National Medical Stores inflated prices for cancer medicines

KAMPALA.

The tug of war between National Medical Stores and the Uganda Cancer Institute has reached its climax with a new audit commissioned by government, unearthing fraud at the body charged with procurement of medical supplies and drugs for public medical facilities.

The audit report implicates NMS for irregular budgeting for drugs and sundries at UCI, insufficient budget for drugs and sundries, anomalies in pricing of drugs and sundries, annual loss of Shs2.9 billion through over pricing of anti-cancer drugs, irregular pricing of medical form 5, failure to credit Shs587.7 million for overpriced Vincristine 2mg arising out of a three month supply, insufficient supply of anti-cancer drugs, unspent account balances, poor quality of some anti-cancer drugs, inadequate inspection over drug usage at UCI and lack of an up to date stores ledger.

In their response to the audit findings, NMS claims the quoted prices in the “leaked Internal Auditor General Draft report” about the alleged inflated prices for cancer medicines was “full of inaccuracies and falsehoods”

“It is not true that NMS inflated prices for cancer institute medicines as was portrayed in the said leaked draft Internal Auditor General’s Report,” NMS statement reads in part.
The NMS spokesman, Mr Dan Kimosho, told Sunday Monitor that NMS had contracts of cheap but good quality medicines, adding that those medicines were not US-FDA approved.

“Uganda Cancer Institute would consistently reject the items requesting for US-FDA approved items. NMS was left with no choice but to buy these items expensively,” he said.

The UCI boss Dr Jackson Orem declined to comment on the report.
According to the audit findings, in the financial year 2015/16, the medicines and sundries procurement requirement for UCI was Shs12.6 billion while the approved budget from NMS was Sh7 billion.

However, this budget remained constant for three consecutive financial years despite the number of patients increasing.
In 2015/16, the number of patients rose to 196,132 from 153,106 in 2014/15 and 104,986 in 2013/14 but the budget for UCI from NMS remained at Shs7 billion despite a procurement need of Shs12.5 billion in 2015/16, Shs10.1 billion in 2014/15 and Shs7.6 billion in 2013/14.

The auditors noted: “It was irregular for NMS to budget for UCI because it doesn’t take into account the institute’s needs, the nature of cancers and the increase in the patients’ numbers. It is recommended that the institute be allowed to budget for its anti-cancer and sundries basing on its needs.”

Analysis of NMS unit prices from a sample of 11 types of anti-cancer drugs supplied to UCI in 2015/6 and the retail market prices from some reputable pharmacies in town for the same type and brands obtained by the auditors, revealed that NMS over priced these drugs to a tune of Shs2.1 billion.

A sample of 10 anti-cancer drugs for the last three financial years approved by the contracts committee on March 20, 2016 and the actual NMS unit charge for the same drugs to UCI revealed, “a very big price variance”.

For example while the frame work contract price per unit for capecitabline 500mg tabs is Shs77,775, NMS supplied to UCI at Shs1.7 million, causing a variance of Shs1,650,245.

This, the auditors wrote, “means the prices charged by NMS are irregular and not from competitive procurement process” before recommending that NMS supplies at prices approved by the contracts committee in the framework contracts.

On this anomaly the auditors noted: “There is a likelihood of collusion between evaluation committee, NMS and the supplier which results in UCI being charged higher prices for drugs.”
In 2014/15, NMS supplied Medical form 5 to UCI at a unit cost of Shs5,400 under invoice No 0341323 on September 9, 2014.