Friends of the family. New connections in robbing the healthcare budget
December last year. Panel session of the procurement commission is on air on MOH (ministry of Health) Youtube channel. Newly assigned Minister of Health Dmitriy Pinevich makes a pointed remark: “Nativita” has to pay the due amount of money back (the amount that was revealed during the investigation that “Belsat” conducted and mentioned in a report), otherwise the Ministry will get “Nativita” sued.
This is about “Nativita’’company registered in village Beshenkovichi, Vitebsk Province and the team“Davaite razbiratsya” (“Давайте разбираться”) who set the record straight in 2020. Let us recall that the public budget has been overpaying Alexey Sychev, the owner of “Nativita ‘’millions of dollars annually. The company received the producer status in Belarus and registered a number of their own pharmaceutical products. In fact, those were drugs imported from Russia and India that were actually only prepackaged in Belrus.
“If considered legally, the drugs are not being manufactured in Belarus. There is a lack of technology and the output that has to be produced by a Belarusian company is not enough. The country has a stake in showcasing the fact of import substitution”, – says Victoria Alexandrova, consultant of the capital spending project on pharmaceutical market.
The state had been buying analogs even more costly until “Nativita” entered the market. So, no wonder, that there is the impression of saving the budget. The following is the direct quote by “Nativita” in response to our enquiry:
“When “Nativita” first marketed its biological preparations and stood a competition with originators, the prices on “Rituximab” and “Trastuzumab” decreased by a factor of 1.5”.
However, the impression of saving is deceptive. The thing is that the government was purchasing original drugs, whereas “Nativita” imports generics that cost anything but one and a half less. According to Vladimir Kovalkin, the project manager of “Kosht Urada” (“Кошт урада”), their purchase price is ten times lower: “Given that a cost of foreign brand drug is much higher than any of generics manufactured in Russia, India or China, delta may be obtained if buying a generic under the guise of original. Take an amendment of exemption into account and you might split a dough. Add procurement value and the fact that it is medicine, the margin is high so you can make a buck.
We approached Dmitriy Pinevich, the former Deputy Secretary and the current Minister of Health, to get the situation straight. Although the official response failed to reach us, we found out that procurement prices on “Trastuzumab”, “Rituximab” and “Lenalidomide” plummeted and are now much lower than in neighbouring countries. Thus, apart from recovering the due sum that “Belsat” mentioned in one of the articles, we estimate that “Nativita” is bound to provide the Ministry of Health with the drugs for free in the amount of $38 million rubles which roughly the same with the budgetary overpayment (but we didn’t have access to all tenders data).
Few weeks later “Nativita” commented on our investigation in the interview to with online news portal TUT.by by accusing the team “Davaite razbiratsya” of mind games:
“It is not technically accurate to compare retail and procurement prices as the drug in a pharmacy may be put on the market and sold under-priced due to either being infringing or its expiration date”.
Nonetheless, a range of products in the hospital segment is lacking in Belarusian drug stores, which makes our research tough to go through. That is why during our second investigation we relied on farm-gate price; in case of shortage of producer data we built upon the selling price ceiling and total price in the neighbouring countries. In doing so we made a research of the latest procurement deals and converted the sums into Belarusian rubles. So, as mentioned above, life-saving medicine indicated a significant fall in price.
The answers to these questions became clear when we had examined public procurement reports. It turns out that the old schemes have been anything but eliminated.
Governmental drugs procurement in 2020.
State company “Belpharmaciya” bought a medication for rheumatoid arthritis “Adalimumab” from “Nativita”. The preparation is marketed as manufactured in Belarus, however the real producer is a Russian company “Biokad”.
Its price (converted to BYN)) on russian manufacturer’s website is 750 for 1 only one pack. Meanwhile, “Nativita” purchased 1000 packs of this medication for 1255,55 belarusian rubles per piece.
A similar medication produced by Swiss pharmaceutical you can get in Ukraine and the price will be roughly the same – 1290 (converted to BYN).
Russian oncologist and chemotherapist Polina Shilo agreed to tell us about benefits and drawbacks of russian generics:
“In order to claim that a generic is equivalent to original preparation, it has to undergo a number of studies. The reality is that generics go through a simplified registration system, which means that they skip all those testing stages that are a must for original medications. As a result, it turns out that not all generics are every bit as effective as originals; in other cases they may appear to be more toxic. Anyway, this doesn’t imply that all generics are bad. On the contrary, they make medical treatment affordable”.
This year “Nativita” is also the state supplier but this time of a so-called domestically produced Glatiramer Acetate for treating multiple sclerosis. And again the real manufacturer is the “Biokad” company. The price by the piece on its website is half lower than “Nativita” paid by gross from the state budget. The maximum price is allowed to exceed the price indicated by the producer by 10 per cent. Thus, procurement of only Glatiramer Acetate will bring “Nativita” another quarter of a million.
Sergey Satsuk, chief editor of “Daily planner” (“Ezhednevnik”) who has been studying tenders on medical equipment and medications procurement says that neither doctors’ actions nor changes of ministers managed to change the system:
“It’s not a matter of individuals or Zharko (Vasiliy Zharko). This system is a result of the actions of people who have a stake in it: businessmen, bureaucrats, the Ministry of Health, the Health Investigation and Research Centre. KGB got the “safest” infringers; the most active remain and maintain the system”.
Another purchase transaction was an antifungal preparation “Pazopanib”, which is supplied and packaged by “Nativita”, although the real producer is a Russian company “PharmaSynthesis-Nord”. The ceiling price for it in russian pharmacies is 1700 rubles per piece (wholesale and retail margin included).
But our open handed Ministry of Health agrees to pay 2564,41 ruble per package. According to the official documents at our disposal, the real delivery price is even three times lower. Thus, “Nativita” gets a profit of 500 dollars per piece.
The full text of the investigation is available in pdf, mobi, epub formats.
