Republic of the Philippines Department of Health OFFICE OF THE SECRETARY Building 1, San Lazaro Compound, Rizal Avenue Sta. Cruz, Mania, Philippines Tel, Nos. (632) 711-9502, 711-9508 and 781-4362; Telefax No. (632) 743-1829 8 December 2006 ADMINISTRATIVE ORDER No. 2006-0034 Subject: Amended Policies and Guidelines for the Institutionalization and Decentralization of the Department of Health Drug Consignment RATIONALE In order to enhance the physical and financial accessibility of essential drugs and medicines (EDM) commonly dispensed to the public as a commitment of our Government in the State of the Nation Address (SONA), the Department of Health (DOH) has explored innovative ways to achieve that commitment. Among the courses of action that was projected as viable alternative in bringing into realization such commitment is the procurement of drugs through consignment method The consignment strategy is provided under Administrative Order No. 5 s. 2003, also known as Guidelines and Procedure for the institutionalization of the Department of Health Drug Consignment System. Under the said A.O., DOH Hospitals are allowed to enter into a Drug Consignment Agreement with legitimate manufacturers/suppliers which have the capability to meet the demands of the Hospital for essential drugs and medicine in a sustainable manner. The advantages of the said system are: 1) It will enhance the availability of low-cost, high quality drugs and medicines in DOH hospital pharmacies, without entailing additional cost or investment on the part of the government, 2) The income that hospitals will earn from the direct sales of these drug products may be used for the improvement of hospital operations, thereby improving healthcare services; 3) Funds allotted for the procurement of supplies and medicines will be freed up and may be utilized for other equally important needs of the hospitals; 4) Even with mark-up by the hospitals, the prices of these consigned medicines will stil be lower compared to private outlets. This situation may provide healthy competition with nearby private retailers and may therefore prompt them to lower drug prices as well; 5) No budgetary allotment and notification of cash allocation are required in these transactions since payment will be based on actual drug sales of the respective hospital pharmacies, decreasing red tape in the use thereof; 6) Optimum waste and inventory management as a result of the mechanism to return unused medicines within the agreed period or asa consequence of the available shelf-lifeHowever, after reviewing the current system for consignment, it was observed that imperfections in the market have consequent effects on the roles and processes al each level of the organizational structure. It was observed that factors like: a) existence of local or satellite branch of pharmaceutical suppliers; b) willingness of the pharmaceutical suppliers to enter into a consignment agreement; c) peculiar drug needs of individual DOH Hospital; and ¢) delivery time, have great impact on the availability and prices of drugs Further, the consignment system of the DOH was limited only to DOH Hospitals There is a strong clamor to apply the same system under similar activities regulated and initiated by the Centers for Health Development (CHDs) specific to Botika ng Barangays. Cognizant of the said areas for consideration and the existing technical and administrative capability and expertise of the DOH Hospitals and the CHDs, the need to revise A. O. No. 5, s. 2003, by decentralizing certain functions performed at the DOH Central Office level, and thereby empowering the abovementioned entities Administrative Order No 145 s. 2004 entitled Revised Policies and Guidelines for the Institutionalization and Decentralization of the DOH Drug Consignment System was issued. The creation of the said administrative issuance resulted in several consignment agreements entered by DOH Hospitals and pharmaceutical suppliers. However, issues and questions were raised on the manner the subject issuance is implemented especially on areas with varying interpretation As such, this Order is issued to address these issues and questions by clarifying and amending certain provisions of Administrative Order No. 145 s. 2004 ll. PURPOSE AND OBJECTIVES The purpose of this Order is to establish guidelines and procedures to ensure the availability and relative affordability of essential drugs and medicines (EDM) through a ‘consignment system administered by DOH Hospitals and other health units that may be explicitly authorized by the DOH as the need arises, The objectives of this Order are as follows: 1 To provide time-bound systems and procedures that would establish the DOH Drug Consignment System (DOHDCS) 2 To define the attendant roles and responsibilities of prospective Consignor and Consignee; 3. To provide safeguards that would ensure that the system is within the framework of existing rules and regulations on procurement used by the Government in general and by the DOH in particular; and 4 To amend specific provisions of Administrative Order No. 145 s. 2004 lI, SCOPE AND COVERAGE This Order shall be applicable to all DOH Hospitals and other health units nationwide that may be explicitly authorized by the DOH as the need arises. IV. DEFINITION OF TERMS 1. Consignor — A duly accredited supplier that undertakes to place its goods on consignment basis at the pharmacy of the Consignee. Page 2 of 122. Consignee- A DOH Hospital or health unit that accepts the goods subject of consignment, delivered by the Consignor, and sells the same to the public at a reasonable and affordable price 3. Consignment — a method of assuring availability of stocks wherein the Consignor places its goods at the pharmacy of the Consignee for sale, and the former being paid by the latter for only the actual quantity consumed using the money generated from the sale of the consigned goods within an agreed period of time. 4. Registration Certificate/Requirement — a cettificate issued by the DOH which that indicating that a supplier is listed in the Simplified Supplier Registry System (SSR), 5. Consigned Drugs and Medicines ~ are drugs and medicines which the Consignor delivers to the Consignee under a consignment agreement, 6. Replenishment Drugs and Medicines — are drugs and medicines which the Consignor delivers to the Consignee as replenishment for those previously sold by the Consignee or as replacement to delivered goods, which expiration date results to a remaining shelf-life not allowable by the DOH, or as replacement to delivered goods, which deterioration are beyond the contral of the Consignee 7. Consignment Order ~ a Consignee-accomplished form, which directs the Consignor to effect the delivery of specific drugs and medicines with the corresponding required quantities as determined by the Consignee within the applicable period of time. & Prevailing market price ~ is operationally defined in this Order as the average price of a drug obtained from at least three (3) leading retail drugstore/drug outlet chains, i.e. those endowed with natural economies of scale for bulk procurement, within an administrative region and within the month a price offer is submitted or as may be determined by the National Drug Policy Staff Essential Drug Price Monitoring Unit. V. GENERAL GUIDELINES 1, The DOH shall establish the Central Office Drug Consignment System Steering and Oversight Committee (CO-DCSSOC). It shall be responsible in the monitoring of operations of DOH Hospitals and other health units that may opt to undertake drug consignment activities. Specifically, CO-DCSSOC shall monitor the determination of Consignors, essential drugs and medicines to be consigned and allowable price of consigned goods by the said entities. The composition of the CO-DCSSOC and the specific responsibilities of the Committee and its members shall be specified under the appropriate order. 2. Functionally-equivalent Committees, such as DOH Hospital/Health Unit Drug Consignment Management Committees, shall be established at the respective DOH Hospitals and other health units to assist the CO-DCSOC in planning and ‘monitoring works and to perform activities that will determine responsive consignors and the drug price to be used, 3. The National Drug Policy Staff (NDPS), National Center for Health Facilities Development (NCHFD), and Bureau of Food and Drugs (BFAD) shall provide staff and staff estimates to the CO-DCSSOC and to the DOH Hospital/Health Unit Drug Consignment Management Committees, if so required by the same. Page 3 of 124. The DOH Hospitals and other health units shall adhere to existing rules and regulations on accounting, auditing and procurement and shall so harmonize the mechanisms of the DOHDCS, 5. The DOH Hospitals and other health units shall be authorized to prepare a list of essential drugs and medicines for consignment and to invite prospective Consignors to submit price offers for essential drugs and medicines to be consigned. The said list and results of the Consignor and drug price determination process shall be submitted to the CO-OCSSOC. 6. Generally, only drugs not procured through the regular bidding process but are considered essential by the Formulary Executive Council (FEC) shall be consigned. The only exception to this is when, prior to the next procurement, the hospital experiences stock-outs of these essential drugs that are currently in- demand but cannot be purchased using regular hospital funds. 7. The DOH Hospitals and other health units shall be authorized to execute the appropriate Drug Consignment Agreement with a responsive Consignor whose specific goods were determined as having the lowest calculated and most reasonable price offer among those who participated in the Invitation to Submit Price Offer conducted by the same. The most reasonable price offer is determined by an acceptable price monitoring mechanism 8. The price of Consigned Goods shall in no case be higher than the selling price of generic essential drugs and medicines procured through the DOH-Philippine Intemational Trading Corporation (PITC) parallel importation scheme or the prevailing market price whichever is lower. 9. The DOH HospitalHealth Unit Drug Consignment Management Committees shall be authorized to set mark-up price for consigned goods that shall be applied within their area of responsibility subject to specific restrictions embodied in the succeeding specific guidelines. 10. The DOH Hospitals shall be authorized to utilize accumulated income subject to the usual auditing and accounting rules and regulations. Health units, however, may be authorized to collect income through the establishment of a TrustRevolving Fund subject to the specific approval of the Department of Budget and Management (DBM). 11. The Consigned Goods shall be subjected to random sampling and testing by the BFAD for quality assurance. The items retained and tested by the BFAD shall be replaced by the Consignor without cost to the Government VI. SPECIFIC GUIDELINES AND PROCEDURES ‘A. Consignor (Suy jer Company) Eligibili 4, The following requirements shall be the primary basis for eligibility, among other requirements, if so required by the DOH a. Certificate from the Bureau of Internal Revenue acknowledging receipt of duly audited Financial Statements: Page 4 of 12b. Securities and Exchange Commission Registration Certificate for corporations/partnerships; or relevant Department of Trade and Industry registration certificate for sole proprietorships; c. Business Permit from the Local Government Unit which administratively covers the Consignee with which the Consignor intends to enter into a Consignment Agreement; d. Swom and duly notarized statement that the prospective Consignor has not been “blacklisted” to participate in biddings by any Government Agency, Local Government Unit, or Government Owned or Controlled Corporation; e. List of Drugs and Medicines that are intended to be consigned with the corresponding duly certified true copies of Certificates of Product Registration issued by the BFAD; and f. Certificate of Current Good Manufacturing Practice (CGMP) issued by BFAD (for manufacturers). In case the prospective Consignor is not a manufacturer, its principal manufacturer's certified true copy of CGMP certificate must still be submitted. g. Tax Clearance Certificate in lieu of the above mentioned documents, suppliers registered in the SSRS, after showing the Certificate, or certified true copy thereof, may be allowed to participate without prejudice to the right of the Consignee from asking for additional documentary requisites not covered by the SSRS. B. Competitive Consignor and Consignor Price Determination 1 Page S of 12 ‘The DOH Hospital/Health Unit Drug Consignment Management Committees. shall advertise its intention to pursue the DOH Drug Consignment System by inviting all Suppliers to submit price offers not later than two (2) months before each subsequent semester. Documentary requirements as listed in VIA. 1 must also be conveyed in the letter of invitations considering that these shall be verified by the DOH Hospital/Health Unit Drug Consignment Management Committees. Consignors must pass through eligibility requirements unless they present SSR in its stead The DOH Hospital/Health Unit Drug Consignment Management Committees shall convey the generic names and description of all the essential drugs and medicine intended for consignment to prospective Consignors; The date of submission and opening of the Drugs Consignment Offers shall be undertaken at least fifteen (15) calendar days from the issuance of the Invitation to Submit Drug Consignment Offers to the DOH-BFAD Registered Drug Suppliers but shall not exceed twenty five (25) calendar days from the issuance thereof. The evaluation of the Drug Consignment Offers and the resultant resolution shall be accomplished within ten (10) calendar days reckoned from the opening of the same. The DOH Hospital/Health Unit Drug Consignment Management Committees shall send copies of the results to the CO-DCSSOC within twenty- four (24) hours from the approval of the resolution.10. 1" 12, Page 6 of 12 Further, the following data shall be explicitly conveyed to the CO-DCSSOC by the Consignee: The Consignor: The essential drugs and medicine item(s) carried by the Consignor, The approved price for consignment; The approved mark-up price for dispensing by the Consignee; and Abstract that details computation of the prevailing market price. The preparation and perfection of the Drug Consignment Agreement (see Annex A) must be accomplished within ten (10) calendar days reckoned from the date of the resolution of the evaluation of the Drug Consignment Offers A Drug. Consignment Agreement shall have a valid duration of six (6) months, unless extended with reasonable cause as shall be justified by the Consignee. Said Agreement may be subject to extension on a month to month basis, or renewal so long as the price does not change. The duly perfected Drug Consignment Agreement shall be sent by the Consignee to the CO-DCSSOC within fifteen (15) calendar days from the execution of the Agreement. The validity of the price offers shall be at least seven (7) months reckoned from the time a Consignment Agreement has been signed and can be made applicable for all other DOH Hospitals/Health Units within their area of responsibility to ensure consistency and sustainability in price levels Notwithstanding General Guidelines No.7, price offers shall be competitively determined in order to arrive at the lowest calculated and most reasonable consignment price. ‘A Drug Consignment Agreement must be perfected at least ten (10) calendar days before each semester (first day of January and July) ‘A Drug Consignment Agreement of the Consignee must be accomplished in six (6) copies and must be distributed to the following Offices, if applicable, for functional and oversight purposes (a) 1% Copy Pharmacy (b) 2" Copy Property Section/Administrative Division or equivalent (©) 3" Copy Consignee’s Chief Accountant (d) 4" Copy cO-DCSsoc (e) 5" Copy Consignee’s Resident Auditor/equivalent () 8" Copy CHD within the area of responsibility A Consignment Agreement shall not be reached in case the lowest offered price by a prospective Consignor is relatively higher than the prevailing market price. The eligibility determination and the evaluation of consignment offers shall be done in a competitive and transparent manner. And the procedures not specifically mentioned in this Order which may be adopted by the Hospitals shall be similar to those provided for under existing rules and regulations on procurement. Such supplementary procedures that shall be adopted by theHospitals must, however, be reflected in a duly published or conspicuously posted Hospital administrative issuance, copies of which shall be forwarded to the DOH CO-DCSSOC within fifteen (15) days from posting C. Stock Requirement Determination 1. Only drugs and medicines covered by the latest edition of the Philippine National Drug Formulary (PNDF) shall be covered by the DOH Drug Consignment System. The same must be covered by an appropriate Certificate of Product Registration (CPR). 2. The projected quantity of drugs to be ordered must be determined on a quarterly basis by the Consignee. 3. A list of Drugs and Medicines to be consigned shall be prepared by the DOH Hospital/Health Unit Drug Consignment Management Committees. This activity must be accomplished not later than three (3) months before the subsequent semester to assure ample time for advertisement and invitation to prospective Consignors. The drugs and medicines that shall be included in the said list are those not procured by the Hospitals as a consequence of budgetary constraint, but are nonetheless needed. Drugs that are not listed in the PNDF may be consigned only after the approval of the Formulary Executive Council (FEC) as per AO 2006-0018, provided that the Hospital had submitted its request to the Council with the needed justification. If a bidded drug is also consigned, the consigned price should not be higher than the winning bidded price. 4. Exclusively distributed items may also be consigned subject to the recommendation of the Consignee and provided that these are listed in the latest edition of the PNDF, and with the explicit approval of the DOH Hospital/Health Unit Drug Consignment Management Committees 5. Multiple sources (suppliersiconsignors) of consigned drugs and medicines shall be allowed in instances that the responsive supplier/consignor with the lowest price offer can not adequately fill-up the quantity demanded by the Hospital within a given consignment period. However, such responsive consignor/supplier must explicitly indicate in writing that the full quantity demanded by the Hospital can not be adequately filled within the consignment period (an ex post facto evaluation event). The concerned Hospital then may invite suppliers, which participated in the previous Price Offer submission for consignment to enter into consignment agreement provided that they satisfy all parameters of eligibility and responsiveness and that they agree to sell their goods at the lowest price offered. 1. The Drug Consignment Agreement shall cover at least two (2) deliveries, which shall take place within seven (7) days reckoned from the start of each quarter covered.2. The specific description of the drugs and medicines and their quantities that must be delivered for. every quarter shall be covered by a Consignment Order (see Annex B). The Consignment Orders for the initial quarter shall be issued at the same time a Drug Consignment Agreement is perfected. The Consignment Orders for the succeeding quarter must be issued not later than three (3) days from the start of said quarter. 3. Consignment Orders are integral part of the Consignment Agreement. 4. A Consignment Order shall bear the following information Name of the Consignee as Heading Consignment Order No. Business Name of the Consignor Business Address of the Consignor Consignment Order Preparation Date Preparing Officer Item No. Description of the Article i. Generic Name ii, Dosage Form il, Strength iv. Sub-Packaging Unit i, Quantity i. Unit k. Unit Price |. Total Price m. Certification from the Supply Officer that the price were competitively determined 1. Approval of the headichief of the Consignee. zor79 5. A Consignment Order for a particular drug may be issued in-between quarters in order to offset unforeseen exigencies, such as sudden depletion of that particular stock as a result of force majeure or calamities, provided that such shall be covered with the appropriate justification as shall be certified by the official of the specific requesting unit within the Hospital/Health Unit and as approved by their respective heads/chiefs. 6. The consigned goods shall be delivered directly to the Consignee’s Pharmacy and shall be immediately inspected together with the representatives of their respective Inspection and Acceptance Committees, and inviting representatives from the COA as witnesses. 7. A Delivery Receipt shall be issued by the Consignor for every delivery made to the Consignee and shall bear the following information: a. Name of Consignor Company as Heading b. Date of the Delivery Receipt c. Delivery Receipt No. d. Consignment Order No. covered e. Name of authorized representative of the Consignor effecting the delivery f. Item No. g. Description of the Article i. Generic Name ji. Dosage Form Page 8 of 1210. "1 12. 13, Page 9 of 12 il, Strength iv. Batch No/Lot No v. Manufacturing Date vi. Expiration Date vii. Sub-Packaging Unit h. Quantity i, Unit j. Unit Price k. Total Price The Delivery Receipt must be supported with a Certificate of Analysis coming from the Quality Control Department of the manufacturer reflecting therein the same batch/lot numbers covered in the Delivery Receipt. The same batch /lot numbers must appear on the invoices for billing purposes. Consignees shall apply the zero inventory concept by turning-over all unused stocks to the Consignor within seven (7) days after each of the quarters covered in the Agreement or within the following day from the receipt of the Replenishment Goods, to avoid stock availability gaps. The drugs and medicines returned shall be covered with the appropriate invoices No items shall be received which expiration dates are less than twelve (12) months from the date of the delivery. Any consigned items which expiration is less than that prescribed hereon shall be immediately invoiced and returned to the Consignor for immediate replacement. A Return Invoice (Invoice Receipt of Property) shall be issued to this effect stating therein the specific description and quantity of the items and the specific reason for their return. Stock ledger cards and bin cards shall be maintained and updated on a daily transactional basis. The Supervising Officer of the Consignee’s Pharmacy must countersign erasures and report to their respective headsichiefs any discrepancy. Any loss of consigned goods arising from fortuitous events beyond the control of the Consignee shall relieve the same from any responsibility. Provided however, that such loss is not due to negligence resulting to theft or pilferage and in which case the Consignee’s Pharmacy-on-Duty, and those staff physically present within the immediate vicinity of incident, including the security guards shall be held jointly and severally liable for the monetary value of the goods pilfered/stolen Monthly Inventory Reports must be accomplished jointly by the Pharmacy Staff and the Pharmacistin-Charge (as the preparing units) (or equivalent personnel in the Consignee), and the Consignee's Inspection and Acceptance Committee (as the verifying body) and the Chief Accountant/equivaient officer in the Consignee (as approving Officer) to determine the following as shall be manifested in the said Report: a. Stocks received as initial delivery/beginning balance (Add: Replenishment stocks, if any), b. Stocks sold for the month ©. Ending Balance of Consigned Goods (a minus b); Representatives from the COA and the Consignor shall be invited under this activity14. The Monthly Inventory Report must be supported with prescriptions duly marked “PAID’ with the Official Receipt Numbers indicated. The total consigned goods that are sold as verified from physical counts shall be reconciled with the total consigned goods sold based on prescription filled. Payment shall be made after such reconciliation, 15, The Monthly Inventory Report must be accomplished and approved within five (5) working days reckoned every end of the month, i.e. the last day. 16. The original copy of the duly reconciled inventory report shall be forwarded to the Property Section/Administrative Division or equivalent unit in the Consignee and shall serve as the basis in the preparation of succeeding Consignment Order. 17. The Property Section/Administrative Division of the Hospital or the equivalent unit in the Consignee shall be tasked to prepare Consignment Orders, which are serially numbered and recorded to the appropriate book. The same shall be responsible in furnishing the COA with a copy of said Order within three (3) days from perfection together with a certified true copy of the Consignment Agreement {the Consignment Agreement shall only be furnished once to the COA, hence for succeeding Consignment Order(s) the Agreement will no longer be submitted). Re-selling and Dispensing Conditions 4, The DOH Hospitals shall be allowed to dispense and sell drugs under a duly perfected Consignment Agreement. The DOH Hospitals shali be authorized to dispense consigned drugs and medicines with mark-ups provided that the resultant retail price, ie. with the mark-up will not result to a price higher than the prevailing market price. No consignment agreement shall be entered into by the Hospital if after computation of the range of possible resultant mark-up prices until the level of break-even point, ie. a price where no income will be earned by the Hospital concerned, would result to a price higher than the prevailing market price 3. The DOH Hospitals must maintain distinct records of sales of consigned drugs and medicines, distinctly identifying the Consignor for the purpose of tallying records and payment. s The label and packaging of the consigned goods shall be maintained as they are, provided that the consigned goods are dispensed using their generic names only, among the other essential requirement to be reflected in a prescription as provided by law and pertinent statutes. e Consigned drugs and medicines sold shall be issued with separate Official Receipts to facilitate balancing of sales records and inventory. ° The foregoing procedure shall apply mutate mutandis to CHDs and other health Units provided that they are authorized to set up Trust/Revolving Fund as approved by the DBM and subject to issuance of specific guidelines. E. Fiscal Management 1. The Accounting Section of the Hospital or equivalent unit in the Consignee shall be responsible for the preparation of the Monthly Report of Collection, and shall Page 10 of 124 immediately effect payment of consigned drugs and medicines sold, within two (2) days from the approval of the Monthly Inventory Report by the Chief Accountant or equivalent offical in the Consignee. The income derived from the consigned drugs and medicines shall be deposited in a trust fund set up for this purpose. The funds derived shall be used for expanding the acquisition of the Consignee’s need for essential drugs and medicines, and adjunct activities, and augmentation of the maintenance and operating expense and capital outlays. Payment or remittance of sales to the Consignor shalll be made within seven (7) days after the inventory taking, The transactions shall be recorded and accounted for separately. G._Quality Assurance 4 Random sampling of consigned goods may be undertaken during the deliveries only as a post market surveillance requirement. It shall be witnessed by the representative from the Consignor and shall be executed by a DOH authorized inspector The Consignor shall promptly replace the sampled goods without cost to the Government. The DOH Hospital/Health Unit Drug Consignment Management Committees shall endorse the sampled goods to the BFAD for testing No testing fees shall be levied by the BFAD on the endorsing DOH Hospital/Health Unit Drug Consignment Management Committees. Vil, MONITORING STRUCTURE AND COORDINATING INSTRUCTIONS 1 Page 11 of 12 The CO-DCSSOC shall have oversight function on the progress of the DOHDCS. The NDPS and NCHFD shall provide staff complement and estimates to the Committee. All Consignees must submit a copy of the Consignment Agreement, and projected volume of consigned goods, to the CO-DCSSOC within fifteen (15) days from the perfection of said Agreement. All Consignees that intend to undertake this scheme shall create a Committee on Drug Consignment System that would specifically undertake activities that would assure the implementation of the system and will monitor all activities under the said system. It shall inform the CO-DCSSOC of the status of the system by providing the following information requirement on a quarterly basis: a. Copies of Consignment Orders issued to Consignors; b. Delivery Performance of Consignors if complying with agreed terms and conditions; ©. Critical data of each consigned essential drugs and medicines, i.e i. Total volume of particular essential drug ordered per quarter versus actually consumed; ji. Batch/Lot No of each essential drugs and medicines delivered by a Consignor;il, Manufacturing/Expiration Date of each essential drugs and medicines delivered by a Consignor; d. Summary record of sales and net income for each consigned items. 5. As a guide to the foregoing steps that shall be traversed, the different stakeholders are enjoined to verify the Procedural Flowchart (see Annex C) 6. All concerned Hospitals which shall adopt consignment as a method of enhancing its inventory must submit all information requirement due to the DOH CO-DCSSOC as described hereon and within the prescribed timelines. 7. Non-compliance to information requirement submissions and the procedure set forth in this Order shall be subject to appropriate sanctions as provided for in the pertinent laws, statutes, rules and regulations covering behaviour and actions of Government Officers and Employees. Vill, SEPERABILITY CLAUSE If any provision in these Guidelines, or application of such provision to any circumstance, is held invalid, the remainder of these Guidelines shall not be affected thereby. IX, REPEALING CLAUSE Administrative Order Nos. 5 s. 2003, and 145 s. 2004, and all other provisions of previous issuances, which are inconsistent with this Order, are hereby repealed, and/or modified accordingly. X. _ EFFECTIVITY This Order shall take effect immediately. fecretary of Health Page 12 of 12ANNEX A (Consignment Agreement, Pro-Forma) DRUG CONSIGNMENT AGREEMENT This Consignment Agreement is entered into by and between: The (Name of Consignor), with principal address at (Business Address of the Consignor), represented herein by its (Designation), (Name), hereinafter referred to as the Consignor; and - The (Name of Consignee) with principal address at (Address of Consignee), represented by its (Designation), (Name), hereinafter referred to as the Consignee. WITNESSETH THAT; WHEREAS, in view of the high procurement cost of drugs, medicines and other hospital supplies and items, access to the same by patients and other common people has been limited; WHEREAS, the Consignor desires to offer its products at a reasonable cost through forward-stocking or consignment scheme; WHEREAS, the Consignor was among those specifically identified in the list. determined by the DOH Central Office DCS Steering and Oversight Committee (CO-DCSSOC) as having the most responsive and reasonable price offer based on a limited source invitation; and WHEREAS, the Consignor and the Consignee are fully aware of the provisions of the DOH Administrative Order No. 2006- , entitled “Amended Policies and Guidelines for the institutionalization and decentralization of the Department of Health Drug Consignment System’. NOW THEREFORE, for and in consideration of the foregoing premises, and the terms conditions hereunder enumerated, the parties of this Agreement hereby agree, that: 1. The Consignor shall undertake to supply DRUGS AND MEDICINES for sale on a consignment basis at the "Murang Gamot” Pharmacy or equivalent project/unit of the Consignee. A Consignment Order shall be issued for this purpose. The said Consignment Order shall be made an integral part of this Agreement.2. The Consignee shall undertake to sell the consigned drugs and medicines to the public at a reasonable and affordable price. 3. Ownership and title to the consigned goods shall remain with the Consignor. The consigned goods shall not be removed from the Pharmacy/Store Room of the without prior written consent of the Consignor. 4, The Consignor shall be bound to maintain the price of the consigned goods for at least seven (7) months from the date of the consignment and shall be applicable within the catchment area of the Consignee. 5. The Consignees shall be bound to pay only for the drugs and medicines sold. Any expired or unsold drugs and medicines shall be the returned to the Consignor every quarter, Payment shall be made within seven (7) days after the monthly inventory taking. 6. This Agreement shall cover two deliveries, which shall take place within seven (7) days reckoned from the start of each quarter covered, 7. The specific description of the Drugs and Medicines and their quantities that must be delivered for every quarter shall be covered by a Consignment Order. The Consignment Orders for the initial quarter shall be issued at the same time this Agreement is perfected, The Consignment Orders for the succeeding quarter must be issued within three (3) days from the start of said quarter. 8. Consignment Orders are integral part of this Agreement. 9. Deliveries may be made directly to the Pharmacy in the presence of the Inspection Committee's Representative. The delivery and replenishment of drugs and medicines shall be on a quarterly basis. All unconsumed stocks for each quarter shall be returned to the Consignor. 10.Zero inventory concept shall be applied by turning-over all unused stocks to the Consignor within seven (7) days after each of the quarters covered in this Agreement or within the following day from the receipt of the Replenishment Goods, to avoid stock availability gaps.11. The Consignee shall conduct an inventory of goods consigned every end of the month or at last working day of the month as the case may be, or whenever necessary to be determine by the Pharmacist- in-Charge, with the presence of the Inspection Committee and a representative from Commission on Audit. The Consignor may observe the inventory taking at his own discretion. 12.Upon the expiration or earlier termination of this agreement, for breach of any term or condition, the Consignee may, upon previous notice/demand, require the Consignor to remove from the Hospital the consigned drugs and medicines. 13.The Consignor shall hold the Consignee free and harmless from, and shall be solely responsible for, any claim, action, suit, cost of expenses, damages and liabilities arising out of, in connection with, or resulting from the use of the consigned goods. 14.This Agreement shall have a validity duration of six (6) months, unless extended with reasonable cause as shall be justified by the head/chief of the Consignee 15.A Delivery Receipt shall be issued by the Consignor for every delivery made to the Consignee and shall bear the following information: Name of Consignor Company as Heading Date of the Delivery Receipt Delivery Receipt No. Consignment Order No. covered Name of authorized representative of the Consignor effecting the delivery Item No. g. Description of the Article i. Generic Name ii. Dosage Form iii, Strength iv. Batch No/Lot No v. Manufacturing Date vi. Expiration Date vii. Sub-Packaging Unit Quantity Unit Unit Price Total Price pansy wees16.The Delivery Receipt must be supported with a Certificate of Analysis coming from the Quality Control Department of the manufacturer reflecting therein the same batch/lot numbers covered in the Delivery Receipt. The same batch /lot numbers must appear on the invoices for billing purposes. 17.No items shall be received which expiration dates are less than twelve (12) months from the date of the delivery. Any consigned items which expiration is less than that prescribed hereon shall be immediately invoiced and returned to the Consignor for immediate replacement. A Return Invoice (Invoice Receipt of Property) shall be issued to this effect stating therein the specific description and quantity of the items and the reason for their return. 18.Consigned Goods may be subjected to random sampling and testing by the Bureau of Food and Drugs (BFAD) through an authorized DOH representative or BFAD inspector during deliveries and the corresponding items retained and tested by the BFAD shall be promptly replaced by the Consignor without cost to the Government. 19.Any loss arising from fortuitous event shall relieve the Consignee from any responsibility. However, in case of loss arising from pilferage and theft, the Consignee shall be liable for the monetary value of goods lost or stolen. 20. The Consignor and Consignee shall implement the provisions of the DOH Administrative Order No. 2006-____,_ entitled “amended Policies and Guidelines for the Institutionalization and Decentralization of the Department of Health Drug Consignment System” throughout the duration of this Agreement. IN VIEW THEREOF, the parties have hereunto set their hands this ———_ day of, 200 By: Consignor Consignee By: (Name) (Name)WITNESSES : ACKNOWLEDGEMENT Republic of the Philippines ) ) ss. BEFORE ME, Notary Public for the (Place), on this of 200_ personally appeared the following: Name C.T.C. No. Issued at Issued On (Consignor) (Consignee) both known to me to be the same persons who executed the foregoing instrument and that they acknowledged to me that the same is their free act and voluntary deed. This instrument consisting of five (5) pages, including this page, in which the Acknowledgement Portion is found, signed by both parties concerned, and their instrumental witnesses on each and every page on the left margin thereof. IN WITNESS WHEREOF, I have hereunto set my hand, the day, year, and place above written. Notary Public Doc. No. Page No. Book No. Series of 200_ANNEX B (Consignment Order Form) NAME OF CONSIGNOR/COMPANY: ADDRESS: Republic of the Phil Department of Health (Name of Hospital) (Hospital Address) CONSIGNMENT ORDER No. DATE PREPARED: PREPARED BY: Please deliver to the (Name of Hospital) Pharmacy/Property/Supply Section within receipt of order the following article specified below, subject to the stipulations contained in the Consignment Policies prescribed in DOH Administrative Order No. 2006- insltutionalization and decentralization of the Department of Heath Drug Consignment System” and Consignment Agreement working days upon , “Amended Policies and Guidelines for the Item ARTICLE, QTy. | UNIT] UNIT TOTAL No. PRICE | | | | | REQUESTED BY: Supply Officer APPROVED BY: Chief of Hospital