State Pharmaceutical Corporation’s drug procurement irregularities exposed.

Sri Lanka State Pharmaceutical Corporation has failed to maintain adequate pharmaceutical supplies to provide quality patient care and prevention services during the economic crisis period arising out of the exchange deficit and other factors as at 13 May 2022 , Auditor General Department’s special audit report revealed.

The main reason for the pharmaceutical shortage at hospitals was the failure of the corporation to carry out a medicinal drug procurement in accordance with a proper time table and its lack of constant monitoring process on the progress of pharmaceutical procurement orders and its activation for the past several years.

The State Pharmaceutical Corporation has to pay around Rs.4.28 billion to suppliers, Peoples’ Bank and Bank of Ceylon by April 2022 for medical supplies ordered by the Corporation from the local market, audit inspection detected .

The total amount payable was Rs 3.11 billion for suppliers, Rs 920 million for Peoples Bank and Rs.250 million for Bank of Ceylon for pharmaceutical supplies by 2022 April 20.

According to Corporation’s information provided to the Auditor General that there was a total financial requirement of Rs. 23,123 million as at 2022 May 25.

The State Pharmaceutical Corporation has disbursed Rs. 7,135 million for issuing letters of credit, payments to suppliers and imports and clearances for orders in the Medical Supplies Division and Rs. 15,988 million for settling bank overdraft facilities for medical supplies as at 2022 April 20.

The report recommended to avoid delays in the procurement process and that responsibility be delegated to the relevant officials by effectively executing the activities related to the files sent by the State Pharmaceutical Corporation of Sri Lanka.

It has to be submitted to the Ministry Procurement Committee and the Cabinet Procurement Committee according to a proper procurement plan and procurement schedule.

A safe stock of 03 months should be maintained for each medical supply for effective control, the report suggested adding that the procurement lead time is about 11 months and although it is necessary to maintain a safe stock of 06 months.

It is recommended that consideration be given to reducing the level of secured stock by minimizing procurement time due to the lack of adequate storage facilities and the high cost.

The Auditor General’s report has suggested that action be taken to implement a re-order stock level based ordering system to reduce the lead time required for medical supplies.

It has been directed to pay attention to maintaining stock levels for appropriate medical supplies items and properly update and use the computer system.