From Scarcity to Waste: The Complex Logistics Management of Basic Medical Supplies in the Unified Health System

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Summary

During the SARS-CoV-2 pandemic, the ability to manage supplies of health supplies from all over the world was put to the test, and it is no different in Brazil. With the lack of supplies for the treatment of patients, the logistical vulnerabilities of the Unified Health System (SUS) were evidenced with regard to the acquisition, transportation, storage and distribution of strategic supplies. In addition, several wastes occurred due to these vulnerabilities, resulting in a loss of R$243 million (two hundred and forty-three million reais) for the Federal Government. This case is an invitation to readers to reflect on the logistical vulnerabilities in the acquisition, transportation, storage, and distribution of these strategic medical supplies during the pandemic.

Keywords: SUS, COVID, vaccine, strategic inputs, supplies, medicines, pandemic, Brazil.

Abstract

During the SARS-CoV-2 pandemic, the management capacity of healthcare supply chains worldwide was put to the test, and Brazil was no exception. A shortage of healthcare supplies for patient treatment exposed logistical vulnerabilities within the Brazilian Unified Health System (SUS) concerning the acquisition, transportation, storage, and distribution of essential medical resources. Additionally, numerous wastages occurred due to these vulnerabilities, resulting in a loss of R$243 million (two hundred and forty-three million Brazilian reais) for the Federal Government. This case invites readers to reflect on the logistical vulnerabilities in the acquisition, transportation, storage, and distribution of these essential medical resources during the pandemic.

Keywords: SUS, COVID, Vaccine, Strategic Inputs, Supplies, Pandemic, Brazil.

Medical Supplies as Vital Elements in Health Logistics

In Brazil, health is an essential pillar for the well-being of all and is guaranteed by article 6 of the 1988 Constitution, as a social right. In this perspective, for the promotion of equity and universality in access to health services, ensuring public and free care for all citizens, regardless of their economic condition, the Unified Health System (SUS) was founded.

And here is the crucial point: for the SUS to work effectively, basic inputs are needed. These are medicines, equipment and hospital materials - fundamental goods to keep the health system functioning, carry out activities in health organizations and ensure adequate medical care for the diagnosis and treatment of the patient according to the PCDT (Clinical Protocol and Therapeutic Guidelines) - documents that establish criteria for the diagnosis of the disease or health problem; the recommended treatment, with medications and other appropriate products, when applicable; recommended dosages; clinical control mechanisms; and the monitoring and verification of therapeutic results, to be followed by SUS managers.

"Just as factories need equipment and raw materials, the health area needs basic inputs or materials, medicines, medical equipment, computer resources – machines and software, logistics structures and others, to be used in primary care actions and services, of medium and high complexity, urgency and emergency, etc. Therefore, they are no longer simply called material resources, but refer to a wider range: logistics and, by extension, logistical resources for storage, inventory monitoring, and distribution" (CONASS, 2023).

Without these basic supplies, the situation becomes complicated. But if scarcity is bad, what about excess and mismanagement? Here is the logistical challenge that must be explored in all its complexity of keeping all its components aligned, like a big intricate puzzle.

Denselling the Logistical Challenges of the SUS

The global scenario was overwhelmingly impacted by the SARS-CoV-2 pandemic, which not only redefined daily life, but also brought to light crucial issues, such as the lack of medical supplies in Brazil. Amid the chaos unleashed by this health crisis, news about the shortage of essential materials reverberated in local newspapers, echoing even in the international media.

This situation has not only mobilized the Brazilian population but has also attracted the attention of prominent figures on the world stage, highlighting not only the urgency and importance of addressing the logistical complexity in the distribution of these inputs, but above all, it has underscored the need to take immediate action to ensure the effective and timely delivery of these vital goods at such a critical time.

The lack of personal protective equipment (PPE), syringes, respirators, oxygen tanks and supplies for vaccine manufacturing; the delay in the acquisition and importation of foreign vaccines; as well as the difficulty of transportation, storage and distribution were also targets of media criticism.

While the country was still seeking to overcome the challenges of the shortage of medical supplies during the first months of the pandemic, a surprising turnaround occurred just under a year later. The scenario, previously marked by the urgency of vital supplies, was now faced with a new and unexpected challenge: the excess of doses of vaccines and medical equipment, which resulted in an unusual and worrying situation for the Brazilian health system.

In this scenario, the news printed in the newspapers gained a new focus: the incineration of thousands of doses of expired vaccines, among them, those donated by the United States Government and also those acquired by its own resources, in addition to the disposal of aprons donated by the Government of China, due to the state of conservation in which the PPE was, generating a loss of R$ 243 million (two hundred and forty-three million reais) in inputs, in addition to the approximate additional cost of R$ 10 million (ten million reais) in incineration for the Federal Government at the time.

This new scenario not only surprised the population, but also raised a series of questions about management and responsibility in the field of public health. The contrast between the lack and subsequent incineration of expired doses and the disposal of donated PPE has raised concerns about the effectiveness of the acquisition, storage, and distribution practices adopted by the Ministry of Health (MS).

In view of these concerns, the Federal Court of Accounts (TCU) opened Case TC No. 038/216/2021-3, which investigates the representation made by a group of federal deputies to investigate possible irregularities, regarding the expiration of thousands of doses of vaccine and other materials, further intensifying the debate on transparency and accountability in facing the health crisis.

Thus, Luana Silva, a specialist in the Specialized Health Audit Unit (AudSaúde), with extensive experience in inspection and specialized analysis of operations and processes related to the health area, and her direct correspondent, André Cardoso, representative of the Secretariat for External Control of Sustainable Development (SecexDesenvolvimento), responsible for accelerating and guiding the effective incorporation of policies, government programs and actions aligned with principles of sustainability to the state apparatus.

Luana and André, dedicated professionals with deep knowledge in their respective areas, were appointed by their organizations, which make up the internal structure of the TCU, to conduct a thorough analysis within the scope of TC Process No. 038/216/2021-3. Its objective is to prepare a comprehensive Report, detailing and evaluating the issues related to possible irregularities in the Ministry of Health, thus offering a fundamental contribution to transparency and improvement of practices in facing the health crisis.

At first, Luana and André's Report pointed out deficiencies in the logistics planning of the Ministry of Health (MS), in addition to weaknesses in internal controls, directly related to the structure of the logistics chain of the Ministry of Health, which, from the perspective of the Federal Court of Accounts (TCU), are the most worrying points. Upon ascertaining the facts, the auditors realized that it was necessary to study more thoroughly to identify the root reasons and other factors that led to the lack and, subsequently, the waste of inputs in a short period of time.

The Impact of the Extinction of the Coordination of Logistics Planning in Health on the Distribution System of Medical Supplies

During the development of the Report, it was identified that, in 2009, Decree 6,860/2009 institutionalized the creation of the Department of Logistics of the Ministry of Health, responsible for managing the agency's logistics chain, which had the function of planning, acquiring, storing and distributing inputs and medicines supplied by the Ministry of Health. The decree also created the General Coordination of Health Management and Planning (CGGPL), responsible for logistical planning, improvement of demands, and the provision of data that would assist in the activities of acquisition, storage, and distribution of inputs and medicines, entitled Strategic Inputs (HEIs).

However, in 2019, through Decree 9,795/2019, the General Coordination of Management and Logistics Planning in Health (CGGPL) was extinguished, causing the activities carried out by the coordination that ensured that the necessary inputs were available to the Health Units (HU), ceased to exist, since its activities were not redistributed to any other body, thus leaving the system vulnerable to possible failures and compromising compliance with the Clinical Protocols and Therapeutic Guidelines (PCDT).

Before its extinction, CGGPL's supply chain logistics planning sought to optimize available budgetary resources and prevent the waste of inputs. In this way, it was possible to have control of the acquisitions of the HEIs and also of the way they would be distributed, avoiding the loss of inputs due to expiration dates or damages.

To observe the problem in general, Luana and André sought to understand how the process of acquisition, transportation, storage, and distribution of inputs made available by SUS was organized. To do so, they used the following image, which outlines the logistical process of acquiring HEIs:

In the Report, both made clear the relevance that the Coordination had in logistics planning and the importance of people trained to work in the management of the Ministry of Health's logistics chain, clarifying that the work under the responsibility of CGGPL allowed the anticipation of the need to purchase HEIs, optimizing the use of the available public budget and mitigating the possibility of lack of inputs and medicines in Health Units.

The extinction of coordination in 2019, associated with the pandemic period that began in 2020, led to a lack of planning in the acquisition and storage of HEIs, which generated financial damage, with the loss of thousands of doses of vaccines, rapid tests, PPE, not only those donated by the Government of China and North American companies, but also acquired through the Brazilian Government's own resources. In addition, the loss of this material caused even greater losses to the public coffers, since the incineration of all the material was estimated to take about seven months to be completed, with an associated cost approaching R$ 10 million, in addition to additional costs with storage and transportation of these inputs.

Strategic Regulation: Standards for access and financing of medicines and supplies in the SUS

Luana and André found that it was not only the HEIs donated and purchased directly by the Ministry of Health during the pandemic that were susceptible to the logistical problems of the SUS. At this juncture, the auditors added a special mention in the Report to the category of financeable medicines and supplies, those made available free of charge to the population or subsidized for the treatment of specific conditions.

Ordinance GM/MS No. 4,114 of December 30, 2021 provides for the rules and actions for access to medicines and inputs of strategic programs, under the management of the Strategic Component of Pharmaceutical Services (CESAF), within the scope of the SUS. Its Chapter II deals with programming, acquisition and financing, bringing in its text:

Art. 4 The programming of medicines and inputs that are part of CESAF, for the purpose of acquisition by the Ministry of Health, must be carried out based on the criteria of epidemiological profile, historical consumption, in addition to others that may be necessary.

Article 5, paragraph 2 - The quantity of medicines and supplies to be acquired shall be established considering the average of the data described in the caput of Article 4, and may be increased by a strategic stock calculated based on the historical series and according to the specificities of each acquisition.

According to the Department of Pharmaceutical Services (DAF), the medicines and supplies provided by CESAF are financed by the Ministry of Health (MS), being distributed to the states and the Federal District, with local governments being responsible for receiving, storing and distributing the inputs.

That said, the special mention in the Report comes from the observation by Luana and André of a parallel logistics structure not integrated into the main logistics chain of the SUS.

Obsolete Technology and Challenges in the Management of Strategic Inputs

Luana and André's report shows that the fragility in the management and control of stocks and distribution of HEIs goes beyond stocks. The inspection carried out by the auditors pointed out that the Ministry of Health is vulnerable when it comes to the Information System used to manage the HEIs acquired and stored in the ministry's warehouse, which is located in São Paulo.

The system used is the Integrated Material Management System (Sismat), in which the control of material inputs and outputs is carried out manually by users. Also, the system is applied in the registration of outputs for both distribution and disposal of expired inputs. However, a number of vulnerabilities were scanned during database inspection:

1. It is obsolete and no longer supports updates;
2. It is accessed and fed by outsourced employees, with no effective link with the agency;
3. The registration of input input and output does not occur in real time, concomitantly with its physical movement in the inventory (arrival and output for transport);
4. The information entered in the system can be changed without a record of the action or the author of these changes;
5. Does not identify the batches with the corresponding location on the stock shelves;
6. It does not have information on the size and weight of input packaging, essential elements for inventory management and incineration; and
7. It does not allow you to issue management reports to assist in the planning and optimization of purchases and inventory logistics.

In addition to the direct implications in logistics control that cause financial losses to the public coffers, the vulnerabilities observed also imply in effective Risk Management, with regard to the security of the flow of information necessary for the correct acquisition, distribution and disposal of HEIs.

In addition, due to the expiration of the HEIs during the pandemic, one last vulnerability of the system related to its operational applicability was observed: the inadequate management of the disposal of expired supplies and medicines within the scope of the Unified Health System (SUS).

In the current scenario, there are stocks of HEIs awaiting disposal, resulting not only in the cost associated with expired inputs, which translates into waste, but also in additional expenses related to storage, evidencing weaknesses in the disposal system, adding complexity to the already existing challenges in the management of the SUS supply chain.

Consideration of the Report and Planning

After the completion of the Report, Luana and André delivered it to the Federal Court of Accounts for consideration by the members and other participants of the plenary session, taking into account the responsibility, legality, efficiency, effectiveness, economy and legitimacy of the facts pointed out by the auditors.

With the Report in the hands of the TCU, it is time to make decisions and actions regarding corrective measures, application of fines and suggestion of accountability of managers for irregularities detected. The challenge is clear: to address the vulnerabilities found in the management of basic medical supplies in the SUS logistics chain, in order to avoid the repetition of problems such as the shortage and loss of HEIs. In view of this, a deep reflection is instigated on how to improve the system, optimize processes and ensure that the resources allocated to health are managed efficiently, seeking solutions that go beyond the mere correction of failures, but that effectively strengthen the resilience of the Brazilian health system.

Questions for the discussion

1. How did the extinction of the General Coordination of Management and Logistics Planning in Health, combined with the lack of adequate planning to acquire, store, and distribute Strategic Inputs (HEIs), impact the efficiency of the Ministry of Health's logistics chain within the scope of the Unified Health System (SUS)?
2. How did the lack of adequate planning for the acquisition and storage of Strategic Inputs (HEIs) during the pandemic period negatively impact the costs and efficiency of the logistics of incineration of these materials, resulting in significant financial losses for the public coffers? What measures can be adopted to reduce these impacts in the future?
3. How can the use of a non-integrated parallel logistics structure for medicines and bankable inputs impact or be impacted by the main logistics chain of the SUS? What measures can be adopted to reduce these impacts?
4. How do the vulnerabilities of the Computerization System used by the Ministry of Health affect the logistics of the supply chain of the Unified Health System (SUS)? And what was its impact during the pandemic?
5. As a member of the plenary session of the Federal Court of Auditors, after reading the Report, what would be your decisions on corrective measures, application of fines and suggestion of accountability?
6. The Federal Court of Auditors determined that the Ministry of Health, within 180 days, must deliver an action plan that improves the logistics system, with regard to the acquisition, transportation, storage and distribution of the strategic inputs, mentioned in the case. Considering this context, prepare an action plan, identifying the actions to be adopted, those responsible, and the deadlines for implementation, with a view to replacing Sismat, either by starting the process of acquiring a Warehouse Management System - WMS available in the market or by requesting a new computerized system, promoting and documenting the cost-benefit analysis of possible alternatives, in order to correct the vulnerabilities found and allow functionalities that ensure full control of the stock independently of the contracted logistics operation company.

GALLERY

REFERENCES

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ABOUT THE AUTHORS

Yara Moura Lima is a Business Administration student at the University of Brasília and a member of the Casoteca ADM Team. E-mail: mouralimayara@gmail.com

Michelly Karen Alves da Silva is a Business Administration student at the University of Brasília and a member of the Casoteca ADM Team. E-mail: michellykaren@outlook.com.br

Patricia Guarnieri Dos Santos is an Associate Professor of the Administration course at the University of Brasilia (UnB). Professor and advisor in the Graduate Program in Agribusiness and the Graduate Program in Administration at the University of Brasília (UnB) and bachelor's degree in Administration. CNPq Productivity Scholarship - PQ2. Postdoctoral internship at the Università di Bologna - Circular Economy (2019- 2020). Postdoctoral internship at the University of Brasília - Strategic Public Procurement (2016-2018). PhD in Production Engineering from the Federal University of Pernambuco (2009-2012). Master's degree in Production Engineering from the Federal Technological University of Paraná (2005-2006). Specialist in Business Management from the Faculty of Social and Applied Sciences of Cascavel and Brazilian Institute of Socio-Economic Research (2001-2002) and Specialist in Teaching in Higher Education from the Pan American Education Union (2003-2005). Bachelor of Accounting Sciences from the State University of Western Paraná, 2000. He has experience in Business Management, working mainly in the following areas: Supply Logistics and Reverse Logistics, Management of partnerships and collaborative relationships in SCM, Circular Economy and Decision Analysis. She is the author of the book Reverse Logistics: in search of economic and environmental balance. He has articles published in national and international events and journals, chapters in national and international books. Referee of national and international journals, as well as national and international events. He is the leader of the Group of Research and Advanced Studies in Logistics and SCM (GEALOGS). She is a researcher in the research groups: Research Group on Operations, Logistics and Decision Support Methods (GOMETA) and People and Customer Management Group (GP2C). E-mail: pguarnieri@unb.br

Editor: Nicole Alonso Santos de Sousa she is a graduate student of the Department of Administration (ADM/FACE) of the University of Brasília (UnB) and co-coordinator of the ADM Casoteca. Post-graduation in Finance and Controllership (MBA USP/ESALQ). Bachelor in Business Administration (UnB). E-mail: nicolealonso2000@gmail.com

Co-editor: Luiz Henrique Lima Rodrigues is a Business Administration student at the University of Brasília and Co-coordinator of the ADM Casoteca. Director of Relationships 2024 at Concentro (Federation of Junior Enterprises of the Federal District). E-mail: luizhenriquelima305@gmail.com.

This case was written from secondary information and based on other references cited. It is not the authors' intention to evaluate or judge the company in question. This text is intended exclusively for academic study and discussion, and its use or reproduction in any other form is prohibited. Copyright infringement will subject the offender to the penalties of Law No. 9,610/1998.