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Payment of ₹200 crore to pharmaceutical companies for supply of Remdesivir in Karnataka is stuck due to violation of tender conditions

After more than a year of supply of the drug, payments to major pharma companies are stalled due to this breach.

After more than a year of supply of the drug, payments to major pharma companies are stalled due to this breach.

Remdesivir injection, which was considered a key drug in the COVID-19 treatment protocol, became a household name in 2021 during the second wave of the pandemic. While the threat of the pandemic has subsided, it is learned that the Karnataka government is yet to clear the dues. For companies supplying the drug, which adds up to ₹200-crore due to breach of a tender condition that the government is mandated to test 10% of all supplies.

After more than a year of supply of the drug, payments to major pharma companies are stalled due to this breach.

During the second wave of the pandemic in 2021, critical injections were procured by the government through Karnataka State Medical Supplies Corporation Limited (KSMSCL), a nodal agency for procurement of all government related medical supplies in the state.

‘No compromise on patient safety’

The delay in payment of dues has been attributed to violation of tender condition for medical supplies to the government which mandates third party laboratory testing before supply. However, these lab tests were not conducted citing medical emergency starting April 2021.

Remdesivir was in short supply. Visuals from relatives of patients looking for remdesivir were all over social media and news publications. Some people managed to buy medicine from the market by paying a premium.

“There was a demand that not a single sample of those batches is available for testing (if the test was to be done today),” said a supplier of the drug to the government.

The supplier argued that the omission was merely ‘procedural’ and not something that put patients at risk. “This position exists to ensure that the quality of medicines supplied to the government is not less than the standard as compared to those released in the open market. The high end drug was tested in laboratories as per strict protocols and certified safe by the manufacturers. In view of the emergency during the height of the pandemic, third party testing was omitted to save time and expedite supplies to the government,” he claimed.

Companies supplying Remdesivir to Government of Karnataka

Pharma companies that supply remdesivir include Biocon Biologics, Mylan, Sun Pharma and Cipla. A leading Karnataka-based company claimed that payments have been withheld due to lack of reports from the empaneled labs, which is no longer possible as physical stocks are not available for testing. In a letter to the Department of Health and Family Welfare, the company informed that it had supported the Karnataka government with COVID-19 drug supplies and played an active role in saving every possible life.

Another pharma company expressed unhappiness over delay in payment of stock of remdesivir injections supplied during the second wave of COVID-19 pandemic despite completing relevant paperwork much earlier.

A senior official of the Health Department of Karnataka told Hindu“Then the situation was such that emergency supplies were necessary, as thousands of people were infected with COVID-19 and fighting for life. The supplies were made directly to government health facilities, and 10% of the samples tested at the empaneled laboratory in Delhi could not be tested because the demand for injections was unusually high and urgent.

Sources said that KSMSCL Managing Director Rajendra Cholan is expected to soon approach the KSMSCL board for resolution of the more than a year old problem. Sources said the board is ready to take feedback from district health officials (DHOs) and others on the issue.

When asked how the government will reconcile the supplies before making the payment, an official said, “Remdesivir is a universally accepted drug, which has also been accepted by the central government. The utility report is with the government. We have sought consumption report from DHO. There are no adverse reports. The matter will be discussed by the KSMSCL board. ,

Payment of pharma companies, security deposit withheld

Bills of around ₹300 crore are outstanding for payments to vendors supplying medicines under the Karnataka State Medical Supplies Company Limited and the National Health Mission (NHM).

Pharma industry sources claimed that the security deposits of the companies participating in the tender are also stuck.

“Since security deposits have not been issued even to companies that do not qualify in the tender process, some small vendors have stopped participating in the tender process. The security deposit of the companies participating in the tender process is stuck. This can affect the entire drug purchase process,” said a seller. Hindu,

Sources said the average annual procurement under NHM is around ₹1,200 crore.

One of the reminder letters to the state government on the outstanding dues from KSMSCL by a company reminded the government that it is facing hardship due to non-payment as they are an MSME.

Vendors liaison with Minister, Public Accounts Committee

Some vendors said that Health Minister K. Sudhakar and Public Accounts Committee chairman Krishna Byregowda apprising them of the problems faced by the Karnataka government in procurement of medical supplies, including non-payment of bills and refund of security deposits.

A senior health department official said the government is owed around ₹300 crore for the purchase of NHM, and the delay in payment is due to the process followed while clearing the bills. The official revealed that a small number of bills also had budget related issues.

Regarding returning the security deposit to the vendors, an official said that efforts are being made to get them all vacated in the next few weeks. “The security deposit has been deposited through an e-portal in the last two years. About 15 security deposits made during the manual tendering process between 2013 and 2016 have problems. These are pending due to controversies, and a report has been sought.

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