Drugs scandal: CID arrests 4 Health Ministry employees but no action against those who signed paperwork authorising purchase
The Criminal Investigation Department (CID) this week arrested four Health Ministry employees in connection with the procurement and distribution of counterfeit human immunoglobulin from an unregistered local company.
But action is yet to be taken against the senior officials who signed the paperwork authorising the purchase of the immunoglobulin and of two more drugs from Isolez Biotech Pharma AG—Rituximab, a monoclonal antibody that treats certain autoimmune diseases and types of cancer; and Irinotecan, a cancer drug.
Payments were disbursed for immunoglobulin and Rituximab but the third drug did not arrive. All three deals were approved on the basis of waivers of registration (WoRs) issued in the name of former National Medicines Regulatory Authority (NMRA) Chief Executive Officer (CEO) Vijith Gunasekara. He later claimed his seal on them was forged.
The Director of the Medical Supplies Division (MSD) Kapila Wickramanayake, Accountant (Supplies) Niran Dananjaya, Assistant Director MSD Shanthini Solomon and Stores Manager Sujith Kumara were arrested on Monday and remanded till November 29. Isolez owner Hewage Sudath Janaka Fernando is also in prison pending further investigations.
The Sunday Times followed the story from late September, when reports emerged that the counterfeit human immunoglobulin had triggered adverse reactions in several hospitals. The trail of documents tracing the procurement shows the involvement of several senior officials including former Secretary of Health Janaka Sri Chandragupta.
In September 2022, Health Ministry Additional Secretary (Production, Supply & Regulation of Pharmaceuticals) Saman Ratnayake wrote to D.R.K. Herath, Deputy Director General of the Medical Supplies Division (MSD) stating that it was decided at a meeting chaired by former Health Minister Keheliya Rambukwella to “procure below one-month stock level drugs [sic] using Indian credit line [ICL] through private suppliers”.
Dr. Ratnayake said that such drugs will be procured through the Health Ministry’s “emergency procurement method” and that “the order quantity should be decided without concerning pending orders at the moment due to two months delay in the process of procurement by SPC [State Pharmaceutical Corporation].”
This meant that even if the Health Ministry had previously ordered drugs that were in shortfall, new orders would be placed over and above them under the controversial “emergency procurement” method which did away with NMRA registration and opened the door to backdoor deals by walk-in drugs sellers.
On the basis of Dr Herath’s subsequent instructions, the MSD then drew up a list of priority items that included “human immunoglobulin IV 5-6g”. It said 22,500 vials were required to cover three months’ demand in the public health sector.
On September 27, 2022, the Health Ministry published an invitation for expressions of interest to import and supply “vital and essential” pharmaceuticals to Sri Lanka under the ICL. Isolez submitted a quotation for the supply of 7,500 packs of human globulin with a unit price of US$ 130 (Rs 42,690 at the prevailing rate of exchange) and a total of US$ 975,000 (Rs. 320mn).
The bid said Isolez planned to import “raw materials” for human immunoglobulin, purportedly as part of a contract manufacturing deal with India’s Livealth Biopharma Pvt Ltd. Isolez would also market the final product. Livealth, a reputed Indian company, has since said it had nothing to do with the deal. And no import took place.
A five-member technical evaluation committee appointed by Dr. Ratnayake to assess the Isolez bid unusually had no medical specialists who might have spotted glaring discrepancies in the offer documents. The TEC recommended that the company be awarded a WoR for the supply of the 7,500 vials.
But in October 2022 the Health Ministry’s threemember Health Sector Emergency Procurement Committee (HSEPC)— which is chaired by Mr. Chandraguptha—decided to award the full tender of 22,500 vials of immunoglobulin to Isolez. The total value of the contract was US$ 2,925,000 (over Rs. 960mn).
The HSEPC also decided to award a contract for Rituximab 500mg injection in 50ml vials to Isolez at a unit cost of US$ 152 (nearly Rs. 50,000 each).
In a letter issued in November 2022 by Mr. Chandraguptha to Isolez, he states that “You are hereby strictly instructed to adhere to the agreed timeline and should take all required actions to import them as quickly as possible”. It defined in detail the penalties that would be applied to the company should the consignment be delayed.
The first consignment of 100 vials of immunoglobulin was only supplied to the Health Ministry by Isolez in May 2023, well past the deadline. However, in March 2023, Mr. Chandraguptha wrote to Dr. Herath citing a Cabinet decision of April 2022 which reportedly allowed the Health Ministry to “make payments for medicines and surgical devices without imposing fines by the Medical Supplies Division (MSD) in terms of the Procurement Guidelines in respect of the delays in the supply of such medicines and surgical devices due to the sudden fluctuation in the foreign exchange rates”.
“Hence, in accordance with the said Cabinet decision, it is lawful to waive off penalty imposed on the supplies including HSEPC for late deliveries of Goods for EOI orders due to numerous reasons,” Mr. Chandraguptha instructed. Therefore, Isolez was not penalised for late delivery.
On September 1 this year, the MSD issued a cheque for Rs. 36,381,875.40 to Isolez for the supply of 900 vials. On September 21, the product was withheld.
In the case of Rituximab, the contract for 2,250 vials was awarded to Isolez despite it being the second lowest responsive supplier, documents show.
On the basis of Dr Herath’s subsequent instructions, the MSD then drew up a list of priority items that included “human immunoglobulin IV 5-6g”. It said 22,500 vials were required to cover three months’ demand in the public health sector.