Teaching Hospitals’ Debt To Drug Manufacturers Hits ₦30 Billion
The Pharmaceutical Society of Nigeria, PSN, on Wednesday raised the alarm over what it described as “gross mismanagement: of the Drug Revolving Fund, DRF, by most institutions especially the tertiary health institutions, disclosing that debts owed by Teaching Hospitals to pharmaceutical companies has grown to N30 billion at the last count.
The PSN who said the debts have left the pharmaceutical companies without drugs also alerted that despite the fact that 90 percent of the Central Bank of Nigeria, CBN, Pharmaceutical Intervention Fund, has been disbursed, most of the 40 pharma companies who have accessed the funds have no access to Forex.
At a briefing to mark this year’s World Hepatitis Day in Lagos organised by the PSN in collaboration with Mega Life Sciences, the President of the PSN, Pharm. Mazi Sam Ohuabunwa said the N30 billion Drug Revolving Fund owed the pharmaceutical industry by federal and state agencies, teaching hospitals, Federal Medical Centres parastatals, among other institutions, are over two to three years overdue.
He said the huge debt has further encumbered their operations and left the pharmacy shelves empty. To ensure the availability of drugs in health institutions, the PSN is proposing a bill to institutionalise and regulate DRF.
He said the DRF was one of the fallouts of the Bamako Initiative, towards better health of the people through the Primary health care model.
“DRF is programmed to provide quality and affordable medicines through a fund set aside to procure medicines and dispense same to patients at a minimal cost.
“Unfortunately, this has been grossly mismanaged by most institutions especially the tertiary health institutions, where pharmaceutical companies are owed huge sums of monies.
“We know that these debtor institutions receive regular subventions from the government, and they have sold the items to patients for cash.
“We could not understand why they are using the government space and reputation to incur debts and embarrass the nation as a difficult place to invest in and do business.
“One hospital, National Orthopaedic Hospital Igbobi, was running this system perfectly they were able to raise additional capital to build a house of about 200 million, but in some hospitals, they have diverted the money to other things and so the money is no longer available and they are owing pharmaceutical companies about N30 billion the last time we check because the drug revolving fund is no longer revolving.
“We are appealing to government especially the tertiary health institution where they owe a huge amount of money and left the pharmacy store empty to ensure quick payment. It is the easiest way for the government to maintain a certain level of drug availability.”
“The DRF has been grossly mismanaged by most institutions especially the tertiary health institutions, where pharmaceutical companies are owed huge sums of monies that have further encumbered their operations and left the pharmacy shelves empty.
To ensure the availability of drugs in health institutions, Ohuabunwa disclosed that the PSN is proposing a bill to institutionalise and regulate DRF, adding that letters have been sent to the House of Assembly, Ministry of health and other government agencies in that regard.
Speaking on the CBN intervention fund, Ohuabunwa said about 90 per cent of the fund has been disbursed to a pharmaceutical company.
Stating that they are starting to raise issues for a second tranche as the first fund was like a drop in a very big ocean, he said only one company could have mopped up that N100 billion but CBN gave a maximum of N2.5 billion to about 40 pharmaceutical companies.
“The money has been disbursed on paper. A significant number of pharmaceutical companies have the money in their bank account, but none of them has been able to produce much because most of the raw materials and equipment needed to produce drugs are imported.
“Others are still struggling to get foreign exchange. The major problem is FOREX. If they can get FOREX, they will be able to buy equipment. We have written to CBN on this.”
He called on the CBN to make FOREX available for those who have received loans to acquire machinery and critical raw materials.
Describing the CBN and COVID-19 intervention funds as laudable ideas, he said the objectives are yet to be achieved.
The impact of difficulty in forex access is that it portends grave danger and may undermine the noble objectives. First, the longer it takes to get the machines and equipment in, the longer it will be for Nigeria to begin to see an enhanced local production.
“Second, the longer it takes, the more difficult it will be for the benefitting companies to begin production and generate cash flow to meet the interest and repayment obligation, as the moratorium is fast depleting.
“Third is that with forex at rates higher than the planned or forecasted rates in the business plan, the money received in Naira may no longer be sufficient to meet the stated needs.
And fourth is that the longer the Naira is left in the Banks awaiting piecemeal allocation of forex, the faster the value depreciates by growing inflation and the fewer the number of machinery and equipment or even raw materials that can be bought. “
Speaking, on local production of vaccines, he said some pharmaceutical companies have set up a vaccine laboratory, but need NAFDAC approval before they can start the process of local production of vaccines.
Lamenting the spread of the Delta variant into Nigeria, he urged Nigerians to always wear their face mask and get a vaccine.
He dismissed conspiracy theories about COVID-19 vaccines insisting that the vaccines are safe and efficacious.