AbstractIntroduction: With advanced medical care and drugs, consumption of drug cost from budget allocation is high. It has been proved that control measures in monitoring drug consumption have resulted in 20% saving in cost utilization. By using various material management measures, appropriate drug utilization in usage and cost can be designed. Objectives: Apply ABC – VED to classify a drugs in the pharmacy of a rural health centre into logical groups. Identify the vital few items among the drugs (A class) than the trivial many (C class) to enable differential control. Material and Methods: Study was undertaken in a rural health centre of a teaching hospital in Tamilnadu. The list of drug consumption and expenditure between January to December 2013 was transcribed in a spreadsheet and ABC-VED analysis done and then categorized into three. Results: The annual drug expenditure on drugs in the hospital for 2013 was Rs. 3, 94,886.21. On ABC analysis, Category A has 8 items with a percentage of about 15.09% and consumes 69.02% (Rs. 2,72,76.64 ), Category B has 12 items with a percentage of 22.64% and consumes 21.21% (Rs. 83,774), category C has 33 items (62.26%) which consumes 9.70%. By VED analysis, Vital drugs consumes 61.47% (Rs. 2,42,754.56) with 22 items of 41.05% of total drugs, Essential drugs consumes 33.6% (Rs. 1,31,349.67) of with 23 items of 43.39% of total drugs and Desirable drugs consumes 5.2% (Rs. 20, 781.98) of cost with 8 items of 15.09 % of drugs. There were 24 (45%) items in category I of which 6 items are both expensive and vital, 2 items are expensive and essential. 22(41%) in category II constituted 7 items intermediate cost and essential, 1 item was in intermediate cost and desirable group, 14 items belonged to low cost and essential group. 7(13%) in category III were of low cost and desirable group. Conclusion: Majority of the resources been utilized by fewer drugs, which requires strict control. Application of inventory management tools for efficient management of the pharmacy drugs and close supervision on items belonging to important categories is needed. ABC-VED matrix analysis identifies the drugs requiring stringent control for optimal use of funds and to avoid out-of-stock situations.

Keyword: ABC-VED analysis, Inventory control, Medical stores, Material management.