Auditor General blames NMS for overpricing cancer, ARV drugs

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The Auditor General John Muwanga has advised the ministries of Health and Finance to work with National Medical Stores in calibrating prices of antiretroviral and anti-cancer drugs, which are currently sold expensively.

For the anti-cancer drugs, Mr Muwanga recommended specifically that the procurement should be “opened up to all National Drug Authority (NDA) approved manufacturers/suppliers” to break NMS’ monopoly.
“In addition, NMS should co-opt subject matter specialists from Uganda Cancer Institute and NDA on the evaluation committee for the procurement of anti-cancer medicines,” Mr Muwanga advised, as part of the recommendations contained in the value for money audit report submitted to Parliament.

NMS is the government agency charged with procuring essential medicines and other medical logistics for use in public health facilities. Supervised by the Ministry of Health, according to the audit, during the last three financial years up to last December, the entity had received and absorbed funding to a tune of Shs655b.

The audit, through document review and analyses, established that 11 out of the 15 most frequently ordered anticancer drugs were procured at a relatively higher price than international median prices, which also means being sold expensively.

“Furthermore, it was established that the price of some specialised drugs such as anti-cancer drugs is sometimes determined by the demand volumes,” the report reads in part but more markedly, it indicates that “in some instances, the high prices are also caused by variances in the contract price agreed in the framework contract and actual purchase price. Out of the 15 sampled anti-cancer drugs, three drugs had their actual purchase prices higher than the contract prices.”

The audit also documents that four of the 15 anti-cancer drugs sampled had variances between the contract price and the actual purchase price. The price difference ranged between $443.36 (Shs1.5m) and $2.24 (Shs8,000). Only one drug, Doxorubicin Hydrochloride 50milligrams with a price difference of $5.57 (about Shs20,000) was the only drug that was procured at a price lower than the contract price.

NMS in the report is quoted to have defended that their purchase prices when compared with other approved price references confirms they are still “within range” but the Auditor General countered that they can still consider procuring drugs approved by World Health Organisation (WHO) at lower prices. NMS also premised the high anti-cancer drug prices on the high standards requested by Uganda Cancer Institute.

The latest report comes on the heels of an on-going row between NMS and UCI over prices of anti-cancer drugs. Last year, the Secretary to Treasury Keith Muhakanizi, commissioned a probe into accusations that NMS inflated prices of the cancer drugs for more than twice or thrice the market rates, which the latter dismissed.

The audit also brings into sharp focus the price of ARVs and Anti-Malarial Artemisinin Combination Therapies (ACTs), which are availed jointly by the development partners, notably US government through its overseas development agency- Usaid and procurement from local manufacturer, Cipla Quality Chemical Industries Ltd.

“The company has increased foreign exchange inflows through export of medicines and has brought about increased foreign exchange savings on imports as the country now buys its ARVs and ACTs locally,” the audit notes.

But it was observed that the prices at which NMS procured ARVs from the local manufacturer were higher than the prices of drugs imported under donor supported arrangements.”

The report documents that the donor prices for five out of the eight selected drugs were on average lower than those of the local supplier prices; the percentage average difference for four out of the five drugs was found to be more than 25 per cent.

Startlingly, the audit points out that high prices offered by the local manufacturer are dictated by a Memorandum of Understanding (MoU) signed between the company’s executives and ministry of Health. “The high prices mean fewer quantities are procured for distribution to health facilities with the available resources,” the audit reveals, which “can result in increased donor dependency which exposes government to a risk of limited availability of ARVs in the event of withdrawal of donor funding.”

The report further documents that donor dependency on ARVs has increased over the years under review; the percentage of quantities of ARVs donated increased from 58 percent to 80 per cent of the total ARV.

The fact that the donor prices are lower implies that opportunities still exist for NMS to procure ARVs at a lower price, Mr Muwanga recommended.

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