Sri Lanka’s healthcare system has long been under pressure due to financial constraints, bureaucratic inefficiencies, and supply chain challenges.
However, a recent case involving the procurement of papaverine hydrochloride injections by the Medical Supplies Division (MSD) of the Ministry of Health has brought to light a critical flaw in the system – the slow registration process of pharmaceutical companies by the National Medicines Regulatory Authority (NMRA). As alleged by healthcare trade unions, this inefficiency not only inflates costs but also threatens patient care by limiting access to essential medicines.
The papaverine case
In 2021, the MSD had purchased 1,560 units of papaverine hydrochloride injections, a medicine used primarily in cardiothoracic treatments, at a staggering cost of Rs. 68.59 million. The issue? The unit price of Rs. 40,868.98 was grossly inflated compared to the estimated price of Rs. 255.07.
Despite the exorbitant bid, the Procurement Committee had approved the purchase without calling for new quotations, resulting in an even larger order of 3,125 units at a total cost of Rs. 127.72 million.
This wasn’t just a financial oversight; procedural lapses exacerbated the situation. According to procurement guidelines, any tender exceeding Rs. 50 million should be evaluated by a Technical Evaluation Committee (TEC) consisting of five members. However, in this case, only three members were appointed, violating standard regulations.
Moreover, the MSD had explicitly instructed that the order should consider existing stock levels before opening Letters of Credit (LCs). These instructions had been ignored, and instead of opening LCs for only 40% of the required quantity, as per the annual demand for the medicine, LCs had been opened for 1,563 units. By August 2022, 1,421 units remained unused, with many set to expire by February 2023.
A difficult choice for procurement officials
The inflated cost and procedural missteps in the papaverine case are tied to a more systemic issue – the slow pace at which the NMRA registers pharmaceutical companies.
However, when contacted by The Sunday Morning, State Pharmaceuticals Corporation (SPC) Managing Director Dinusha Dasanayake explained the dilemma: “In the past, some procurements did take place, but the issue is when there is only one registered supplier with the NMRA and it is the only one bidding. If we want to make that product available, we have to decide whether to procure it or not.”
This leaves procurement officials with a difficult choice: overpay for critical medicines or face the possibility of shortages that could impact patient care. In the case of papaverine, the authorities opted to procure the medicine, despite the inflated price, to ensure it remained available for cardiothoracic treatments.
“Not procuring it will affect patient care later. That’s one issue,” Dasanayake noted, emphasising the difficult position authorities found themselves in when there were no alternatives. “We had only one supplier for papaverine at that time. But we only cancelled the recent tender, which was flagged by cardiothoracic surgeons. We are now exploring possibilities of obtaining it from other sources,” he added.
Broader implications of lack of competition
The NMRA was established to ensure that only safe, effective, and high-quality medicines are available in Sri Lanka. Part of its mandate is to regulate and approve pharmaceutical companies, giving them the necessary licence to supply medicines within the country. However, this process has become a bottleneck, particularly for essential medicines such as papaverine, where only one supplier is registered.
This slow registration process has broader financial implications. In the papaverine case alone, the inflated costs had resulted in millions of rupees in unnecessary expenditure. If more suppliers had been registered, competitive bidding would have driven down prices, allowing the MSD to procure the same medicine at a fraction of the cost. The funds saved could have been reallocated to other pressing healthcare needs, such as purchasing medical equipment or improving hospital infrastructure.
Worse still, the slow registration process is endangering patients. In situations where only one supplier is registered, authorities must decide whether to pay inflated prices to ensure medicine availability or risk running out of essential medicines. In either scenario, the well-being of patients is compromised, either by the financial strain on the healthcare system or by the lack of critical treatment options.
A key factor driving up costs is the lack of competition in the pharmaceutical supply chain. When only one company is registered to supply a particular medicine, that company effectively holds a monopoly, allowing it to dictate prices. While international open competitive bidding is designed to encourage multiple bids and lower prices, the slow registration of suppliers by the NMRA stifles competition, resulting in inflated costs for lifesaving medicines.
The papaverine case is just one of many examples where the lack of competition has forced Sri Lanka’s healthcare system to overpay for essential medicines. Without prompt action to streamline the registration process, the country will continue to face similar challenges, exacerbating the financial strain on an already stretched healthcare budget.
Improvements to approval process
When contacted, NMRA Chairman Dr. Ananda Wijewickrama confirmed that the approval process had improved significantly after overcoming previous backlogs and delays. “Things are good now. If there are fewer than five registrants for a particular medicine, we prioritise and expedite those registrations. In such cases, there won’t be any delay,” he explained.
Regarding price controls, Dr. Wijewickrama highlighted that the NMRA actively monitored the pricing of pharmaceuticals. “For pharmaceuticals, we set a price and companies cannot quote excessive amounts,” he added.
Addressing the specific case of papaverine, Dr. Wijewickrama noted that the issue came to light due to the involvement of a cardiothoracic surgeon who was part of the tender board.
“When the inflated pricing was discovered, the surgeon informed us and we immediately called for a lower price. That intervention was led by the cardiothoracic surgeon and the NMRA, not by other parties,” he explained.