Former minister of health Sylvia Masebo and Commerce minister Mulenga Chipoka must explain the drug scandal in the recent forensic audit as revealed by News Diggers.
THE K685M DRUG SUPPLY RIP OFF
By Zondiwe Mbewe (News Diggers )
A FORESNSIC audit into the alleged drug pilferage has revealed that ZAMMSA’s K685 million medical supply mop-up exercise was initiated by the ministry of Commerce and influenced by a Pharmaceutical Society meeting that aimed to exaggerate the procurement of medicines.
PwC conducted a forensic audit into alleged pilferage, specifically concerning drugs procured using USAID and other cooperating partners covering January 2023 to July 2024.
The forensic audit report noted that ZAMMSA conducted an open tender process for its mop-up exercise between November 2023 and February 2024valued at K685Mto 24 suppliers
Despite procurement procedures appearing to have been followed, the audit uncovered concerns upon a detailed review.
“One of the functions of ZAMMSA, which manages the medical supply chain in Zambia, is to procure medicines and medical supplies. The procurement process begins with planning , where ZAMMSA forecasts demands and sets procurement timelines. This is followed by tendering, during which proposals are evaluated and finally supplier selection based on specific criteria such as the bidder’s delivery capacity . From our review of the procurement process, we noted instances, where, although the procurement procedures were followed, a detailed review revealed concerns. These concerns are outlined below , focusing on procurements related to the mop-ups and cholera outbreak responses ,” the report read.
“Mop-up procurements. Mop-up is a technique utilized by ZAMMSA /MoH to buy stock items held by Zambia-based pharmaceutical dealers to meet immediate requirements such as when responding to an emergency. Mop-up/Ex-stocks items are usually in stock and available for immediate delivery . ZAMMSA conducted an open tender process for the mop-up exercise between November 2023 and February 2024, which included the prequalification of suppliers, a preliminary evaluation, and a final due diligence . As a result, 24 suppliers were awarded contracts valued at K 685 million (approximately USD25M)”.
The report further noted that initial discussion about the mop-up exercise were driven by Ministry of Trade and Commerce in a meeting held jointly with the pharmaceutical sector on May 17,2023, where positive discrimination in the sector was discussed.
The report added that a key recommendation from this meeting was for ZAMMSA to consider mopping up ex-stock in the country to help stabilize the drugs and medical supplies situation.
“We discuss our observation from the review of the mop-up transaction under the headers below: inaccurate and irregular needs assessment process . The initial discussion around the mop up exercise were driven by the Ministry of Trade and Commerce in a meeting held jointly by with the pharmaceuticals sector on 17 May 2023 to discuss positive discrimination in the sector. However during our reviews we note that ZAMMSA determination of medical supplies was influenced by the outcomes of the meeting held by the Pharmaceutical Society, which aimed to exaggerate the medical requirements to be procured . One of the recommendations that came out of the meeting was that ZAMMSA should consider mopping up ex-stock in the country to contribute to stabilizing the drugs and medical supplies status. Prior to that representatives of the parenetical sector held a meeting under the umbrella Zambia Pharmaceutical Business Forum (ZPBF)on 10 May 2023 where they provided recommendations to ZAMMSA on how a mop up process should be conducted,” read the report.
“From correspondence revived the 17 May meeting was meant to address a government policy directive on the need for positive discrimination in the procurement of medicines and medical products in the country targeting local pharmaceutical manufacturing companies . As opposed to the support to local manufacturing companies , the 17 May 2023 meeting g appears to have focused on the trading companies (distributors and wholesalers) who are generally importers and in some cases, source the items from the same suppliers as ZAMMSA. The key resolution from the May 17 meeting 2023 was thus not for the support to local pharmaceutical manufacturer but to procure ex-stock items from the trading companies”
The report disclosed that ZAMMSA’s supply planning team adopted the ex-stock quantities quoted by suppliers to determine the procurement gap for mop up orders, without considering existing stock levels in the warehouses or any stock in the pipeline.
It added that while this mop up was being initiated, ZAMMSA had bulk essential medicines and medical supplies procurement in the pipeline from UPA, United Nations Development Programme and other local suppliers worth K794 million.
“After the two meeting, suppliers begun submitting the quantities of ex-stock they had in-country for ZAMMSA;s consideration from as early as 19 May 2023. On October 4 2023 Ms Siyandi submitted a requisition worth K145 million to the Director of Finance. This requisition was accompanied by key documents , including memos from Ms Siyandi , directed to both the Director General and the Director of Finance. These memos sought approval for the mop up procurements and the associated budget. The requisition cited a budget of ZMW 145 million (USD5.2M and memos attached cited the justification that the medicines were needed to stabilize the stock status in the country which was below 50 per cent at the time, according to Ms Siyandi. After the requisition was raised and approved , a memo addressed to then acting DG ZAMMSA, from the Acting Permanent Secretary Admin Ministry of Health Dr John Kachimba, directed that the mop up be swiftly conducted and a waiver for marketing authorization requirement be applied to all suppliers considered,” the report read.
“Whilst this mop up was being initiated ZAMMSA had bulk essential medicines and medical supplies procurement in the pipeline from UPA , United National Development Programme and other local suppliers worth ZMW 794M. As these were contracts for essential medicines deliveries were expected between 2023 and 2024 hence formed part of the stock in pipeline at ZAMMSA . A gap analysis was prepared by the supply planning team which indicated that ZAMMSA had a gap of ZMW 2. 96 B (USD 106.5M) for essential medicines and other programmes. However this gap analysis did not consider stock balances and stocks in pipeline , relied on inaccurate Average Monthly Consumption values (AMC’s) and was based on ex-stock quantities quoted by suppliers. The supply planning team adopted the ex-stock quantities quoted by suppliers to determine the procurement gap for the mop up orders ,without considering the stock levels at the warehouse or any stock in pipeline”.
PwC stated that it also held discussions with three supply Planning Officers who were involved in the process , who indicated that they were guided by management to compute based on ex-stock quoted by suppliers.
“we held discussions with three Planning Officers who were involved in the process : Ms Jean Chongo, Ms Lola Nambela and Mr Harrison Katai who indicated that they were guided by management to compute based on ex-stock quoted by suppliers . The final tender floated on 27 November 2023 included a schedule of requirements that conso0lidated all quantities submitted by suppliers as ex-stock and floated by ZAMMSA were above the quantities prioritized in 2023 procurement plan. While the supply planning team did an analysis on stock at the warehouse and stocks in pipeline to establish the gap quantity, the analysis relied on inaccurate AMC’s and used an inflated stock availability period of 18 months,” read the report.
“According to Ms Msimuko, Acting Director of Supply Planning, the recommended maximum Months of Stock (MOS) to be considered of stock before initiating procurement is six month. This recommendation is based on warehouse capacity and the monthly consumption rates of facilities . Ms Msimuko emphasized that procuring 18 months worth of stocks in a single procurement cycle would be excessive as it exceeds both the consumption capacity of the facilities and the storage capacity of the warehouse. As a result, a larger portion of the stock could risk expiry, Ms Chongo a supply Planning Officer indicated that they were guided by the former Director Supply Planning Ms Nalishebo to use 18 months in assessing the gap. This inflated the final gap quantities computed by the supply planning team over and above the quantities in the procurement plan. Despite this computation that vindicated an inflated gap quantity, the supply planning team eventually picked the ex-stock quoted by suppliers to be the actual gap”.
