The Ethiopian Pharmaceutical Supply Service (EPSS) plans to construct a 100 million dollars mega warehouse in a bid to modernise and centralise its pharmaceutical storage and distribution. The project was announced during a parliamentary audit report meeting last week.

Solomon Nigussie, deputy director general of EPSS, revealed that UNICEF designed the facility, while the Ministry of Finance (MoF) will manage funding with international backing. The 50,000sqm warehouse is set to be a fully automated, "hands-free" facility equipped with advanced temperature control and logistics technology, according to Solomon. The project is expected to be completed within two years at most.

EPSS operates 63 warehouses, 12 of which are rented, while the others are aging. EPSS Director General Abdulkadir Gelgelo (MD) stated that the new warehouse will address existing problems and improve storage standards mandated by the Ethiopian Food & Drug Authority (EFDA).

Awol Hassen, EPSS’s public relations head, stated that consolidating warehouses will boost efficiency by reducing management complexities.

During the meeting, Parliament’s Public Expenditure Administration & Control Affairs Standing Committee, led by Yeshimebet Demise and Arare Mosisa, expressed worry over warehouse conditions and the distribution of medicines.

EPSS distributes medicine and medical devices to 5,000 health institutions. Program medicines, funded by the Ministry of Health (MoH), account for 70pc of EPSS’s distribution, with a budget of 21 billion Br for the 2023/24 fiscal year. These include 163 essential medications like family planning and HIV treatments. The remaining 30pc are rotating fund medicines, budgeted at eight billion Br, covering chronic disease treatments and routine medical supplies.

Parliamentarians questioned EPSS about ongoing shortages of medicine and medical supplies in hospitals. In response, Abdulkadir stated that 69pc of program medicines are delivered directly to hospitals, but finance and logistics capacity limitations hinder the distribution of rotating fund medicines.

Abdulkadir said that EPSS receives a 2.5pc distribution fee from donor institutions to deliver program medicines. However, rotating fund medicines are not fully covered by this arrangement. “If hospitals pay for distribution, EPSS could expand its delivery services,” he said. EPSS recently acquired 147 vehicles from donor institutions to assist with transportation, according to him.

Solomon Abdela, a senior supply chain expert at the Ministry of Health (MoH), referenced an MoH study revealing that EPSS fails to supply approximately 25pc of rotating fund medicines. This shortfall forces hospitals to resort to expensive procurement methods, such as tenders, which inflate costs and strain budgets.

MPs criticised the lack of a barcode system for tracking inventory until the recent audit. Abdulkadir responded that implementing such a system would cost 174 million Br. He argued that an Enterprise Resource Planning (ERP) system, a software system that helps integrate various departments of an institution, must first be in place for barcodes to function. A pilot ERP trial began two years ago in select branches, costing nine million dollars and funded by global organisations, the MoH, and EPSS.