HEALTH: Corruption in Pharmaceutical Industry Kills

By Thalif Deen Reprint | | Print |

Thalif Deen

UNITED NATIONS, Dec 11 2006 (IPS) - The World Health Organisation (WHO) is undertaking one of its toughest new assignments: taking on a powerful adversary in the world’s multi-billion-dollar pharmaceutical industry.

The Geneva-based U.N. agency, which succeeded in piloting an international convention against the global tobacco industry, says its new initiative is aimed at fighting corruption by promoting greater transparency in the procurement and regulation of medicines.

According to WHO figures, a staggering 50 billion dollars are spent annually on pharmaceutical products – “a market so large that it is extremely vulnerable to corruption.”

“We are aware that corrupt practices take place in various forms in both high and low income countries,” says Dr Guitelle Baghdadi-Sabeti of WHO’s Department of Medicines Policy and Standards.

These corrupt practices “lead to huge amounts of money wasted that could otherwise be used to purchase much-needed medicines or recruit additional staff in health institutions.”

“In simple words,” Baghdadi-Sabeti told IPS, “corruption in the health sector kills. But thanks to the media, these practices are to a certain extent brought to light.”

However, the proposed project is helping to increase momentum, as more and more public health colleagues in ministries of health and national medicines regulatory authorities become interested in working on this challenging topic, it adds.

In late October, the WHO hosted a “strategy meeting” of about 40 stakeholders, including member states, Western donors, representatives of civil society and international organisations active in promoting good governance in the health sector.

The overall plan to fight corruption in the pharmaceutical industry comes under the mandate of WHO’s “Good Governance for Medicines” (GGM) programme.

The WHO cites a report by the Berlin-based Transparency International (TI) which has revealed that in one unnamed country, the value of two out of three medicines supplied through procurement was lost to corruption and fraud in hospitals.

And according to TI estimates, about 10 to 25 percent of public procurement spending, including in the health sector, is lost to corruption.

‘This is an aberration when you think that poor populations struggle with the double bind of a high burden of disease and low access to medical products,” says WHO’s Assistant Director-General for Health, Technology and Pharmaceuticals, Dr. Howard Zucker.

“Countries need to deal with this problem and ensure that the precious resources devoted to health are being well spent,” he adds.

According to Baghdadi-Sabeti, the WHO’s goal is to curb corruption in the public pharmaceutical sector through a three-step approach. But how these steps are applied can be adapted to suit a specific country situation.

Phase I: To assess transparency and vulnerability to corruption of key functions of national public procurement systems and of national medicines regulatory authorities;

Phase II: To develop and implement national ethical frameworks promoting good governance in the public pharmaceutical sector, through a consultative process and consensus building and;

Phase III: To socialise the national ethical framework by training national officials on good governance principles in the public pharmaceutical sector.

The WHO also points out that the economic impact of pharmaceutical expenditure in low-income countries may represent up to 50 percent of total health care costs. This means that “corrupt pharmaceutical practices are extremely detrimental to national health budgets.”

According to WHO, corruption occurs at different stages of the chain, including bribery of government officials to register medicines without required information; and government officials deliberately slowing down registration procedures to solicit payment from suppliers.

Additionally, corruption is also caused by favouritism rather than professional merit in selecting members of medicines registration committees or in recruiting regulatory staff.

Finally, corruption is also triggered by theft and embezzlement in the distribution chain, including in health care facilities.

To combat the problem, WHO plans to stimulate legislative reform that will establish laws against corruption and promote standardised systems of checks and balances to limit or prevent abuse by making publicly available the criteria, structures and procedures applied to select regulatory and procurement staff and medical products.

The WHO also says that the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) has so far approved proposals totaling about 3.5 billion dollars, with an additional 6.5 billion dollars from the Bill & Melinda Gates Foundation.

“However, corruption within the public sector risks undermining these efforts by misappropriating some of this vital aid. Ultimately, successful implementation of such funds will depend on good governance at national level,” it warns.

Last month, WHO also launched another global campaign, in collaboration with some 20 international partners, to fight the sale of counterfeit medicines.

According to a joint study by WHO, the Organisation for Economic Cooperation and Development (OECD) and the Pharmaceutical Security Institute, more than 30 percent of medicines in some areas of Latin America, Southeast Asia and sub-Saharan Africa are counterfeit.

In many of the former Soviet republics, counterfeit medicines can be as high as 20 percent while in Western industrialised nations, with strong regulatory mechanisms, counterfeits account for less than one percent of the market value.

Still, the study says that up to 50 percent of all illegal Internet sales are counterfeit.