ZAMMSA bought drugs inflated by 1600 percent without negotiating- Auditor reveals
By Zondiwe Mbewe (News Diggers)
A FORENSIC audit into suspected drug pilferage has revealed massive price inflation in medicines and medical supplies procured by the Zambia Medicines and Medical Supplies (ZAMMSA) under the mop up exercise with some prices inflated by as much as 1600 per cent.
The audit conducted by Price waterhouse Coppers (PWC) also implicates senior government officials including alleged abuse of authority, rushed procurement and bypassing procumbent protocols.
The report cites Ibuprofen 200 mg tablets from Sterelin Medical and Diagnostics as an example purchased at K3,951.67b which was 1,613 per cent higher than ZAMMSA s estimated price of K230.67 for the same medicine. Against the 2023 fourth quarter Zambia Public Procurement Authority (ZPPA)market index of ak157, the markup amounts to 2,417 per cent.
Another cited case involved Immunoglobulin ( IV)IG 5 g 100mL, supplied by Vyking Pharmaceuticals Ltd at K8, 947 compared to ZAMMSAs estimate of K865, a price increase of 934 per cent.
The audit notes that while the Evaluation Committee recommended re tendering or price negotiation for bids exceeding the budget by more than 10 per cent, contracts were nonetheless awarded without either step being taken.
” Inflation of unit prices for medicines awarded under mop up : on a sample basis, we compared the unit prices awarded for sample medicines against estimates prepared by ZAMMSA for each of the medicines and medical supplies floated in the tender and observed instances in which prices of the procured items were potentially inflated up to 1600 per cent. We relied on ZAMMSAs estimates as we could not trace all the items on the quarterly market price index published by the Zambia Public Procurement Authority (ZPPA). We held discussions with Mr Ngandwe and Ms Chongo, part of the supply planning team that prepared the estimates. They elaborated that the estimates are prepared with a number of considerations in mind including, price estimated in the procurement plan, the ZPPA market price index and historical ZAMMSA unit price data for the past year,” read the report.
” While we were not able to trace a number of sampled medicines to the 2023 Q4 ZPPA market price index , we were able to trace some such as Ibuprofen 200mg Tablet whose average unit price was provided at ZMW 157, ZAMMSA estimate the unit price as ZMW 230.67 while the suppliers (Sterelin Medical and Diagnostics) quoted ZMW 3,951.67.
This translates to 2417 percent inflation against the 2023 Q4 market price index. We understand that a price reasonableness analysis was done at the initial evaluation stage by comparing what each supplier had quoted against ZAMMSAs budget per commodity.
The evaluation Committee recommended either a negotiation or re tendering for any unit price that exceeded ZAMMSAs budget by more than 10 per cent. Despite this recommendation, the procurement team proceeded to award contracts without undertaking negotiations or re tendering, in direct contradiction to the committees recommendations”.
The report implicates immediate past Director General if ZAMMSA, who requested , and was granted a waiver from the ZPPA to shorten the tender floatation period from 14 days to three and to conduct the procurement outside the Electronic Governance Procurement ( e GP) portal.
” ZAMMSA went ahead with the process of pre-qualification, evaluation and awarding of contracts for the mop up exercise
In a memo dated 14 November 2023, the Acting DG, requested for no objection from the DG ZPPA to reduce the tender floatation period to 3 days from 14 days and to conduct the procurement outside the Electronic Government Portal (EGP). Regulation 79(3) of the Public Procurement Regulations stipulates that procuring entities must provide an adequate period for applicants to prepare and submit their pre-qualification applications. Specifically, where the notice is published nationally, this period must be no less than two weeks. In addition, Regulation 44(1) of the Public Procurement Regulations stipulates that a procuring entity must issue an invitation to pre-qualified bidders via the e-GP system, notifying them of the scheduled date and time for the electronic reverse auction.
The e-GP system provides transparency in the procurement process and offers other e-functionalities such e-evaluation, processing of notifications to bidders and e-contract management,” the report read.
“In addition, and according to Mr Justine Milimo, Acting Director, Procurement and Mr Nchimunya, former Director, Procurement, conducting evaluation on the eGP system would have been the faster, more efficient and more accurate process considering the value and risk attached to the tender. Despite the above and not withstanding the ZPPA Act’s requirements for a minimum tender flotation period of two weeks for national tenders, the Acting Director General of the ZPPA, Mr Justin Matimuna, granted approval on 21 November 2023 for an expedited process. The approval was granted on the grounds of urgent need for medicines in the facilities. However, the final contracts were not awarded until April 2024. The shortened flotation period and the decision to conduct the procurement outside of eGP system could therefore have been aimed at limiting the number of bids received, potentially favoring preferred bidders.
We understand that eGP system requires bidders to be registered to participate in bidding opportunities and this might have precluded suppliers who might have been registered in the system then, given the shortened tender flotation period.
The PwC audit further revealed that Dr John Kachimba, then Acting Permanent Secretary at the Ministry of Health, influenced the procurement process by directing a waiver of marketing authorization, a responsibility legally assigned to the Zambia Medicines Regulatory Authority (ZAMMSA).
“A memo dated 10 November from the Acting Permanent Secretary Admin Ministry of Health, Mr Kachimba to then Acting DG ZAMMSA directed that the mop up be swiftly conducted and waiver for marketing authorization requirement be applied to all suppliers considered. Section 39 of the Medicines and Allied Substances Act of 2013 states that a person shall not place on the market, advertise, market, manufacture, sell, import, supply, administer or deal in any manner with any medicine or allied substance without a marketing authorization issued by the Authority,” the Authority referenced in the Act is the ZAMMSA. One of the primary mandates of the authority is to grand pharmaceutical licenses and marketing authorization. The PS Admin MoH appears to have violated the above provision by issuing a directive to waive the marketing authorization,” read the report.
” However despite this directive ZAMMSA included a requirement for the submission of marketing authorisation as part of the tender released on 27 November 2023 . Despite this during the pre-qualification process there is no evidence that marketing authorisation was considered for any of the suppliers who submitted their bids. The marketing authorisation component was marked as not applicable in the pre-qualification report across all suppliers. We sampled a bid document submitted by one of the suppliers who was awarded a contact, Zambian Alternative Pharmaceutical and noted that they did not submit a marketing submission contrary to the requirement of the tender floated on 27 November 2023, read the report
Investigate senior doctors and pharmacists. They are the ones who know about drugs, where they procure then and where they take them. This should not be a big problem. These chaps have a lot of money and big cars, mansions they can’t account for. Go for them. Do a life style audit on each and every senior medic, culprits will show up. This is the worst and irresponsible form of corruption.