NMS hits back after Parliament accusations of theft and dealing in expired drugs

Kampala, Uganda | THE INDEPENDENT & URN | National Medical Stores (NMS) has hit back at accusations of improper conduct leveled against them by parliament, arguing that they are not backed by facts.

NMS said it was particularly alarmed by concerns by Members of Parliament (MPs) that the institution is not using the Integrated Financial Management System (IFMIS), saying the only reason this had happened initially, was because of the known strict engagement conditions set by their donor partners.

NMS’ partners USAID, GAVI and Global Fund contract and pay the entity for storage, delivery and distribution of the essential medicines and vaccines donated to the people of Uganda. The partners have not raised any concerns.

Parliament today heard a report from the  Public Accounts Committee- PAC  accusing NMS of theft, overpricing and supplying expiring drugs to health centres that don’t need them. The PAC report alleges that they then charge them for the destruction of the junk medicine.

Legislators this afternoon went ahead to approve the Public Accounts Committee- PAC, report carrying a recommendation that the monopoly of National Medical Stores also be stopped as a result.

The National Medical Stores is mandated to procure, store and distribute human medication and health-related consumable items to government owned heath units across the country.

PAC stated that their report was based on the findings of the Auditor General on the health sector for the financial years 2016/2017 to 2019/2020.

In the PAC report presented to parliament today, chairperson Nathan Nandala Mafabi argued that the lack of essential medicines and health supplies is attributed to low supply and not only improper budgeting.

Mafabi also said users of the medicines and health supplies are not involved in the planning and budgeting process. “Prices charged by National Medical Stores were beyond the market prices, no private hospital or health unit can buy from National Medical Stores because of its high prices, and hospitals prefer buying drugs from the Joint Medical Stores because they are cheaper,” reads part of the committee report.

He recommended that the monopoly of NMS should be stopped because it is overcharging hospitals and health units.

“Indicative prices of medicines should be provided to users to assist them determine the usage of their vote allocation,” recommends PAC. “Budgeting should be done when the users know the prices and this would be the transparent way of determining that National Medical Stores is providing the essential medicines and health supplies at the market price.”

The Integrated Financial Management System 

National Medical Stores (NMS) have explained why they initially operated outside the IFMS, explaining it was a requirement of  NMS’ partners USAID, GAVI and Global Fund.

Such donors were, because of the past experiences such as the Global Fund scandal, reluctant to deposit their tax payers’ money via the Consolidated Fund and remained apprehensive of potential accountability inconsistencies in case they didn’t deal with NMS directly as the service provider. Lawmakers this Thursday afternoon said this could lead to abuse of public funds.

Public Accounts Committee (PAC) chairperson Nandala Mafabi said NMS should be held to account for delaying to subscribe to the financial system used by other government institutions.

MPs also observed that donor support funds should be appropriated by Parliament for accountability.

However, State Minister of Finance David Bahati said an amendment to existing laws is being prepared to provide for this requirement.

He explained that it’s not only NMS but several other institutions receiving tight conditions from donors.

NMS procures, stores and delivers essential medicines, health supplies and vaccines across Uganda.

NMS says it has generated revenue for the Government through earning service fees for the provision of medicines storage, delivery and distributions’ services on behalf of the donors.

Mafabi recently reported NMS to President Museveni, calling for an investigation into the operations of the institution over alleged corruption.

The report compiled by IGG exonerated NMS of any wrongdoing.

It indicated that donor funds were transparently captured by NMS management and the same was reflected in the entity’s budget as scrutinized and approved by the Board.

“According to the financial statements, NMS’ expenditure was in line with the approved budgets,” the IGG’s report reads in part.

The report indicates that the investigators referred to several audits routinely conducted by the Office of the Auditor General, covering both Government and donor funding, which rated NMS highly having inquired into the management of funds donors pay to NMS for warehousing, delivery and distribution of medicines and vaccines and no foul play ever being detected.

“An audit [into all that] by the OAG on the NMS accounts for the FY ended 30th June 2019 did not indicate any mismanagement of funds,” said the IGG.

Expired drugs

Having comprehensively examined the three-year framework contracts NMS has with a number of its medicines’ suppliers including CIPLA/Quality Chemicals (for the anti-malarial medicines, ARVs & reproductive health items) and all the consequent Local Purchase Orders and call off orders, the IGG’s report dismissed claims that NMS was deliberately purchasing medicines with a very short life span before expiry deliberately to occasion loss to the Government.

The IGG report noted that the problem of quick expiring medicines only related to medicines the Ministry received as donations, passed on to NMS for storage.

It also noted that these quick-expiring donated medicines valued at sh140m were handed over to NMS at a time when they “weren’t meeting the requirement of 75% shelf life,” something that no one can appropriately blame on NMS because the entity never participated in the medicines’ procurement but only received them as donations. That instead NMS deserves commendation for registering a medicines expiry rate of 0.5% which is below the WHO recommended standard rate of 5%.

The IGG report sated that this simply means that, whereas cases of procured medicines expiring in the warehouse can’t be avoided as per the nature of medicines, in the case of NMS only medicines worth 0.5% of the total procurement in a FY gets disposed upon expiring on the shelf. The WHO considers up to 5% as acceptable but the NMS management is now at 0.5% in comparison with the governing Board target of 2%.

Destruction of expired drugs

Nandala also dwelt on expired drugs.

“The Committee observed that NMS which is responsible for the supply of essential medicines and health supplies is the same one that destroys expired ones at a high cost to health units. The destruction does not follow the established Laws and hence corruption and theft by NMS,” said Nandala.

He says that section 35 of the Public Finance Management Act (PFMA) providing that any abandonment of claims and write off of public money and stores is done by approval of Parliament is being violated by NMS.

Nandala adds that Parliament has never approved write off of expired essential medicines and health supplies and that this means NMS escapes accountability.

Robert Centenary, the Kasese Municipality MP agreed that NMS should work like other medical suppliers and health centres purchase freely.

Jenipher Namuyangu, the Kibuku Woman MP supported the committee report saying that health centres should not even be limited on the quantity of drugs they have.

Namuyangu who is the Minister of State for Local Government said that the issues raised by PAC are pertinent and that there is need for a joint fight against corruption.

David Bahati, the Minister of State for Planning said that the Ministry of Health will be able to respond to issues raised in the subsequent Treasury Memorandum.

A Treasury Memorandum means an action report by the Minister or government detailing actions taken on recommendations of parliament arising from a report.