Teaching hospitals owe drug firms N30b

A hospital ward in Nigerian Teaching Hospital

By Jeph Ajobaju, Chief Copy Editor

Teaching hospitals, which are tertiary health carers, owe drug makers N30 billion because they mismanage the Drug Revolving Fund (DRF), leaving drug firms with empty shelves, according to the Pharmaceutical Society of Nigeria (PSN).

PSN announced that even though the Central Bank of Nigeria (CBN) has disbursed 90 per cent of the Pharmaceutical Intervention Fund  most of the 40 pharma firms who have accessed the funds have no access to forex exchange (forex).

PSN President Sam Ohuabunwa lamented in Lagos that DRF owed the pharmaceutical industry by federal and state agencies, teaching hospitals, Federal Medical Centres, and other institutions is over two to three years overdue.

Per Vanguard, he said the huge debt has 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.

Appeal for payment of debt

Ohuabunwa disclosed that DRF came out of the Bamako Initiative towards better health  through the primary health care model.

His words: “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 [costing] about N200 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 institutions 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.”

Ohuabunwa disclosed that PSN is proposing a bill to institutionalise and regulate DRF and letters about it have been sent to the House of Representatives, Ministry of Health, and other government agencies.

He said about 90 per cent of CBN intervention fund has been disbursed but there is need for a second tranche as the first fund was like a drop in a very big ocean.

According to him, only one company could mop up N100 billion but the CBN gave a maximum N2.5 billion to about 40 pharma companies.

“The money has been disbursed on paper. A significant number of pharmaceutical companies have the money in their bank accounts, 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.”

Appeal to CBN to make forex available

Ohuabunwa urged the CBN to make forex available to those who have received loans to acquire machinery and raw materials.

He described the CBN COVID-19 intervention fund as laudable but 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.”

Coronavirus vaccines safe

Ohuabunwa confirmed that some pharmaceutical companies have set up vaccine laboratories but they need NAFDAC approval to begin production

He lamented the spread of coronavirus Delta variant into Nigeria and urged people to always wear their face mask and get a vaccine dose, dismissing conspiracy theories about vaccines which he said are safe and effective.

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