The Papua New Guinea (PNG) Government’s announcement of two contracts worth more than K100 million to supply medical kits and antibiotics this year sparked a furore, led by the National Doctor’s Association (NDA).
The National’s reporter REBECCA KUKU looks into the issue that dates back to December 2013.
ABOUT six years ago, Australia’s Department of Foreign Affairs and Trade (DFAT) withdrew funding for an A$38 million (K87 million) programme that supplies medicine to some 3,000 health centres in PNG.
The Australian Broadcasting Corporation reported that the withdrawal was due to concerns about the way PNG had awarded contracts, and over corruption and fake drug allegations.
Then, Australia’s aid agency chose the supplier and distributor for the medicines. That process was taken over by the PNG Government who also removed a crucial quality-control criteria. Doctors had lamented that the distribution of ineffective medicine in a country rife with TB (tuberculosis), malaria, pneumonia and gastro would cost lives. In 2011, a corruption scandal within PNG’s health system left hospitals running out of drugs and prompted the Government to ask for Australia’s help in stocking the health centres.
On Aug 14, health secretary Pascoe Kase announced that Borneo Pacific Pharmaceutical Ltd had been awarded this year’s contract to supply medical kits and antibiotics. The NDA responded furiously the following day, threatening to have doctors walking out of their workplace if the contract was not suspended and Kase replaced.
NDA secretary and chief of emergency medicine Dr Sam Yockopua asked: “Why can’t the Government set up its own department to procure medical kits and medicine directly, either, from the World Health Organisation (WHO)-certified suppliers like the International Dispensary Association (IDA) or equivalent, or directly from manufacturers in Asia, Australia, the US or Europe
“Generic medicines procured this way will be cheaper and effective.”
Prime Minister James Marape, when asked for a response the next day, told The National that the Government was reviewing and looking into alternative ways to improve its procurement and supply of medicine (pharmaceutical drugs) for the people.
The following day (Aug 23), the NDA submitted a 9-point memorandum to Marape on the medicine supply controversy and the Public Accounts Committee (PAC) also announced that it will hold an inquiry into the two contract awards to Borneo Pacific Pharmaceutical Limited (BPPL).
PAC chairman Sir John Pundari said the inquiry was called in response to the public outcry following the announcement of the contract awards. He also said PAC had served notices to BPPL, the National Department of Health (NDOH) and the National Procurement Commission (NPC) for information and documents.
Barker … bogus medicines risking lives
Institute of National Affairs executive officer Paul Barker says PNG continues to face medicine shortages with allegations of sub-standard, and “possibly counterfeit” medicine supplies.
“This is despite the many efforts put into improving the public health systems’ supply of medicine and pharmaceutical drugs since 1975. Medicinal drugs and pharmaceuticals is a very big business.
“It takes massive investment to develop a new drug or product and years of trials to be proven safe and gain approval, usually first in the US or Europe, maybe in China etc …
“Unfortunately the industry tends to focus on products that will provide them a potential good return, especially from private clients who can afford to pay for their drugs or vaccines, which leaves some of the world’s primary diseases, especially the diseases of the poor with limited private funding and product development.
“With the high cost of development, they then like to recover their costs and make a profit from those products which are successful, helping cover the costs of other research which may have achieved no immediate outcome. Some products by their nature are expensive to produce, but the patent on a product allows the drug developer to have a monopoly on their product for an extended period and allows them to set their price at a monopolistic level,” he added.
Barker said: “The regulators can intervene to push the companies to reduce prices, particularly on life saving drugs and pharmaceuticals, but with relatively high prices there’s a strong incentive for other companies to enter the market and copy the product, without paying for the costs of development, and sell illegally, in breach of patent, and make very good money
“Other more unscrupulous companies go further and manufacture and market counterfeit drugs, again making a fortune for a very low cost of manufacture.
“They are risking peoples’ lives with a bogus product that has little or no medicinal effect, and potentially raising the risks of the disease or bacteria developing immunity from the drug or vaccine. This is highly dangerous and criminal, but even with international and national checking systems, it is difficult to identify the illicit products which are often packaged identically and need chemical tests to verify their composition and origin.”
Barker said the international community, governments and businesses had intervened to some extent to pressure major pharmaceutical companies to lower prices for key drugs and medicines, and also to allow other companies to replicate the product legitimately at a cheaper price. “For example, in India, new public and private funds have also been applied to researching, developing and distributing vaccines and medicines to fight some of the world’s most critical diseases, like malaria, TB and HIV/AIDS, through the Global Fund and the Clinton Foundation, as well as through established bodies like WHO, and national research institutes, such as NIH in the US, and the Institute of Medial Research in PNG, and with distribution supported by bodies such as UNICEF and national and international Non-Governmental Organisations (NGOs), as well as the health department.
“Sadly, research undertaken by various medical institutes, such as the Goethe Institute in Germany, have found a high prevalence of counterfeit drugs being available in PNG, distributed through trade stores without prescription, but even through more official channels at times. As highlighted by various health managers in PNG in the late 1980s, PNG’s relatively efficient distribution system for medicines came under increasing pressure from corrupting influences, associated with opportunities perceived to make large amounts of money through the sale and distribution of high value products, sometimes sourced from cheaper and unauthorised sources, and in some cases potentially including some of these counterfeit products.
“Corruption of public procurement in PNG did not of course apply solely to medicines, but to construction contracts and a wide range of other goods and services entailing the public sector.
“Addressing the problem effectively requires a strong capacity to identify bogus products, and a firm capacity and intent to strengthen and oversee public procurement systems, with high probability of detection, prosecution and strong penalties to act as a real deterrence to perpetrators, whether in the private sector or public officials. The wider community, including health professionals, need strong awareness,” Barker stressed.
Reilly … medical supplies were ordered by international tender following WHO’s advice
Former health secretary (1980s to 1990s) Dr Quentin Reilly said medical supplies during his days were ordered by international tender following WHO’s advice on drug quality and there was no medicine shortage issues.
“The tenders were advertised by the health pharmaceutical department and assessed by the same department with WHO and then finalised for orders.
“The chief of pharmaceutical services was chairman of the Tender Committee and the health secretary was not part of the committee but signed on the committee’s advice.
“The amounts to be purchased were calculated from the previous year’s usage plus estimated required increases – from population growth etc. So, generally the tenderer who offered the best quality for the best price and was assessed as competent by WHO was awarded the tender. But, there were no complaints of medicine shortages in those days. Distribution was done via regional medical stores to the health institutions nationwide.
“There was a system of monthly assessment of drug usage instituted at each health institution, from Aid Post up, so that accurate drug requirements could be estimated.
“Unfortunately, over recent years, many aid posts which are very important primary health care centres serving our rural people have closed due to both staffing and medical supply problems,” he added. Reilly said the medical stores arranged the distribution of medicines to the health institutions via provincial medical stores, “not by private contractors as is happening more recently”.
“Some of the stores have disappeared over the years which seems to have affected efficient distribution of supplies at regular intervals, especially to more remote areas,” he added. In December 2013, six companies submitted tenders for the procurement and supply of medicines, but only two had the crucial ISO 9001 – IDA and MissionPharma/City Pharmacy Limited.
A Health Ministry official reportedly told a meeting of contract bidders that the ISO 9001 standard was no longer required.
The company that won the tender, BPPL, did not have the ISO 9001 accreditation but it did have a history in PNG as the largest supplier of drugs from the North China Pharmaceutical Group (NCPG).
A survey of antibiotics in PNG in 2011, published in the Journal of Pharmaceutical Sciences, found all four samples provided by NCPG were sub-standard, with one probably being a counterfeit drug.
BPPL’s bid of US$31 million (K71 million) was US$9 million (K30.4 million) more than the bid from IDA which had successfully delivered the medical kits for two consecutive years.
Kase … denies there are substandard medicines in PNG
However, Kase denies that there are substandard medicines in the country, saying that medicines and pharmaceutical drugs procured and supplied in the country were checked by a WHO-certified testing facility and that the process involved many people going through a long process to ensure that all supplies met the standards.
“Firstly, the health department complies with the Public Finance Management Act. It makes a list of all the medicines they want to buy and specify what those medicines will be used for.
“Then we send it to the state solicitors for vetting and after it has been vetted, we request for a pre-government funding allocation from the Finance Department.
“After that is done, we than ask the National Procurement Commission (NPC) or what was previously known as CSTB for a tender number. And so they advertise on behalf of the department but we meet the costs and the NPC issues us a tender number.”
“Bidders are given six weeks to bid, with a bidders’ meeting slotted on the fourth week for them to ask us technical questions, if any, and/or get clarification on the contract.
“The bids are than sent to the NDOH for evaluation. It goes through two evaluations. First the Medicine Evaluation Committee which is made up of doctors and pharmacists who make the quality assessment. They ensure that the bidders are certified. They also check samples, letter of authority from the manufacturer, ISO, good manufacturing certificates, and even the packaging is checked and also ensure that everything meets the standards.”
“Elimination then starts after the checks by the committee, who then passes those who met all the requirements to the Financial and Evaluation Committee.
“This committee is made up of the Finance Department, State Solicitors, NPC and NDOH. The committee then looks for the ‘Lead Time’ or how soon supplies can be brought in to the country, how much it cost and starts scoring them.
“After this, a resolution is taken and the top three or sometimes even just two or one company is then recommended to the NPC for consideration and approval.
“The NPC then sets up a board to decide. This board is made up of the NPC board chairman, finance secretary, works representatives, and three independent accountants and engineers who then decide who the contract will be awarded to, based on NDOH’s recommendation. If the contract is valued below K10 million, then the board will decide and award the contract. But if it is worth more than K10 millon, the board will make their recommendations to the National Executive Council (NEC) for a decision,” he added.
After the contract has been awarded, Kase said: “We receive the supplies and ship them to Wewak, Lae, Rabaul, etc where the supplies are then stored in five area medical stores. Hospitals will than place orders with area medical stores and pick up their supplies to store in their pharmacies where patients or the people can access the supplies.”
Bole … right to complaint must be backed with evidence
NPC chief executive officer Simon Bole said the public had the right to complain about the awarding of Government contracts but it must be backed with evidence.
“The public, including organisations and associations (like the NDA), can lay a complaint with the NPC if they were not happy with the awarding of contracts but must also provide supporting documents and evidence to support why they think the company in question should not be given the contracts.
“They can write to us, and tell us their reasons and also provide supporting documents or evidence. And if the commission finds enough evidence, then the commission can suspend the contracts while an investigation is carried out,” he said.