The anatomy of Sri Lanka's worst ever health scandal
With several officials, including the Secretary to the Ministry of Health under Minister Rambukwella, in remand prison and under investigation over the purchase of outright fake medication for State hospitals, Namini Wijedasa goes back to the very beginni
On December 28, 2022, former Health Minister Keheliya Rambukwella hurriedly summoned a press briefing. One of his objectives was to justify a recent trip to India, where he stayed in a five-star hotel and visited the facilities of a pharmaceutical company that his Ministry had shortlisted to receive a fat contract.
The minister was self-righteous, angry. Allegations regarding irregularities in emergency procurements, he sputtered, were untrue. He dismissed media reports as “lies” and “malicious” and said 90 percent of them were false.
Not such lies after all
The planned procurement from the Gujarat-based Kausikh Therapeutics (P) Ltd, the business that Minister Rambukwella visited in India, didn’t go through. This was only because whistleblowers conveyed through the media that the company was blacklisted in Sri Lanka.
And one year later, several officials, including the Secretary to the Ministry of Health under Minister Rambukwella, are in remand prison. They are under investigation over the purchase of outright fake medication for State hospitals. Their signatures are on the paperwork. Some are fall guys.
The Criminal Investigation Department (CID) is still digging, reporting facts regularly to the Maligakanda Magistrate. But the trail of documents has already shown that the “special pathway”--introduced under Minister Rambukwella’s watch to buy billions of rupees worth of drugs and medical devices without vetting for quality, safety and efficacy--caused overpriced, low-quality medication to enter the country. The “human immunoglobulin” injections that contained no immunoglobulin were only the worst of the lot.
An ongoing probe by the National Audit Office (NAO) will throw up more troubling facts, the Sunday Times learns. It will reveal, for instance, that Cabinet had been misled. And that the decision to allow waivers of registration for walk-in, unsolicited proposals had been made by a tight-knit group at the Health Ministry and in the National Medicines Regulatory Authority (NMRA)
before it went to Cabinet for approval.
The audit will analyse the Ministry’s and NMRA’s departure from established procurement procedure and the breakdown and violation of internal governance.
The start
In 2020, at the height of a global epidemic, a procedure was introduced to facilitate emergency medical purchases. The relevant Finance Ministry circular said it was temporary; that the health committees must ensure that supplies were bought transparently and responsibly at the best price; and that they were directly related to the COVID-19 emergency.
The economic crisis struck. In May 2022, Minister Rambukwella notified Cabinet about severe shortages in essential medicines and medical equipment. In June of that year, the Secretary to the Ministry of Finance issued “Guidelines for Health Sector Emergency Procurement Process” (HSEPP), allowing for procurement to be carried out bypassing standard competitive bidding. It was to be valid from June to December, 2022. In a way, it was a continuation of extraordinary measures introduced during COVID-19.
A Health Sector Emergency Procurement Committee (HSEPC) was set up. It replaced the Standard Cabinet Appointed Procurement Committee, the Cabinet Appointed Procurement Committee and the Cabinet Appointed Negotiating Committee. But the rules specified that technical experts must be consulted when emergency procurements were under consideration. This is because Technical Evaluation Committees would also not be appointed.
As investigations now show, the Health Ministry’s favoured group that handled emergency medical purchases did not squander time on expert input. When unsolicited proposals such as immunoglobulin and the cancer drug rituximab were examined, for instance, subject specialists were just not there.
The rules also stated that HSPEC should inform the Health Minister of the procurements it makes and that he should submit a monthly report to Cabinet justifying the need to purchase the relevant items. Auditors have found no evidence of Minister Rambukwella having done that--or of a vigilant Cabinet having followed up. There was also no sign of the Health Ministry’s internal auditor having monitored the process.
Despite growing controversy regarding the impact of unsolicited proposals on the health sector, Minister Rambukwella secured Cabinet approval to extend the emergency procurement system till June, then December, last year. But in his observations, Ranil Wickremesinghe, as the Minister of Finance, did flag that continuing with the procedure could lead to deviation from accepted best practices in procurement.
Health Ministry’s role
To go back further: On September 26, 2022, Minister Rambukwella submitted a Cabinet memorandum that warned darkly of serious shortages in public health institutions. It urged that, to guarantee uninterrupted medical supplies, the Indian Credit Line (ICL) which was expiring at the end of that year should be used to procure medicines on an emergency basis from private import agents--but with NMRA approval.
The Health Minister sought Cabinet clearance to buy three months' worth of stocks under the Health Ministry’s existing pricing mechanism. He also wanted permission for the NMRA to issue waivers of registration (WoRs) for medical items before importation, purportedly to minimize delays. These WoRs later facilitated the entry of fake drugs while available data shows that a large variety of drugs were “grossly overpriced” in comparison with previous, pending or existing orders.
On October 25, 2022, Minister Rambukwella again sought Cabinet approval to order 38 items of medication from an Indian company called Savorite Pharmaceuticals (Pvt) Ltd which had tendered an unsolicited proposal. (He said at the press conference that these companies “walked into my office”). He underscored that it would take considerable time to import medicines through the State Pharmaceutical Corporation (SPC), the government’s authorized procurement arm, and that 151 medicines were at “zero level”. Surgeries could grind to a halt in three weeks, he prophesied.
The Minister asked permission to sign an agreement with Savorite. But he also snuck into this Cabinet paper the words “and other selected suppliers” while also stating that the payment would be through the ICL “and other funding sources”.
Conditions laid
Cabinet approved his memorandum “on principle” subject to the observations of Mr. Wickremesinghe, in his capacity as Finance Minister.
These came on November 2: The Finance Minister had no objection but instructed that, as the proposed supplier was selected on an unsolicited basis, the prices and quality of medical supplies should be reviewed and negotiated by the CANC or HSECP “to obtain realistic and reasonable prices on par with the market rates and also the quality of the drugs".
“The Ministry of Health should follow the procedures which are applicable for private sector pharmaceutical suppliers who import drugs on behalf of the State Pharmaceutical Corporation under the Indian Credit Line Scheme for the proposed supplier,” he said, while suggesting that Health Ministry and the proposed supplier agree upon the prices and quality of drugs before importation.
Crucially, he asserted: “If there are any private sector supplier [sic] who comes under unsolicited basis to provide medical supplies under the Indian Credit Line, the Ministry of Health should follow the process a, b and c, above for them. Further, if funds utilise [sic] other than the Indian Credit Line, the appropriate Procurement Guidelines should be followed by the Ministry of Health.”
Given the prevailing shortage of drugs, he said, the SPC should develop an in-house mechanism “to address this emergency situation by reducing the lead time for procurement process with the approval of the relevant authorities”.
Mr. Wickremesinghe proposed that the Health Ministry “should develop a proper monitoring and coordinating mechanism within the institutions come under [sic] the purview of the Ministry to overcome such unnecessary delays in the procurement process”.
“Further, the Ministry of Health should follow the appropriate procurement planning process by keeping lead time and buffer stock to avoid shortage of any medical supplies in future.” His observations said.
Nowhere did the Finance Minister suggest that the widespread adoption of unsolicited proposals using a variety of financing options would be a solution to the crisis. But that is what happened.
Those fake drugs
Documents say that on October 25, 2022, the same date that Minister Rambukwella submitted a Cabinet memorandum seeking approval for the Savorite tender, the HSEPC--headed by former Health Secretary S. Janaka Sri Chandraguptha, now in remand prison--approved the purchase of rituximab injection from Isolez Biotech Pharma AG.
The meeting minutes are titled “Import and supply of vital and essential pharmaceuticals to Sri Lanka through Private [sic] suppliers (through) the Indian Credit Line for 3 months”.
It is now known that rituximab was not paid for through the ICL as it didn’t even come from India. And if the order was approved on October 25, why was Cabinet not informed of this and a host of other approved purchases listed in the same HSEPC minute?
An ongoing probe by the National Audit Office (NAO) will throw up more troubling facts, the Sunday Times learns. It will reveal, for instance, that Cabinet had been misled. And that the decision to allow waivers of registration for walk-in, unsolicited proposals had been made by a tight-knit group at the Health Ministry and in the National Medicines Regulatory Authority (NMRA) before it went to Cabinet for approval.