€1.2 million worth of expired medicine logged in 2016 report

Jeremy Micallef The Central Procurement and Supplies Unit (CPSU) in 2016 had over €1.2 million in expired medicine still in stock, some of which had been expired for over five years and was not marked as such, according to a report obtained by this newsroom.

The CPSU was created to control the purchasing and stocking of materials, works and services provided by the Government healthcare services. Medicines and supplies are mainly distributed to public hospitals and clinics across Malta and Gozo.

The report, conducted by the National Audit Office (NAO), was carried out to verify that expenditure incurred on medicines and surgical supplies was duly authorised and properly accounted for during the financial year of 2016. The exercise was aimed to ensure that procurement was in line with regulations.

In its conclusions, the NAO noted that it was not in a position to verify the validity of particular explanations given by CPSU management in view of the specific technical and medical factors.

Stock Issues

The physical counting of stock was undertaken by a private audit firm in January 2017, and CPSU management stated that a report showing discrepancies between physical counts and stock records, together with relative explanations, was still in the process of being compiled when the audit was in its final stages in May.

An analysis of a report issued by management on 16 January 2017 noted a total stock of medicines worth €18,031,558.

Items with an aggregate cost totalling €861,860 were expired, and not identified as such.

A number of these entries had been expired since January 2014.

The stock report made available to NAO also contained over 60 entries with a zero value – this means that as a result, apart from the accuracy of the information being hampered, the stock value of just one of the items in question was understated by €210,000.

Corroboration of details obtained from sampled invoices also revealed discrepancies in quantities recorded on the computer system and bin cards, besides other accounting errors.

Funds and Security

Since St Vincent de Paul Residence was no longer under the responsibility of the ministry, the CPSU started invoicing them for supplies from January 2015. No reimbursements were received for supplies issued since then, with the bill of items provided reaching €2,432,429.

With regards to security, the only room requiring access control was the storage room for dangerous drugs. The rest of the main stores had no restriction in place to limit the right of entry to staff.

The report also noted that CCTV cameras did not cover all areas, and this increased the risk of intrusion and theft.

CPSU Management comments

The CPSU stated in their comments that they concurred with most of the observations put forward by the NAO, and that remedial action had already been taken in certain instances. They also noted that due to the department catering for the provision of critical and life saving treatments which amount to over €350 million per annum, they are compelled to take extreme measures within law to ascertain that all their patients receive the required care in order to safeguard their wellbeing.

With regard to the absence a reconciliation report between physical counts and stock records, they insisted that it does not constitute a limitation of scope as CPSU provided ‘alternative’ sample data for the auditors to formulate their opinion while the physical annual stocks take was being pursued.

The management also noted that during the time of the audit they were under the process to change over their Stock Control and Management system to a new software that eventually should provide full traceability with bar-coding from the point of receipt of the materials in the warehouse to the point of having this distributed out of the warehouse.

On the issue of expired stock, the CPSU says that it is normal practice within the pharmaceutical industry that certain drugs can still be used beyond their expiry dates if such concession is provided by the manufacturer or if the appropriate testing is made through qualified institutions.

When it came to the items amounting to €861,860, they insisted that it did not constitute a material mis-statement when compared to the €100 million spend per annum, more so when the large proportion of this amount was attributable to the national stockpile for pandemic preparation which amounted to €672,000. They also said that the medicine had been tested and was still effective as when it was originally produced.

The CPSU did welcome the recommendation in respect to internal controls, although they noted that this does not tantamount to material misstatements.

They ended their comments by explaining that certain potential risks, such as skilled human resource shortages, are making it difficult to keep abreast with maintaining an effective control environment.