Restricted and single source procurement: The HDM Labs Case

Over the last two weeks or so, the print media have been carrying reports of another apparent irregularity in the procurement of drugs and medical supplies at the Ministry of Public Health. This time, the procurement relates to the supply of pharmaceuticals, including, 27,040 bottles of metformin 500mg tablets, 63,804 of 2% lidocaine injections, 49,303 diclofenac 1% 30g gel, 28,232 propofol 10mg/ml injections, 16,951 bottles of acetylsalicylic acid X1 tablets, and 12,392 bottles of 75mg diclofenac tablets. The supplier, HDM Labs Inc. of Island Park, New York, was chosen using the restricted method of procurement, and the contract was awarded in the amount of US$1.790 million, equivalent to G$366.9 million.

Readers will recall that in February 2017 a similar controversy erupted in the emergency procurement from ANSA McAL of $605 million in drugs and medical supplies for the Georgetown Public Hospital Corporation (GPHC). Apart from a breach of the Procurement Act, there were a number of concerns about the prices of certain items supplied, compared with those charged by other pharmaceutical suppliers. In the midst of public criticisms, the GPHC’s board investigated the matter and concluded that the Chief Executive Officer acted “recklessly” in initiating the procurement but no evidence was found that the Minister of Public Health gave any instructions for the procurement procedures to be bypassed. The Public Procurement Commission (PPC) carried out its own investigation and also exonerated the Minister.

A Google search indicated that HDM Labs Inc. was established in 1993 to provide various purified human proteins, including a wide range of cancer antigens, human hormones and polyclonal antibodies for the research and diagnostic industry. According to one of its websites (http://www.hdmlabsinc.com/about-us/), the company states that: (i) it is one of the biggest innovators providing secondary antibodies and cell culture products worldwide; (ii) it has contracts with FDA approved therapeutic plasma facilities for distribution of their plasma products; and (iii) it supplies a wide range of disease state plasmas for control manufacturing.

Another website, (http://www.hdmlabsinc.com/), indicates that the company: (i) is a global specialty distributor working to meet the needs of customers at high quality and great value; (ii) has the capability to provide products across a wide range of areas, from human proteins and antiseras to high quality grade plasma with globally accepted safety standards; and (iii) provides various generic pharmaceutical products for various markets. HDM Labs Inc. is classified under surgical & medical instruments & apparatus manufacturing, and with an annual income of $10 to 50 million, company employs 10 to 19 associates. HDM Labs Inc is a public business and is considered small.

(http://profile.infofree.com/biz/NY/Island%20Park/H DM%20Labs%20Inc/11132543758902)

It is evident that HDM Labs Inc. is not a manufacturer of pharmaceuticals but perhaps an intermediate supplier of such products. However, the company’s websites did not indicate any experience in the latter and what products were supplied in the past.

Events leading to the award of the contract

In April 2017, the Ministry invited six suppliers to participate in a restricted tender to supply pharmaceutical supplies for Regional and Clinic Services, including HDM Labs Inc. At the tender opening on 23 May 2017, three suppliers - International Pharmaceutical Agency,