Domestic producers do not have open access to the procurement of medicines

The negative impact on the provision of domestic suppliers with equal opportunities to participate in the procurement of medicines and medical products has a number of deficiencies, which exist in the system.

This was announced today by the Council on fight against corruption and the shadow economy of NCE RK "Atameken" at the meeting. They presented the results of the anti-corruption monitoring in the sphere of procurement of medicines, medical devices and medical equipment purchased in the framework of the state guaranteed benefit package (hereinafter - SGBP).

 Opening the meeting, the chairman of the Board Kairbek Suleimenov noted that the organizational and legal deficiencies identified during the monitoring limit competition in this segment of the economy and pave the way for corruption.

"Public expenditure on provision of medicines within the state guaranteed benefit package are increasing every year, and from 2009 to 2016 increased from 55 to 160 billion tenge. Meanwhile, there are some drawbacks in the system of procurement of drugs and medical products, as evidenced by the treatment of entrepreneurs in "Atameken". The existing practice of discrimination of suppliers has adverse affect on provision of equal opportunities to participate in the procurement. This limits competition and creates fertile ground for corruption", - said Kairbek Suleimenov.

Member of the Board, a deputy of the Mazhilis Ivan Klimenko noted that policy carried out in recent years on behalf of the Head of State on improving the procurement process of goods and services from the state budget for their optimization and protection against corruption risks, alas, did not affect the system of medicines procurement.

"For example, notarization of documents within the framework of the tender documentation is still practiced, which is no longer required when conducting procurement. Provisions of law to support domestic manufacturers of medical equipment, often in practice do not work. In accordance with Article 10 of the Code of medicines purchased in the framework of the provision of SGBP are the responsibility of local authorities, and therefore the Health Department of South Kazakhstan, Almaty, Karaganda, East Kazakhstan, West Kazakhstan regions produce them centrally. However, in Akmola, Kostanai regions, Almaty and Astana the functions of local executive bodies for the procurement of drugs and medical supplies were delegated to institutions that provide medical care - hospitals and clinics, making the procurement process less transparent. Gaps in the existing order of formation and registration of prices for medicines and medical equipment can create barriers for entrepreneurs to participate in procurements", - said Ivan Klimenko.

 He noted that at the beginning of 2015, according to the Audit Committee, there was revealed the excess supply of immunobiological products in the amount of 1.3 billion tenge.

"The absence of fair value for health care makes it impossible for PPP development in this sector", - said the deputy.

According to Ivan Klimenko, the gaps in the existing order of formation and registration of prices for medicines and medical equipment allow to create barriers for access of entrepreneurs to participation in the procurement. Despite the fact that the registration of prices is a form of realization of the state functions, aimed at the realization of the rights, freedoms of entrepreneurs, these functions in the Register of public services are not included and have no legal regulation.

Lack of information on the work of Formulary Committee creates a legal vacuum, which may contribute to the risk of corruption, and the gap in the legal regulation of counteraction to dumping incurs detrimental blow on domestic producers and creates conditions for unfair competition.

Violation of the established procedure for procurement of medical equipment by the local executive bodies not only harms the interests of domestic manufacturers of medical equipment, but also implies the commission of corruption offenses.

The representative of the Ministry of Health and Social Development of the RK Zauresh Mushanova agreed with the opinion of members of the Council to transfer the price registration to the register of public services, while describing in detail the procedure of formation on drug prices in the country.

"For price controls on drugs, there was set up a special working group. Earlier, before the adoption of the Code, there have been repeated comments of the public on the pricing, as mentioned, that the original purchased price of generic drugs. In this regard, the Ministry of Health in cooperation with international consultants in July 2015 approved the new rules for the formation of prices for medicines and medical devices under SGBP. According to the new method, a representative of the manufacturer provides own price for registration. Further, the National Center for Expertise of medicines, analyzes wholesale and retail prices and international prices. After analyzing the Center provides recommendations for registration of the price. This procedure removed unnecessary links in order to reduce prices", - assured Zauresh Mushanova.

Chairman of the Board of LLP "SK-Pharmacy" - a single drug distributor in Kazakhstan Nurzhan Alimbaev did not agree with the opinion of the individual members of the Council with regard to the fact that SK-Pharmacy does not support the domestic producers of medicines and medical equipment.

"From 896 kinds of medicines purchased for 2017 – 462 are of domestic production", - said Nurzhan Alimbaev.

According to his information, in support of domestic producers 47 positions were transferred to SKF for centralized procurement. In general, due to the centralized procurement, the prices in the regions have been aligned, the number of direct contracts increased.

In defense of SK-Pharmacy, he also cited the situation at the end of 2015, when due to the global economic crisis, the purchase of pharmaceuticals for 2016 was under threat. However, a single distributor, according to him, was able to purchase the entire volume of the claimed drugs at the same price.

Members of the Council also noted that a significant influence on the formation of corruption risks in the field of medicines procurement has made the publication by the Ministry of Health and Social Development of normative legal acts that restrict and eliminate competition. Despite the fact that 81^st step of the Plan of the nation - 100 steps to implement the five institutional reforms of N.A. Nazarbayev - stipulates an extension of SGBP through non-governmental organizations. However, this sphere still practices issue of regulations that limit the participation of private organizations and lobbies the interests of state-owned enterprises.

Deputy Prosecutor General Andrei Kravchenko, as well as members of the Council also drew attention to the existence of corruption risks in supply of medicines within SGBP.

In this regard, the Council decided to forward the recommendations to the concerned state authorities to change the legislation, governing the procedure for procurement of medicines and medical equipment. In order to ensure their transparency and to reduce corruption risks, it is proposed on the basis of the National Chamber of Entrepreneurs to create a database of these procurements.

It was suggested for General Prosecutor's Office to appeal the individual orders of the Ministry of Health and Social Development, restricting competition and providing benefits to individual legal entities. In addition, LLP "SK-Formation" is recommended to take concrete measures to address corruption risks in this sphere.