Analysis of Economic Losses to Patent Medicine that Stagnant in
Surabaya, Indonesia
Dwi Ratnasari, Thinni Nurul Rochmah
Faculty of Public Health, Universitas Airlangga, Mulyorejo, Surabaya
Keywords: Patent medicine, Stagnant, Losses, Hospital, Cost.
Abstract: Ineffective and inefficient drug management can result in the stagnation of hospital supplies and can
bring about negative consequences, one of which is economic losses. Patent medicine is one type of
drug used in drug services for general patients at the Islamic Hospital of Surabaya. The stagnation of
patent medicine at Pharmacy Unit Islamic Hospital of Surabaya was at 26.42% in October 2016 to
March 2017. The objective of this research study is to analyse the amount of economic losses due to the
stagnation of patent medicine at the Islamic Hospital of Surabaya. This was a descriptive observational
research study and used a cross-sectional design. The study was conducted on 299 patent medicines at
Islamic Hospital of Surabaya. The results showed there were some effects of stagnation including
increased holding costs, embedded capital, loss of ordering costs, increased risk of damage and
expiration, as well as increasing extermination costs. The total economic losses due to patent medicines
that stagnated in October 2016 to March 2017 amounting to IDR 41.276.489 (1 USD = IDR 13.513).
The conclusion showed that the drug management system is still ineffective and inefficient, so that it
can causes losses. The recommendation that can be given is to improve the hospital’s management
information and drug management system.
1 INTRODUCTION
Problems that appear in the steps of pharmacy
supplies management can be caused by ineffective
and inefficient drug usage in the hospital. One of
problems that can appear in the hospital drug
management is the occurrence of stagnation to do
with the pharmacy supplies. Stagnation is the
condition when the amount of drug stock at the end
of month is more than 3 times the average drug
consumption in every month (Muzakkin, 2008). The
occurrence of drug stagnation in a hospital can cause
economic losses in the hospital including purchasing
costs, ordering costs, and holding costs on the drug
that has stagnated (Muzakkin, 2008).
Hospitals are health care institutions that have
organised medical and other professional staff, and
inpatient facilities, and deliver 24 hours per day, 7
days per week. They offer a varied range of acute,
convalescent and terminal care using diagnostic and
curative services (WHO, 2016).
The Islamic Hospital of Surabaya is the private
hospital type C with the number of bed amounting to
111 beds. The Islamic Hospital of Surabaya uses 2
types of medicines in their services; patent medicine
and generic medicine. Patent medicine is used in
general patient care (30%) and 70% of BPJS patients
are in for generic medicine in an inpatient capacity
as well as outpatient services. The amount of
prescriptions written during 2016 at the Islamic
Hospital of Surabaya was 59,208 scripts for patent
medicine. The patent medicine that stagnated on
June – October 2016 was 20.52% with an average of
56 drugs stagnating every month. There was an
average of 79 drugs stagnant every month. Most of
the patent medicines that stagnate are drugs that are
in category C or are slow moving. The average of
slow moving drugs that stagnate stands at 50 drugs
every month.
Drug supplies that stagnate and stock out will
affect the budgeting of the hospital because it can
cause consequences and losses for the hospital.
Drugs that stagnate and stock out will cause costs to
arise from that specific condition (Mellen &
Pudjirahardjo, 2013).
The presence of an amount of patent medicine
that stagnates indicates that the patent medicines in
the Islamic Hospital of Surabaya requires a more
218
Ratnasari, D. and Rochmah, T.
Analysis of Economic Losses to Patent Medicine that Stagnant in Surabaya, Indonesia.
In Proceedings of the 4th Annual Meeting of the Indonesian Health Economics Association (INAHEA 2017), pages 218-221
ISBN: 978-989-758-335-3
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

effective and efficient management of the supplies
of patent medicines in order to avoid stagnant drugs
which may result in losses for the hospital, specially
economic losses. Based on the explanation above,
there is a need to analyse the economic losses caused
by patent medicines that stagnate. The objective of
this research study is to analyse the economic losses
that are caused by patent medicines that stagnate and
provide recommendations to improve drug
management in the Islamic Hospital of Surabaya.
2 METHODS
This was an observational descriptive research study
that used a cross sectional design. This study was
conducted on the 299 patent medicines in the
Pharmacy Unit of the Islamic Hospital of Surabaya.
This research was conducted by way of the
observation of the 299 patent medicines in the
pharmacy storage without intervention and by way
of interviews with the informants on the condition of
the patent medicines in the Pharmacy Unit of the
Islamic Hospital of Surabaya. The informant in the
interview about the patent medicine condition was
the Head of the Pharmacy Unit of the Islamic
Hospital of Surabaya. The analysis was done by data
collecting the patent medicines stock and calculating
using the inventory formula.
3 RESULTS
The results showed that the patent medicines that
stagnate are 166 items of drugs out of the whole 299
items of drug amounting to 76.254 drugs from
October 2016 to March 2017 at the Islamic Hospital
of Surabaya. The losses to be borne by the Islamic
Hospital of Surabaya due to patent medicines that
stagnate include the holding costs of the patent
medicines and the ordering costs of the patent
medicines.
1. Holding Costs of Patent Medicines
The holding costs that should be borne by the
Islamic Hospital of Surabaya caused by patent
medicines that stagnate include embedded capital
costs, electricity costs AC, and the running of the
pharmacy refrigerator, as well as any expired costs.
Table 1: Holding Cost due to Patent Medicine That
Stagnate
No Holding Cost Amount of Losses (IDR)
(1 USD = IDR 13.513)
1 Embedded Capital
Costs
39.495.525
2 Electricit
y
Costs 821.209
- Cost of Lamp 26.525
- Cost of AC 414.457
- Cost of Pharmacy
Refri
g
erato
r
380.226
3 Expired Costs. 935.439
Total 41.252.173
The total holding cost that should be borne by
Islamic Hospital of Surabaya on October 2016 to
March 2017 due to patent medicines that went
stagnant amounts to IDR 41.252.173.
2. Ordering Cost of Patent Medicines
The ordering cost of patent medicines that have
gone stagnant has been calculated by the
administration, with the costs including ordering
paper costs and stamp costs, and phone charges. In
relation to the patent medicines that stagnate, out of
the 199 items, there are 94 items that were ordered
amounting to 92.736 drugs in total. The
administration cost that was required to do the
ordering of the 92.736 drugs amounted to IDR
21.683. The ordering of medicines at the Islamic
Hospital of Surabaya is done in two ways: 80% of
patent medicines are ordered through routine
distributors and 20% are ordered by phone, so the
phone charges that were used were only calculated
from 20% of the patent medicines that were
stagnant. The phone charges amounted to IDR
2.631. The total of the ordering costs that should be
borne by the Islamic Hospital of Surabaya on
October 2016 – March 2017 due to patent medicines
that stagnated amounts to IDR 24.315.
The total of the losses that was caused by patent
medicines that stagnated has been calculated by
adding up the holding cost with the ordering cost.
Table 2: Total Losses Due To Patent Medicines That
Stagnate
No
Losses Caused by Patent
Medicines that Stagnant
Amount of Losses
(IDR)
(1 USD = IDR
13.513)
1 Holding Cost 41.252.173
2Orderin
g
Cost 24.315
Total 41.276.489
Analysis of Economic Losses to Patent Medicine that Stagnant in Surabaya, Indonesia
219

4 DISCUSSIONS
The presence of drug supplies that stagnate in the
hospital has caused losses for the hospital that
relates to purchasing costs, ordering costs and
holding cost (Hadidah, 2016). Drug supplies that
stagnate can also cause costs for the hospital due to
patent medicines that have been damaged in storage.
Other than that, drugs can also expire because of
being kept too long in storage. Drug supplies that
stagnate and have become damaged and expired also
cause the cost of drug elimination in the hospital.
The management system is said to be ineffective
if the drugs often have stock out and stagnate. The
more often and the longer a service unit has stock
out and stagnation, the more ineffective its
management (Quick, 1997). Excessive investment in
the pharmacy will increase the holding cost which
may also increase the opportunity cost (Rangkuti,
2004). The holding cost increases because the drugs
that should be sold are still in pharmacy storage. The
holding cost of the patent medicines that stagnate is
obtained from the embedded capital cost f the drugs
that should be sold, and the electricity cost that
should be incurred.
Pharmacy supplies which have been in storage
too long will increase the risk of the drug being
damaged and expiring. Patent medicines that
stagnated and were in the storage of the Pharmacy
Unit of the Islamic Hospital of Surabaya on October
2016 to March 2017 also had expired. The slow
moving drugs amounted to 3 items and caused losses
because of the drugs not being sold and needing to
be eliminated. The losses caused by the patent
medicines that stagnate may occur due to the
holding cost. Drugs that stagnate also come with an
ordering cost (Mellen & Pudjirahardjo, 2016). Patent
medicines that stagnated caused losses to do with the
ordering costs amounting to IDR 24.315 which was
obtained from the administration costs and phone
charges. If too many drugs are ordered and less are
used, it will cause the drugs to stagnate (Kumalasari,
2016).
Based on the interview with the Head of the
Pharmacy Unit of the Islamic Hospital of Surabaya,
they know that drug planning is done manually and
visually by calculating the amount of drug supplies
and not seeing the pattern of drug consumption that
cause an occurrence of stagnation by the actions of
the officers of the pharmacy unit. The pattern of
drug consumption according to the differences in
disease trend can cause the occurrence of drug
stagnation because the drugs used will be different
every month, and the drug that is required does not
always match with the drugs that had been planned
before (Ratnasari, 2017). Based on the interview, it
has known that there is no specific method used in
the controlling of the drugs supplies at the Pharmacy
Unit in the Islamic Hospital of Surabaya. Other than
that, the Hospital Management Information System
(HMIS) at the Islamic Hospital of Surabaya cannot
show the data of the drugs thoroughly and they
cannot be processed directly in order to see the
pattern of drug consumption. Slow access to HMIS
in the collection of data will prevent the officers
from processing the data to do with the drug supplies
and the data of the drugs being used.
Based on the problems that are known to cause
the occurrence of drug stagnation, it has been
indicated that drug management has not been
effective and efficient. Below are the given
recommendations for improving drug management:
1. Improving the Hospital Management Information
System (HMIS). Improving the HMIS can be
done with coordination between the Pharmacy
Unit and the HMIS Unit to design the content of
the HMIS that will enable the officers to access
the data of the drug supplies easily and
automatically. The whole data can then be
accessed quickly and accurately at any time
required. Other than that, it is possible to design
an analysis to display drug use trends. The
advantage of improving HMIS is the easy access
to the data of the drug supplies completely and
thoroughly which will facilitate the officers in
the analysis of the drug used. The disadvantages
are that the process of the re-design difficult and
expensive.
2. Make reporting the drugs used adjusted to the
trend of the disease, so then it can be known that
the drug priority is different in every month to
adjust from the precious trend of the disease. The
analysis of the trend of the disease and the drugs
used is also done with coordination between the
pharmacy and the doctor.
3. Improving drug planning by considering the
drugs used or drug consumption that is adjusted
with the trend of the diseases at the Islamic
Hospital of Surabaya. In accordance with the
previous research on the Islamic Hospital of
Surabaya, one of the planning methods that can
be done is by using the Minimum - Maximum
Stock Level (MMSL) method. The MMSL
method is a method for scheduled purchasing
with an interval ordering setting. In this method,
each item of drug in the maximum-minimum
stock level is determined to be sufficient and not
INAHEA 2017 - 4th Annual Meeting of the Indonesian Health Economics Association
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excessive. The ordering is done when the drugs
have reached the prescribed minimum level for
ordering until the drug reaches the maximum
label again.
5 CONCLUSIONS
The occurrence of patent medicines that stagnate
indicates that drug management has not been done
effectively and efficiently. The consequences that
can occur at the Islamic Hospital of Surabaya
includes increasing the drug holding cost, embedded
capital on the drug that has stagnated, losses on the
ordering costs, increasing the risk of the drug being
damaged, the risk of the drug becoming expired and
increasing the drug examinations. The losses that
should be borne by the Islamic Hospital of Surabaya
amount to IDR 41.276.489. The recommendation
that can be given to avoid the occurrence of drug
stagnation is improving the Hospital Management
Information System (HMIS), to make reporting the
drugs used according to the trend of diseases easier,
and improving the drug planning system with
specific methods.
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