Following deliberations within the health department, the Punjab government has annulled its policy for the procurement of medicines in the wake of irregularities by empanelled chemists.
In a two-part series, ‘Policy of profit’ (August 27-28, 2011), HT had highlighted that suppliers had jacked up retail prices of medicines and disposable items and then showed heavy discounts for supply to 170-odd government hospitals, causing losses to the state exchequer.
HT had pointed out that some of the items supplied were not of the brands mentioned in the mandatory list of 29 companies, as per the agreement with 11 suppliers.
There was one supplier each for two districts under the policy for the 2010-11 financial year.
When contacted, Satish Chandra, principal secretary, health, Punjab, confirmed that the policy had been annulled and would be replaced by the single-rate contract system, for which the tenders were being invited.
“The decision was taken on the recommendations of the committee formed by the chief secretary. Moreover, the PHSC (Punjab Health Systems Corporation) board of directors (BoD) was also in favour of doing away with the existing policy,” Chandra said.
On September 9, 2011, shortly after the HT reports were published, chief secretary SC Agrawal, at a meeting with senior health department officials, had formed a committee to look into the matter.
He had suggested safeguarding the pricing/economy factor while reviewing the entire procurement scenario and framing a fresh policy.
The committee submitted its report to the chief secretary on October 31, 2011, recommending replacing the existing policy with the single-rate contract system.
The PHSC, the nodal agency for the functioning of government hospitals and procurement of medicines for health centres, also resolved at a meeting of its BoD in December that the policy be replaced due to difficulties in its implementation.
Raji P Srivastava, PHSC managing director, had been issuing notices and warnings to many of these empanelled chemists to submit rate lists of medicines being procured and assure competitive prices, besides quality products with brands mentioned in the mandatory list.
But the suppliers remained adamant that the prices be sought from drug manufacturers. Payments of chemists to the tune of lakhs of rupees have been withheld.
The contract period of most of the empanelled chemists expired on February 15, 2012, but they have been given a 90-day grace period with strict instructions against violation of the policy agreement.
The PHSC also issued guidelines to civil surgeons and senior medical officers at its 170 hospitals and health centres to invite quotations in a transparent manner if they still found procurement from empanelled chemists unfeasible.
The fresh policy (rate contract) could be implemented by June, for which bids have already been invited, said Srivastava. The fresh policy would be implemented under the ‘single rate contract’ for all kinds of purchases — under the head of user charges by hospitals, purchases under the National Rural Health Mission (NRHM) and bulk purchases of the health department.
“The bidder should submit an affidavit that the rates quoted are not higher than the rates quoted for the same item to any other government undertaking or approved in any prevailing rate contract,” says the tender document, for which bids have been sought by March 26.
The PHSC had earlier issued a tender notice in January 2011, seeking maximum discounts on the maximum retail price (MRP) from chemists in the absence of any rider or mention of rate specifications in its terms and conditions. The now-annulled policy had been implemented with effect from February 2011.