ABSTRACT:
Background: About one-third of the annual hospital budget is spent on buying material and supplies, including medicines. Cost analysis (ABC analysis) has been found to be effective in the management of a medical store. Automated capital budgeting systems have been claimed to reduce capital spending by identifying utilization trends. Objective: To conduct the economic analysis (ABC) of drug expenditure in a tertiary care teaching Hospital, B.G. Nagar. Material and Methods: A matrix based on the coupling of cost (ABC) analysis criticality analysis was formulated for prioritization, to narrow down the group of drugs requiring greater managerial monitoring. Results: Randomly 9 drugs were selected for the analysis. The total six months drug expenditure on items issued in 2008-09 was Rs. 1, 58,237-40. On ABC analysis, 82.662% (2), 11.1525% (3) and 6.1864% (4) items were found to be A, B and C category items, respectively. Conclusion ABC analysis identifies the drugs requiring stringent control for optimal use of funds and elimination of out-of-stock situations in the pharmacy. The application of the cost inflation index justified the increased annual budget.