Ministry of Health: "No hanky-panky in drug procurement"

The Health Ministry says allegations of drug supplies monopoly and corruption levelled against it are baseless.

However, the whistleblower who first made the allegation in June, expressed disappointment and  has given an update to The Star detailing the rising tender contracts value of drug supplies by the top six tendering agents.

A tendering agent, however, begged to differ, explaining that the procurement procedures were transparent and the use of agents was common even in other countries.

The real issue was whether tendering agents should be bumiputra agents only, he said.

On Friday (Oct 19), Health secretary-general Datuk Seri Dr Chen Chaw Min said  that the ministry had investigated the drug supply procurement procedures for hospitals and found they were carried out according to the  guidelines set by the Finance Ministry.

On the issue of the appointment of agents, involvement of politicians or senior government servants in procurement, as well as the monopoly claims, he said the matter had been referred to the Malaysian Anti-Corruption Agency (MACC) and the Malaysia Competition Commission (MyCC).

"So far, nothing out of ordinary has been reported against the ministry."

"With this statement, we hope that no parties will make any assumption or create confusion about the management of the procurement at the Health Ministry," Dr Chen said in a statement on Friday (Oct 19) in response to a Free Malaysia Today report.

The portal had reported that the whistleblower was disappointed with the lack of action after his revelation.

On June 13, The Star carried a report on the allegations in which the whistleblower provided details on high-ranking officials and companies linked to politicians said to have control over billions of  ringgit worth of medical supply to the Health Ministry.

A 12-page document was emailed to Health Minister Dr Dzulkefly Ahmad and forwarded to a few parties including The Star.

It said there were bid-rigging of open tender process, thus enabling the monopoly of medical supply.

In response to the ministry's statement on the matter, the whistleblower provided updates, saying that the top six tendering agents had, to-date, been awarded approximately RM5,934,877,317 or 92.21% of the approximate RM6,435,975,589 total tender contracts value.

The whistleblower said with the latest information, the amount was now approximately RM6.44bil for the period of 2010 to 2018 (and ongoing).

"Collectively the top six tendering agents were awarded approximately RM5,934,877,317 or 92.21% of the approximate RM6,435,975,589 total tender contracts value," he said.

The tendering agent, who disagrees with the accusations, said this was not evidence of wrong-doing, explaining that the procurement procedures were transparent and the use of an agents was common even in other countries.

The agent, who is not one of the top six, said he was surprised a pharmaceutical company would make such allegations because the procedures were transparent.

In fact, he said drug patent was the actual monopoly that is causing drug prices to be high - a legal monopoly according to the World Trade Organisation's agreement, of which Malaysia is a signatory.

Moreover, for some drugs, he said, direct negotiations were required because they were patented with no other companies producing them.

"Why would the government call for a tender if a product is patented? So, it would have to be direct negotiations," he said.

He said multinational companies might say they did not want a middle man, but a lot of countries had some sort of an agency arrangement.

Some companies were big enough to step up operations in Malaysia, some were not and would use the service of a tendering agent, he said.

"So, this requirement is actually global. Now, whether it needs to be a bumi agent or not is the bigger question.

"That is why I tell the MNCs to be clear of what they are against," he added.

He said because the six tendering companies had been around for a long time and pharmaceutical companies were happy with their services, they continue to use the tendering agents.

"If you are number 50 to 75, and you expect the licence to bring in money, then sorry, because none of the principals would want to deal with you," he said.

He said that the pharmaceutical company he represents once "got burnt" as the tendering agent did not pay up for some of the products it supplied.

"That's why I understand why MNCs are comfortable dealing with only certain agents," he said. 

/theSTAR 20-10-2018

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