- 294 essential meds procured through emergency purchases
- Misuse of emergency purchases concerning: GMOA
- Emergency imports permitted only to address shortages: Minister
- 2022 SPC audit report reveals cost of defective, expired, damaged meds
The Health Ministry is facing increasing pressure to overhaul its medicine procurement practices by moving away from emergency purchases when addressing shortages at State hospitals and to instead adopt a more efficient procurement process.
According to the Health Ministry, a total of 294 essential medicines have been acquired through emergency purchases as of last week.
It is learnt that approximately Rs. 30 billion is spent annually by the Treasury on emergency purchases. Some health experts argue that these funds could be better spent on acquiring medicines of higher quality.
Wasteful spending
Speaking to The Sunday Morning, Government Medical Officers’ Association (GMOA) Spokesman Dr. Chamil Wijesinghe highlighted the issue of wasteful spending, stating that Sri Lanka loses billions of rupees each year due to emergency purchases, often resulting in the acquisition of subpar medicines at inflated prices.
Wijesinghe emphasised: “Rather than spending large sums on emergency medicine imports, we could have invested in high-quality European medications. The misuse of emergency purchases is concerning, as funds are being directed toward common medications that could have been acquired at a lower cost.
“While the National Medicines Regulatory Authority (NMRA) Act does provide provisions for emergency procurement, these measures should be reserved for genuine emergencies. Unfortunately, the Health Ministry seems to have adopted a routine of emergency purchases even when they are not warranted.”
Dr. Wijesinghe advocated for the cessation of emergency purchases and for a streamlined procurement process that ensured timely orders.
He also highlighted the risks of emergency purchases, pointing at an increased risk of corruption and concerns about product quality, particularly given that many emergency purchases were made using a Waiver of Registration (WOR).
According to Dr. Wijesinghe, last year alone the NMRA had issued 750 WORs and by the end of July this year it had issued 500 WORs.
In the realm of pricing, Dr. Wijesinghe pointed out that the substantial markup on medicines acquired through emergency purchases often amounted to three or four times the original price.
“If you check the prices of medicines purchased on an emergency basis, the prices are three- or four-fold higher than the original price. In some instances, it is even more,” he stressed.
Emergency circumstances
Section 109 of the NMRA Act defines emergency and special circumstances. It permits the import and supply of medicines, medical devices, or borderline products in specific quantities in situations such as saving lives, controlling outbreaks, addressing epidemics, and national emergencies. The section underscores the accountability and reporting responsibilities of importers.
Section 109(2) further states: “Such permission may be granted – (a) on a request made by the Ministry of Health; or (b) on a request made by an individual or an organisation recommended by the Ministry of Health.”
The section also reads that the importer shall be responsible for the accountability and management of the medicine, medical device, or borderline product imported under Section 109 and that the importer shall submit routine reports in the prescribed manner to the authority, on the medicine, medical device, or borderline product imported under Section 109.
The audit report of the NMRA for 2021 has revealed that the letters of exemption from registration had been issued to the State Pharmaceuticals Corporation (SPC) and private institutions for 67 medicines and 140 medical equipment during 2021 based on reasons such as cancellation of registration, lack of registered suppliers, etc., which do not fall under such circumstances.
In its response, the NMRA has stated that actions had been taken in terms of Section 109 of the act with the approval of the Ministry of Health in special cases such as to save a life or to prevent the spread of an epidemic disease, cancellation of registration, non-availability of registered suppliers, non-importation of medicines, and crisis situations due to shortage of medicines in the public and private sector because of factors such as declining trend of registration.
However, the National Audit Office (NAO) in its recommendations has stated that entry of uncertified medicines into the country should be minimised by issuing letters of exemption from registration only in specific cases mentioned in the act.
Meeting shortages
Health Minister Keheliya Rambukwella clarified that the ministry permitted emergency medicine imports solely to address shortages in the State sector. These medicines, he assured, were approved by the World Health Organization (WHO) or other internationally-recognised institutions that guaranteed their quality.
Addressing the timing of emergency purchases, Rambukwella stressed that the process took only around three months, making it imperative for procurement to be swift to avert shortages.
An allocation of $ 200 million has been designated to import essential medicines from the $ 1 billion credit facility provided by the Indian Government. An additional Rs. 3,000 million has been secured for medicine purchases by the ministry, ensuring completion of 95% of the necessary financial arrangements.
Highlighting several international institutions that approve the quality of medicines, the Minister stressed that there were around seven institutions worldwide that had WHO approval to guarantee the quality of medicines, including the European Union’s (EU) Good Manufacturing Practice (GMP) and the US Food and Drug Administration (FDA), and that steps would be taken to import medicines under those organisations.
Rambukwella stressed that the emergency purchases took only around three months and to meet the current requirements, the procurements had to be done immediately to avoid any shortages.
“It is not possible to check the quality of each and every medicine that we import. We don’t import low-quality products. All medicines that are being imported are approved by either one of the international institutions that are there for approving the quality of medicines,” he stressed.
Massive losses
Meanwhile, the annual audit report of the SPC for 2022 revealed significant costs associated with defective, expired, and damaged medicinal drugs. Measures to recover losses from such issues are ongoing.
It is revealed that the total cost of defective, expired, and damaged medicines that were purchased for sale by the corporation as of 31 December 2022 was Rs. 344.23 million and the total cost of defective, expired, and damaged medicines during the year under review was Rs. 60.40 million.
Out of the total cost of Rs. 32.29 million of defective medicines in the previous year and in the year under review, Rs. 23.68 million had not been recovered by 31 March 2023. The total loss incurred by the corporation due to expiry and damage of medicines was Rs. 156.50 million in the previous year and the year under review.
Among the stocks purchased for the medical supply sector for 2022, 19 items with a value of Rs. 265.88 million had failed in condition and although debit notes amounting to Rs. 177.70 million had been issued for 11 items, out of that Rs. 146.61 million had not been recovered from the suppliers, it is stated.
The SPC procures and supplies medicines to the Health Ministry and to the private sector market through an open competitive tender procedure.
All expenses incurred in the purchases for the Health Ministry are advanced by the SPC from its own funds and subsequently collected from the ministry. The SPC receives a service charge of 10% of the cost and freight value of goods for ordering and clearing expenses such as taxes, Defence Levy, etc. Thus, after deducting clearance charges, stamp fees, etc., the SPC retains only about 1% for its services.
Therefore, whatever the losses incurred by the SPC are losses incurred by the country in purchasing medicines.
In this backdrop, the call for reform in medicine procurement is growing louder, urging the Health Ministry to prioritise an efficient and well-regulated approach over emergency purchases. The nation’s wellbeing hinges on the quality and availability of medicines, making it essential to ensure responsible use of resources.