Drug purchases from NGPC superseded law –Murray
By Miranda La Rose
Stabroek News news item. Monday 14 July 2008
Any renewal of Cabinet’s decision to direct the Ministry of Health to purchase drugs directly from the New GPC and several international suppliers would be “wholly illegal and should not be tolerated”, PNCR-1G MP and member of the Public Accounts Committee (PAC), Winston Murray says.
Asked whether he was satisfied with Minister of Health Dr Leslie Ramsammy’s response on the question of direct drug purchases from the New GPC, Murray told Stabroek News that it would be an illegal act for Cabinet to give any direction at this point in time.
“I would urge the Minister of Health rather than going to the Cabinet (that he should) try to follow the Procurement Act, which until the terms of the Act are changed, continues to be the basis for public procurement,” he said.
According to Murray, the Ministry of Health in 2005 bought over $550 million dollars worth of drugs commercially via the New GPC on the basis of a Cabinet decision taken in 2003. That decision directed them not to go out to international tender to get individual prices but to purchase through the New GPC. In this manner, the ministry has no opportunity to vet the prices and no opportunity to seek cheaper prices, he said.
Minister of Health, Dr Ramsammy at a press conference on Wednesday said the opposition MPs “grossly and mischievously misrepresented or misunderstood [the issue]”. He stated “unequivocally” that the Ministry of Health’s procurement of drugs and medical supplies was in compliance with Cabinet’s decision and in accordance with all laws and regulations and that the ministry’s procurement arrangements have been “rigidly scrutinised since 1992”.
The minister said that the Auditor General did not question the legality or appropriateness of the waiver arrangement granted by Cabinet in 1997 (for purchases from international agencies) and in 2003 (for purchases from NGPC) but acknowledged that the AG’s report did recommend that the two waiver decisions be renewed for continued purchases. The Auditor General’s report for 2004 had also recommended that the ministry advertise internationally every three years for the supply of drugs and medical supplies and pre-qualify suppliers.
Dr Ramsammy was on Wednesday reacting to an article published in Tuesday’s edition of Stabroek News in which AFC MP, David Patterson had contended that over the past 11 years the Ministry of Health made all local purchases from the New GPC with no public tendering and in contravention of the Public Procurement Act. The minister clarified that in relation to NGPC the waiver for direct purchases was granted in 2003 and not 1997. Ramsammy also noted at the press conference “Still, in order to avoid the perception of non-response by the Ministry of Health, we have requested a renewal of the decision permitting the Ministry of Health to procure medicine and commodities from IDA (International Dispensary Agency, Holland), PAHO/WHO, UNICEF and NGPC”. He also later emphasized that over the period from 2003, the ministry had also continued making purchases from overseas in addition to its NGPC acquisitions.
Stating that his ministry did not interpret Cabinet’s decision of 1997 to be time-bound and limited to purchases to that year, Ramsammy said Cabinet made the decision after he made a request to improve procurement and supplies to the health sector. His ministry also did not interpret the Cabinet decision in 2003 of a NGPC waiver to be time-bound.
Patterson, who said that in 2005 the contract was worth approximately $600 million, made the statements recently in the context of the New GPC being one of the subsidiaries of Queens Atlantic Investment Inc which saw several of its new planned investments being controversially granted tax concessions by the government recently.
On Cabinet’s decision to direct the Ministry of Health to buy most of its drugs from the New GPC, Murray contended that up to 2003 the ministry might have acted properly under the authority of Cabinet but once the Procurement Act was passed that same year it superseded Cabinet’s decision.
“The Procurement Act is superior to any decision of the Cabinet. The Cabinet may take a decision to change the law and bring it to the National Assembly and the National Assembly may change the law but until the law is changed the Cabinet of this country is also subject to the law. That law explicitly states that before a public sector agency can go out on its own to purchase drugs using a mechanism of its own, it has to get a waiver from the National Procurement and Tender Administration Board (NPTAB). That board now oversees the procurement system until such time that a Public Procurement Commission is constituted,” he said.
Constitutional provision is made for the establishment of the Public Procurement Commission but according to Murray, the “PPP is dragging its feet on (the establishment of the commission) but that is another issue.”
Murray said that at the minimum the Ministry of Health should seek a waiver from the NPTAB that would allow them to pursue an individual approach. Until then the ministry should be complying with the NPTAB requirement that it go out to competitive bidding. The bids are submitted to the NPTAB and based on the competitive bids received the board decides the source the drugs should be purchased from.
“It seems to me that Cabinet has created a niche for the New GPC to give them exclusive right so we don’t know what mark-ups apply to the drugs, we don’t know where they are sourcing them from…That is illegal.”
He noted that the issue surfaced during the last meeting of the PAC which dealt with the examination of the Auditor General’s report of the Ministry of Health for 2005 on the procurement practices of the ministry. He said there was concern that it was using a cabinet decision of 2003 which over the last five years has directed it to exclusively purchase drugs from the New GPC except for those drugs which have to be bought through multilateral agencies such as the World Health Organisation and some others.
Reacting to Ramsammy’s claim that the 1997 and 2003 waivers were not the first that the Guyana government entered into with the New GPC and that it was done prior to 1992 when the then Guyana Pharmaceutical Corporation was the sole procurement agency for the health sector and that arrangement was suspended after 1993, Patterson said he was not interested in what happened before 1992 when there was no democracy as claimed by the current administration and there was no procurement act. It appears now, he said that there is “little difference between what obtained before 1992 and what obtains now,” he said.
While Ramsammy said procurement from local and overseas agencies were on a pay-first basis and payments to the New GPC were always secured through financial security arrangements, Murray reiterated a point made by Patterson that the PAC found instances of the ministry paying for drugs up front.
“I have never heard of this,” Murray said noting, however, that there were examples when in the same Auditor General’s report, the ministry also paid many days after delivery. “That is how you procure,” he said adding that, “I don’t know that we are to finance the cash flow needs of the corporation.”
Murray said that in such transactions they need to open letters of credit (LC) and when the goods arrive, are examined and approved only then they are paid for. Alternatively, he said that a LC that matures on the arrival of the goods and meets with approval could be opened but there should be no giving money upfront even before the goods arrive. “I can’t understand that. That is unheard of in terms of proper procurement practices,” he said.
In relation to Ramsammy’s statement that the New GPC facilitates storage for the ministry’s supplies with no additional cost, Murray said that the minister needs to come better. There was nothing wrong in giving out a contract in which even on the basis of an international competitive bid requires delivery staggered over more than one shipment.
He said the minister needs to produce an economic analysis that shows it was less economical to stagger shipments than to establish bonds for storage. “These statements cannot be made in the public domain and left there without the necessary back-up information to tell us he has done that and he has investigated that and he knows that to be so. In any case that does not excuse him or Cabinet breaching the law,” Murray charged.
Commenting on the minister’s remarks that the New GPC maintains stocks of several thousand items of raw and packaging materials so as to be able to fulfill orders in a timely manner, that it has not supplied any substandard drugs and that it produces a range of generic, over-the-counter and veterinary products, Patterson said that the ministry has no tendering practice to source drugs from other suppliers to know whether or not they could obtain the same drugs at a cheaper rate. “The Auditor General’s report has suggested that it could be done cheaper,” he said if it is put out to tender.
He said that the drugs the New GPC sources from outside are not exclusive and could be obtained by any of the local pharmacies.
In terms of the Minister saying that the New GPC was also attractive because of reduced shipping time, Patterson said that the minister’s statement was just a misnomer.
Patterson asked, “How could the minister know if the other shipping companies are reliable or not when over the past (five) years he was going solely to the New GPC?”