Losses amounting to millions of rupees have been incurred by the Government due to mismanagement in the procurement of medicines within State health institutions, the National Audit Office (NAO) revealed in its latest report.
In the report, the NAO has revealed instances of procurement mismanagement within the State Pharmaceuticals Corporation (SPC) and the Medical Supplies Division (MSD) due to delays in placing orders.
The delays have caused the SPC losses amounting to millions of rupees due to price differences that have occurred within a short period of time, the report points out.
As stated in the audit report, the main purchase order had been issued for purchasing 80,000 vials of the 500 mg ceftriaxone injection for the MSD at Rs. 18.72 per unit in the previous year, with supply fulfilment being delayed.
In order to avoid a stock shortage as a result of the late delivery, 10,998 units of the said drug had to be purchased at Rs. 490 per vial from the local market, the NAO notes.
Accordingly, an additional cost of Rs. 5.18 million had to be incurred by the SPC.
The additional cost incurred due to the delay on the part of the supplier had not been recovered from the supplier as per the order conditions.
Responding to the revelations made by the NAO, the SPC management had stated that the payment relating to the main purchase order had not been made to the supplier. A debit note had been issued exceeding the total amount of the main order for recovering the additional cost and action is being taken in this regard.
In another instance, the requirement for the year 2018 has been identified as two million vials of cefuroxime for injection USP 750 mg and the main purchase order had been issued in 2018 for purchasing the said quantity at a total cost of Rs. 58.93 million, with a unit cost of Rs. 29.46.
The following observations have been made in this regard in the NAO report: “The supplier had supplied 2,000,000 vials of the said drug on 18 July 2018 and an invoice of Rs. 58.52 million had been sent only for 1,914,500 vials. The amount exceeding the amount mentioned in the invoice of 85,500 vials had not been received by the Medical Supplies Division and the said stock had not been taken back by the supplier. Hence, it had been retained in a private store and the stock of 85,500 vials at the cost of Rs. 2.51 million had become unusable.”
Distribution of 100,000 vials out of the 1,914,500 vials supplied had been suspended because they had not been confirmed as meeting the United States Pharmacopeia (USP) standard. A sum of Rs. 2.94 million which should be recovered from the supplier in this regard had not been recovered, it is stated.
This situation had occurred due to the rejection of 85,500 vials which had been supplied exceeding the amount mentioned in the invoice by the MSD.
The management in its response had stated that the situation had occurred due to the rejection of 85,500 vials which had been supplied, exceeding the amount mentioned in the invoice by the MSD.
Nevertheless, the NAO has recommended taking further action on both incidents after carrying out a proper investigation regarding this procurement.
Attempts to contact the SPC, the MSD, and the Ministry of Health regarding the losses incurred and what measures of accountability were taken failed.