The National Executive Council meeting of the Chamber of Pharmacy, Ghana (CoPG) held a meeting in Greater Accra Region and deliberated extensively on issues of national importance and matters confronting the pharmaceutical industry and trade.
The Chamber commend the Government for putting in place an appropriate policy framework to boost investment in the pharma sector, thereby expand job creation and promoting entrepreneurship opportunities for young Ghanaians in particular.
The Chamber recognizes the marvelous work done by the Ministry of Trade and Industry as it has embarked on a comprehensive and integrated programme of transformation to support the establishment of a pharma enclave as well as other support to link to that investment.
At the end of its deliberations, the Council state as follows:
1. Delayed payments for supplies (Pharmaceutical products) to NHIS Service providers (NHIA’s delay in payments for services rendered).
2. Ministry of Health Framework Contract policy, ramifications on pharmaceutical business and quality healthcare delivery.
Delayed payments for supplies (Pharmaceutical products) to NHIS Service providers (NHIA’s delay in payments for services rendered).
Majority of health facilities in Ghana are subscribed to the National Health Insurance Scheme which is a historical intervention intended to provide relief and improve the health needs of all Ghanaians especially the under privileged. We have been a very strong and committed partner in ensuring that the intents and purposes for which the scheme was established are fully realized and we have done that unflinchingly. Recent developments clearly outlined below threaten the achievements and integrity of the relationship between the Members of the Chamber of Pharmacy on the one hand and the NHIA healthcare providers on another which requires prompt attention.
We have particularly resonated this subject of delay in reimbursing countlessly with the hope of a permanent redress. Most of the health facilities are owing for the medicines suppled to them for the past 10 to 16 months and the reason that is given by them is that the NHIS is owing them since April, 2019 leaving them with a huge unsettled gap of months which is a flagrant contravention of the National Health Insurance ACT 852 and the L.I 1809 sections 37 and 38 respectively. However, contractual agreement with NHIA and the Service Providers unequivocally states that: “The NHIA will make payments within ninety (90) days of receipt of a claim unless written notice of a dispute or discrepancy is furnished the provider within thirty (30) days of the claim”.
Impact on our companies
The current situation has culminated into the following:
a) Most of the pharmaceutical companies are faced with cash flow challenges and are unable to meet their financial obligations to their suppliers resulting in termination of import and distribution agreements, at best credit facilities amended to strictly cash or letter of credit (LC) business;
b) There is increasing shortage of essential drugs and medical supplies due to suppliers of these items legitimately refusing to grant further credit to service providers owing to non-payment of outstanding bills;
c) Pharmaceutical companies are defaulting in loan repayments to their bankers and some have had their assets and other collaterals seized by their banks;
d) Active Pharmaceutical Ingredients (APIs) and finished formulations imported are being subjected to exchange rate risk which is very unpredictable under the current economic conditions;
The Council therefore resolved as follows:
a. Chamber Member shall henceforth request the hospitals to provide PAYMENT GUARANTEE before medicines could be supplied to them. This is the only way to sustain our individual companies.
b. Health facilities owing more than three (3) months shall no more enjoy any credit facilities from our members.
c. government should ensure adherence to the NHI Act on re-imbursements to Service Providers
The Council therefore recommends:
i. The creation of a platform for a national stakeholders’ forum to discuss the financial sustainable for the NHIA;
ii. That Section 108 (1) (m) of the NHIA Act 2012, Act 852 requires the Minister to make Regulations on the advice of the Board, by legislative instrument and make Regulations to provide procedures for the resolution of complaints and disputes by the Adjudication Committee and for receipt of feedback by the committee. We do hereby call on the Minister of Health to also take immediate steps to establish the adjudication committee of the NHIS as required by the section 106 of Act 852. This would facilitate the speedy adjudication of cases between service providers, subscribers and the NHIA
Ministry of Health Framework Contract: Ramifications on pharmaceutical business and healthcare delivery.
The Ministry of Health in the past 12 months has introduced Framework Contract policy, with the key objectives to reduce the price of health commodities to the National Health Insurance Scheme (NHIS) and ensure efficiency in procurement. The Ministry has selected 54 products, which constitute the bulk of claims for medicines under the NHIS for the framework contract programme. According to the Ministry of Health, the cost of these medicines is high, therefore consolidating them under one national procurement will ensure low prices, which would ensure cost reduction to the NHIS. These 54 products constitute the major economic products by value to the pharmaceutical industry.
Chamber of Pharmacy Ghana recognizes the need for policy changes geared toward the improvement of deliverables for patients, and the Chamber, therefore, stands ready to support such policies initiated by the public sector when it believes such policies will meet the aspirations as mentioned above.
The Chamber, however, does not believe the framework agreement for procurement of essential medicines centrally by the Ministry of Health will meet the above objectives. This is because, only 16 companies out of the over 50 companies that actively participated in tenders for procurement of medicines were awarded contracts under the programme. The implications of this on the industry and the provision quality health care delivery are outlined here under:
a. The public sector constitutes over 70% of the market for essential medicines in Ghana. By giving this market to only 16 companies, the rest risk going out of business. This is happening now, as most of those companies are under extreme pressure for survival.
b. Monopolies are being created. In several cases, critical drugs were awarded to only one company, e.g. paracetamol. This has grave implications for the country. If the supplier encounters any problem in the delivery due to various reasons as lack of finance or APIs, inadequate production capacity, or technical reasons, the country will not have that product. This has been the case in the first year of operations of this policy. Paracetamol was out of stock in the public sector nationwide, as the supplier could not deliver. Subsequently, the said supplier delivered minute quantities, which caused the various Regional Medical Stores to ration the distribution of paracetamol.
c. There are over 30 manufacturers of this product (paracetamol), for example), in the country. By consolidating and giving virtually all the market to one company, will mean that the rest of the companies will have to close their production lines for this product for at least one year, whilst anticipating to win in the following year. This is further a major disincentive for backward integration by other companies and run-counters to your strenuous effort to make Ghana a pharmaceutical manufacturing hub. If current manufacturers are experiencing lack of market, there would be very little motivation for a new entrant into this space.
d. Because of the extreme competition created by this policy, most of the companies quoted abnormally low prices in a bid to win but have not been able to deliver the goods. Currently average delivery to all the designated institutions stand at about 25% in most of the regional medical stores across in the country. Furthermore, foreign companies without presence on the market participated through local companies (fronting for off-shore companies). These off-shore companies quoted their CIF prices to out-compete the indigenous companies and supply directly from their base.
e. These have profound adverse effects on the economy and health delivery. Due to lack of market, companies will reduce existing staff, little or no new employment will be available. Thus pharmacists, marketing officers, who could be employed to market our products will not have the opportunity, whereas those in employment will lose their privilege. Business expansion is being severely constrained.
Hon. Minister, we wish to state that, contrary to the claim by the Ministry of Health to the extent that cost of medicines offered by the industry to the various Regional Medical Stores were previously high, we offered these products at highly competitively low prices. In fact, the various Regional Medical Stores and the hospitals enjoyed up-to 500% margin on the prices we offered them under national competitive tenders from the regions. That is, the differential in our offered prices and the NHIS tariff was 500% in some instances. We have copious evidence to support these statements from award letters received from the health institutions. The differential between our offered rates and the NHIS rates was so high thereby making a fortune for the health facilities. What has happened to these windfalls is a matter to be investigated
The Chamber of Pharmacy, Ghana wishes to immediately call for the review of the current Ministry of Health framework contract and revert to the decentralized procurement system by the Regional Health Directorates and Teaching hospitals, through national competitive tenders.
We call on the government as a matter of urgency to deal with all the concerns raised above.
Chamber of Pharmacy, Ghana will like to remind the government and all stakeholders that, we are committed in ensuring sustainable, efficacious and timely supply of medicines.
H K ABUTIATE
CHAMBER OF PHARMACY GHANA
Dated 4th February, 2020