TIP finds more ambiguities in purchase of Covid-19 vaccine

KARACHI: Transparency International Pakistan has found more ambiguities in purchase of Covid-19 vaccine for private sector by the federal government. In a letter to the Ministry of National Health Services, Regulations & Coordination (NHSR&C), TI Pakistan, based on new complaints, highlighted more ambiguities in approving Sputnik - Covid-19 vaccine for private import by Drugs Regulatory Authority of Pakistan (DRAP).

The letter says:

1. "The explanation provided in your letter dated 24 March 2021, quoting DRAP mentions that "Initially the government approved such import without fixing the price, as no reference price under that law was available."

However, it is to point out that on 21st January 2021, Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF) has announced publicly Sputnik V is now registered in UAE and that "The price of Sputnik V is less than $10 per shot, making it affordable around the world" (Annex-A).

And surprisingly, the approval of Sputnik V for emergency use was granted the very next day during the meeting of DRAP Registration Board held on 22nd January, 2021 as stated in the Minutes of 299th meeting of Registration Board, DRAP (Annex-B). How could DRAP not know RFID press statements of a day earlier?

1. On 13th January 2021, India had declared the retail price for a single dose Sputnik V vaccine in India as less than INR 734 (Annex-C). Despite the availability of this information pertaining to the international price for Sputnik V vaccine before the 299th meeting of Registration Board, DRAP held on 22nd January 2021, DRAP ignored this information, which was a mandatory requirement of Pricing Policy to check Indian and Bangladesh prices while deciding the price fixation. The DRAP Registration Board in violation of this mandatory requirement subsequently approved the price for two doses of Sputnik at Rs. 8,449 in violation of DRAP Drug Pricing Policy 2018.

2. The Drug Pricing Policy 2018 clearly defines the mechanism for hardship cases, as quoted below:

For imported drugs in finished form and local labeling & cartooning

• Trade Price = (Landed cost + packaging cost) + markup @ 45% provided that in case of anti-cancer, biological, immunosuppressant and anti-retroviral drugs, that markup shall be 40%.

• In case of imported drugs in finished form and finished import & local packaging, MRP shall be calculated by grossing up trade price to provide for retail discount @ 15% (for biological, immunosuppressant drugs). (Annex - D)

In accordance with this DRAP pricing formula Sputnik V one dose price in Pakistan should be = Landed cost + 40% markup -15% retail discount. This equals to $10+25% = $12.5 per dose (Rs.1,925/per dose and Rs. 3,850 for two doses).

But DRAP approved two doses @ price of Rs. 8,449, which is 119% higher than the approved pricing mechanism defined in Drug Pricing Policy 2018 (based on $ 10 per dose land cost). It amounts a clear case on over invoicing.

1. In the Meeting of Registration Board, DRAP held on 22nd January 2021, it is pointed out that the Russian Direct Investment Fund (RDIF) through its letter of exclusive authorization has approved M/s Aurugulf Health Investment Sole Proprietorship LLC, Abu Dhabi, UAE for many countries including Pakistan.

It is also mentioned in the same minutes that the Private office of his Highness Sheikh Ahmed Dalmook Al Maktoum, through letter of authorization dated 19-01-2021 has appointed M/s AGP Limited, B-23, S.I.T.E, Karachi to Register/Market/Sale/Tender Business of Gam-COVID-Vaccine in Pakistan.

DRAP minutes of 22 January 2021 are silent on the relationship between M/s Aurugulf Health Investment and his Highness Sheikh Ahmed Dalmook Al Maktoum. On the M/s Aurgulf website (http://aurugulf.com/#portfolio-sec) also the name of his Highness Sheikh Ahmed Dalmook Al Maktoum is not mentioned.

DRAP minutes also does not clarify whether M/s AGP Limited has any agreement with M/s Aurugulf Health Investment, which is the approved agency for many countries including Pakistan nor it is clear whether this appointment of M/s AGP Limited as sole agent of its product Sputnik V is approved by the "Russian Direct Investment Fund" (RDIF), a Russian Government entity.

1. TI Pakistan has also received a complaint pertaining to the overpricing by AGP Limited, the company that has imported first shipment of 50,000 doses of Sputnik V vaccine to Pakistan. The complainant mentions that the company has recently declared that it will sell the vaccine to "government authorized medical facilities and private hospitals, who would administer the vaccine" (Annex-E). By doing so, there are fears that the M/s AGP Limited will be selling these vaccines to government at 2/3 times market cost to Federal as well as Provincial governments, causing huge losses to exchequer. A higher price to be administered to people at government facilities unlike the earlier declared policy "that the private vaccine will be administered to those who can afford it'.

2. The biggest apprehension is that with the approval of $54 price for two doses for Sputnik V granted by DRAP, against Rs 3,850 ($25), allocated federal government funds of $250 million for the procurement of the vaccine may be misused by using the DRAP approved price as a base price $ 54. This will result in huge loss to the exchequer.

Ministry of National Health Sciences, Regulation & Coordination must resolve the 6 issues quoted above, prior to getting approval of the Cabinet for allowing commercial import on Covid-19 vaccines at artificially high costs, which may cause various problems in future.

Copyright Business Recorder, 2021