Lawsuits, expired drugs leave NMS on its knees

Uganda’s National Medical Stores (NMS) is embroiled in a double crisis—employee litigation and more than Shs60 billion losses resulting from the expiration of vital medical supplies, which the organisation attributes to low utilisation. 

Court records and audits of the entity’s operations reveal that part of the mayhem stems from its ineffective planning and interpretation of the Employment Act.

A flawed interpretation of its human resource (HR) manual when it decided to fire a group of employees it felt went against its core values has also not helped matters. 

NMS lawyers told a judge in the civil division of the High Court that part of the reason as to why some drugs expired in its stores was due to negligence of the aforementioned employees. This was in a case that was settled in the first week of 2024, after having been filed in 2008. 

The government has mandated that NMS procures all essential medicines and health supplies (EMHS) and distribute them to all health facilities in the country, which means funds for EHMS procurement are budgeted for under the organisation. 

Every year, medical facilities create budgets for drugs, medications, and medical supplies. These budgets outline anticipated spending and delivery by NMS for the year. This usually follows meticulous planning to maximise operational efficiency. 

Chaos of losses
NMS allocated Shs185.9 billion to purchase medications and medical supplies for 3,254 healthcare facilities nationwide in the year that ended June 2023.

But 97 percent of those health facilities (3,183) reported under deliveries of drugs and medicine supplies worth Shs26.4 billion, according to an audit by the Auditor General (AG), Mr John FS Muwanga. 

In addition, the deliveries were not occurring in accordance with the cycles, resulting in delayed deliveries that interfered with the course of the patients’ treatment. 

“Under-delivery of expected supplies caused drug stock-outs and treatment disruptions in the affected health facilities across the country,” stated AG Muwanga. 

In order to handle the chaos of losses that arise when these medications expire in stores before being used, the NMS accounting officer was advised to appropriately align the budget for EMHS with the demand to ensure adequate and timely distribution and delivery of drugs and medical supplies to the respective health facilities.

This is because of the 12.6 million doses of Covid-19 vaccine that were kept on hand, 5.6 million doses—worth Shs28.2 billion—were discovered to have expired by June 2023. 

“More expired Covid vaccines still lie in various health facilities across the country and the total combined loss to be incurred next year is estimated at Shs300 billion. These are vaccines procured out of the World Bank loan advanced for Covid-19 support,” AG Muwanga emphasised. 

In addition, during the same period, NMS saw a 153 percent increase in its non-viable or expired drug stock, whose worth reached highs of Shs33 billion, up from Shs13.4 billion in the previous period. These mostly consist of anti-retroviral drugs (ARVs), which run out owing to changes in the World Health Organisation’s recommended treatment guidelines. 

Speculative
Dr Diana Atwine, the Health ministry’s permanent secretary, said the procurement of Covid-19 vaccines was speculative since the pandemic was still active, according to details in the AG’s audit. Furthermore, the government had committed to the manufacturers conditional World Bank grants to produce and deliver vaccines that could not be stopped. 

But, fortunately, the government has secured funds from Gavi, the Vaccine Alliance, to manage the recovery of all expired Covid vaccines and their destruction. 

“I await action on the recovery of all expired Covid-19 vaccines from all the health facilities across the country and eventual destruction of all expired vaccines. Meanwhile, government is advised to ensure in such emergencies, prudent planning is prioritised,” the AG advised. 

The NMS was blamed for this mess due to its lack of careful planning before acquiring any medications to ensure resources are used as efficiently as possible to prevent financial losses while ensuring effective drug supplies to healthcare facilities around the nation.

“The accounting officer of NMS was advised to appropriately align the budget for the EMHS with the demand to avoid over stocking of these drugs and ensure adequate and timely distribution and delivery of drugs and health supplies to the respective health facilities,” the AG stated. 

Costly court battle
A new court document seen by Saturday Monitor shows that the country’s medical supply hub is aware of this problem and it even faulted a couple of its employees. The aforementioned employees were eventually dismissed by the board because of negligence that led to expiry of drugs in 2007, whose quantity was not disclosed. 

NMS is currently recuperating from that legal battle which cost it more than Shs100 million in damages to 10 aggrieved former employees for wrongful termination of employment contracts, wrongful interdiction, and contract violations.

These workers denied in court that they were negligent on duty, which the NMS claims resulted in double drug deliveries and several others expiring in stores. 

They entered a plea of innocence, and their attorneys used the Employment Act and the NMS HR Manual to persuade the judge that their dismissal was unjustified. Saturday Monitor understands that this is mounting substantial liabilities to the national medical supply hub in a Shs300 million legal battle, which NMS lost. 

Wrong-footed 
Among the victims are Mr Jonah Jonah Kyeyune, who was reportedly in high management based on the damages his attorney requested and the time off he was given while the NMS investigated his case. The court was informed that Mr Kyeyune and other staff members were placed under interdiction due to claims of drug delivery in duplicate and of not carrying out his responsibilities as a transport and logistics officer, which caused drugs in the store to expire, a matter that was referred to police for investigations. 

“By the time he was required to appear before the board, his job had already been given away. He appeared, [but] did not hear from the board until when he received a letter informing him that the board had resolved that he would forfeit his terminal benefits,” a court document reads. 

This is when he instructed his lawyers to sue the defendant [NMS] for failure to follow the procedure laid out in its HR manual to renew his contract, sending him on indefinite leave which is not provided for in their HR manual, and that he was invited to appear before the board when his job had already been given out, among other injustice.” 

NMS management dismissed 11 employees, saying they led to negligence that resulted in inefficiencies of its operations. But the procedures it used to get rid of them were unknowingly its invitation to court where its lawyers failed to convince the judge that the procedures were lawful. 

“There was no conviction against the plaintiffs [NMS’s ex-employees] as required under Clause 12.6.1 of the defendant’s [NMS] Human Resource Manual before termination of their employment,” Justice Esta Nambayo said in a ruling 

She added: “The audit report that the defendant [NMS] depended on to terminate the plaintiffs recommended for prosecution under the Penal Code Act, which the defendant did not do.” 

She also proceeded to note: “It was wrong for the defendant to terminate plaintiffs’ employment based on the audit report without following the audit recommendation of prosecution under the Penal Code Act. The defendant’s failure to prosecute the plaintiffs before termination contravened clause 12.6.1 of the human resource manual. Therefore, I would find that the defendant had no basis for terminating the plaintiffs’ employment and as such, its termination of the plaintiffs’ employment was unlawful.” 

Lightning strikes twice
Aside from the technicalities, the court heard that the plaintiffs who were accused of multiple drug deliveries, fraud, and causing financial loss to the defendant, appeared before the board, refuting the allegations before they sued their employer. 

The attorney of the plaintiffs emphasised that akiliafrica, the experts who put up the Navision system of NMS, found that NMS’ auditors did not appreciate how the system operated and as such, the audit report findings were erroneous. 

In a court document, it is stated that ‘‘the board reinstated the plaintiffs to their jobs on the basis of this finding, which was made clear in the akilliafrica report to the defendant.’’ 

The plaintiffs were later fired by management without providing them a reason, even though they had just been rehired. 

Saturday Monitor tried to contact Ms Sheila Nduhukire, NMS’s spokesperson, about the matter, but she was unavailable by press time.