hospitals was selected randomly from among 5,200 U.S. short-term hospitals that employ a pharmacist on at least a part-time basis. The inventory question had a response rate of 67.7%, the purchasing question, 62.2%; inventory turnover was calculated based on a response rate of 60.5% to both questions. Inventories were inordinately large in small hospitals. Inventory turnover rates, which increased with hospital size, were somewhat less than optimal in small and medium hospitals. The Pacific region's inventory/bed and purchases/bed values were substantially greater than those of any other region. Large hospitals had a 20% higher annual purchases/bed figure than the smaller hospitals, perhaps because of their relatively greater volume of outpatient services. Based on their respective demand (as measured by adjusted inpatient days), the drug purchases of the New England and Mid-Atlantic regions were less than expected, while the Mountain and Pacific regions' drug purchases were much greater than expected. Total 1979 purchases of pharmaceuticals and related supplies by pharmacies in all short-term hospitals are estimated to reach $2,215 to $2,772 million.

The acquisition of capital equipment is considerably more involved than the purchase of supply items. Because of the long life of capital equipment, errors in judgment at the time of acquisition can haunt a purchasing manager for years. But if he exercises good judgment and does not lose sight of the particular needs of his hospital, capital equipment can be acquired in a manner that will be in the continuing best interests of the hospital.

Equipping a new hospital involves quickly shifting and sometimes overlapping phases. Consequently, considerable coordination is required among the hospital administration, user departments, purchasing department, suppliers, architect, builder, trade unions, and other involved parties. Detailed procedures such as those described in this article can help to efficiently organize this effort and protect the hospital's interests regarding the costs, specifications, acceptability, and safety of the equipment that is acquired and installed.

Purchasing committees are essential to effective materials procurement and management. These committees perform not only initial evaluation of materials and supplies but also ongoing reevaluation. Thus, they help to ensure that the hospital obtains and maintains appropriate quality, quantities, and cost effectiveness in its purchases and its inventory.

When determining a method of procurement, the purchasing manager must remember his goals. Whether it be by bidding, negotiating, or open-ended contracts, the method chosen is a means of obtaining savings for the hospital and, ultimately, for the patient.