• Former State Minister and Additional Secretary have been subjected to severe criticism for establishing an Information Management System - ‘Swastha’- by spending a staggering Rs.101.8 million
• The MSMIS expansion project was in its final stages when the project was cancelled by the Health Ministry without any reasons being given to introduce the new system called Swastha
• In order to manage the medical supply to health institutions in the country, the first phase of the MSMIS project was initiated in 2015 connecting the MSD with 82 health institutions
• In order to get the Swastha project implemented, it is reported how the Ministry officials have misled the AG’s Department

The involvement of a former State Minister of Health and an Additional Secretary Ministry of Health to introduce an ‘information management system’ to manage medical supplies to health institutions in the country is controversial, higher officials of the Health Ministry claim.

In order to get this project implemented it is revealed how the Health Ministry changed the status report issued by the University of Colombo School of Computing (UCSC) in 2021. This report recommended improving the then existing system- Medical Supply Management Information System (MSMIS)- but instead it turned out that the ‘entire system’ was changed in a scandalous way.   

Former State Minister of Health Prof. Channa Jayasumana and Additional Secretary Production Supply and Regulation of Pharmaceuticals Dr. Saman Ratnayake have been subjected to severe criticism for establishing an Information Management System - ‘Swastha’- by spending a staggering Rs.101.8 million; only to develop the software and suspending the then existing MSMIS for which nearly Rs. 600 million was invested on.

“Other than for commissions, for what other purpose did Dr. Ratnayake and the then State Minister take speedy action to establish a new system when the Ministry of Health had already spent nearly Rs.600 million to establish the MSMIS project in 2015 and to expand the same in 2017,” Health Ministry officials questioned.

According to Health Ministry sources when the Auditor General’s Department raised its concerns as to why the Health Ministry wants to introduce a new system at a further cost, Prof. Jayasumana had lodged a complaint against these officers to the Auditor General (AG). “We came to know that he had levelled bribery allegations against these officers who stood firm against the irregularities that occurred during the procurement process to offer the tender to a selected bidder. Because these officers questioned the Ministry staff regarding this matter, the State Minister made this complaint with the AG. We all should hail these officers for digging into all the corrupt activities taken place in the Health Ministry which is a den of corruption,” sources said.   

However, MP Prof. Jayasumana when contacted told this newspaper that he lodged a complaint against the audit officers as they were working hand in glove with the Medical Supplies Division (MSD) to obstruct the project the Ministry intended to establish.

“I came to know that these audit officers were supporting the MSD officers who were backing efforts to retain the old system as they earned money out of this project. In order to run the old system, they worked during weekends to claim overtime. After I resigned from the Health Ministry, I did not know what action the AG took against these officers. The Health Ministry wanted to get this project implemented as the then existing MSMIS didn’t fulfill the requirements. Although we gave them time till the end of 2021 to connect the MSD with all health institutions in the country they were able to cover up only 1/3 of the institutions. The sole ownership to develop this system should be given to the Ministry of Health, but they didn’t give it to us,” Prof. Jayasumana said.   

Legal action 

Dr. Saman Ratnayake, when contacted, said that he cannot make comments regarding the matter as the company that installed the MSMIS system has informed him that they are planning to take legal action against him for defaming their company at the COPA. 

In order to manage the medical supply to health institutions in the country, the first phase of the MSMIS project was initiated in 2015 connecting the MSD with 82 health institutions. In 2017, a cabinet decision was taken to expand the system up to base hospital levels. This was to be completed by 2021 and the estimated total cost for the entire project was Rs.954 million; out of which Rs.600 million had been paid at the time the expansion project was suspended.
Under the expansion project plans were afoot to connect this system with 571 health institutions in the country. By December 31, 2021, this system had been connected to 140 institutions and another 337 institutions were to get connected to the system within a few months. 

But while the MSMIS expansion project was in its final stages the project was cancelled by the Health Ministry without giving any reasons to bring in the new system-Swastha. This project had been offered to a private company without following proper procurement guidelines and the cost of developing the software was Rs. 101.8 million.
According to Ministry sources the procurement process to offer the tender hadn’t been carried out as per government procurement guidelines. There are allegations that the procurement process for the entire project was followed targeting one software company. 

Before obtaining cabinet approval to establish the new system advertisements were published in papers calling for tenders. Meanwhile disregarding Section 2.8.1 (a) of the government procurement guidelines members who were appointed to the Technical Evaluation Committee (TEC) have been appointed to the Procurement Committee (PC) as well.

“I came to know that these audit officers were supporting the MSD officers who were backing efforts to retain the old system as they earned money out of this project. In order to run the old system, they worked during weekends to claim overtime. After I resigned from the Health Ministry, I did not know what action the AG took against these officers. The Health Ministry wanted to get this project implemented as the then existing MSMIS didn’t fulfill the requirements,”
-  Prof. Jayasumana, MP and Former State Minister of Health 

“After the technical evaluation report with their recommendations was sent by the TEC members to the PC for their observations and approvals it was noted that the name Technical Evaluation Committee had been erased and replaced by the words ‘Consultancy Procurement Committee’. Why did they erase certain wordings and inserted Consultancy Procurement Committee in the report? There is no evidence that this has gone to a PC for approval,” sources added.
According to sources, although one of the procurement conditions was to call for tenders from a software company that had at least five years of experience in the industry, surprisingly the tender had been offered to a company that do not meet that requirement. 

“In addition, in the tender specification, a special condition has been included to pave way the way for this company to send its bid stating that bidders who have a turnover of Rs.10 million are eligible to send their bids. However after offering the tender, the Health Ministry, instead of entering into an agreement with the selected bidder, has entered into a memorandum of understanding with the selected party; paying Rs. 14.6 million as an advance to develop the software,” sources alleged. 

As the Health Ministry wanted to introduce this controversial new system through the MSD a request was made to the University of Colombo’s School of Computing (UCSC) to give a status report on the existing MSMIS system.
 The UCSC through a communiqué dated September 18, 2021, has issued a 77 page report submitting their findings and the recommendations to the MSD. Later it came to light as to how the Ministry officials have added one more page to the report to twist the original recommendations made by the UCSC.

Recommendations to improve the existing system 

The original UCSC report states, ‘The shortcomings of each of the sections (estimation of annual requirements of drugs, receipts and issues of stocks, inspection and testing, distribution and logistics, storage of Drugs and warehouse management, monitoring consumption and disposal of Drugs) have been identified. General issues, technical issues and hardware issues are detailed in Chapter 5. Our recommendation is to improve the existing system by addressing these identified issues to enhance the functions of the system to make it more convenient in accessibility, user friendliness of reporting and efficiency of the system. It would make the MSD process more efficient’.

Although this status report consisted of 77 pages, an additional page to the report, numbered as page 78, was later attached to the benefit of the Health Ministry’s planned new project.
In the newly added page it says that the UCSC has made a recommendation to ‘replace the entire application and to move to a modern solution’. 

This controversial recommendation states, ‘The final recommendation of the University of Colombo- Complete reengineering of the existing system by correcting and simplifying of workflows accordingly, improving the user-friendliness of the system, other responsible entity of the supply chain under the purview of the Ministry of Health should have to study and connect to the system to obtain fully system advantages, reconsider the costing and maintenance components, obtain the complete sources code and obtain complete ownership of the total MSIMS system to the Ministry of Health and as such it is advisable to replace the entire application and move to a modern solution that address all aforementioned issues’. 
When the UCSC was contacted its officials confirmed that they had issued a 77 page report to the MSD and they cannot take any responsibility for the ‘recommendations’ given on page 78.

In order to get the Swastha project implemented, it is reported how the Ministry officials have misled the AG’s Department claiming that the UCSC has conducted a cost benefit analysis for the MSMIS expansion project and that it will cost Rs. 7,000 million. However UCSC sources confirmed with this newspaper that they were never asked to carry out any cost benefit analysis of the MSMIS expansion project as stated by the Ministry officials.

During the investigations carried out by the AG’s Department, it has observed that the software development work of the ‘Swastha’ system had not been completed even by the first quarter of 2023, and for that, 673 laptops had been purchased in February 2022, and these computers are underutilised in the Regional Health Director Offices.
“When questions were raised from the officers as to why they purchased 673 laptops when the system was incomplete, they said that if they had delayed purchasing these computers they would have had to pay more due to the currency inflation. At the time of this purchase was made how did they know that there would be an inflation in currency in future? The guarantee period for these computers has now lapsed by one and a half years,” sources added.    

“When the country faced drug shortages, the Health Ministry without considering the consumption rate, placed large stocks in an ad hoc manner. There were many instances when larger stocks reached the country and the Ministry couldn’t find storage facilities. Due to the lack of storage facilities the quality of drugs dipped,” 
-Health Ministry sources 

Meanwhile, following the public outcry regarding the inflow of substandard medicine to government hospitals and the shortage of medicinal drugs, surgical equipment and medical devices, it was revealed at a recent COPA meeting, how the Health Ministry is delaying to place orders to purchase the necessary Drugs and medical items.
Due to MSD’s arbitrary decision to increase the buffer stocks of medicinal drugs and medical devices from 25 percent to 50 percent in 2021, the stock receipt schedules have been revised constantly. As a result, the orders submitted for 2021/2022 is said to have been withheld temporary from time to time which led to the severe shortage of medicine in hospitals. This has led the hospitals to opt for local purchases which have cost the country dearly. 

It is reported that there are instances where more than 11 to 24 months have been taken to finalise procurement process to purchase these essential drugs and devices. About 80 per cent to 90 per cent of the orders submitted to State Pharmaceutical Corporation (SPC) for 2020 and 2021 had not been delivered on time. As a result, the total cost of formulary medical supplies purchased by the hospitals from the local market had been reported as Rs.940 million and Rs.852 million respectively for 2021 and 2022.

 “MSD spends more time than the planned procurement process at various levels and this has caused the delay in delivery of medical supplies. Necessary steps haven’t been taken to properly identify those causes and to minimise delays. Because the buffer stock was increased further by 25 per cent, the Ministry changed the delivery schedules and did not order the necessary stocks as they were retaining more buffer stocks. As a result, by 2022, the country faced a severe drug shortage,” sources said.

Problems with shelf life of drugs 

According to the sources, by retaining more buffer stock, there were many occasions that the shelf life of the medicinal drugs and devices have lapsed; hence the country lost a considerable amount of money. 
“When the country faced drug shortages, the Health Ministry without considering the consumption rate, placed large stocks in an ad hoc manner. There were many instances when larger stocks reached the country and the Ministry couldn’t find storage facilities. Due to the lack of storage facilities the quality of drugs dipped,” reliable Health Ministry sources said. 

Meanwhile a US$ 235 million loan assistance given under the Indian Credit Line facility to purchase pharmaceuticals from India is reported to have been underutilised even by June 2023. To procure the shortage pharmaceuticals identified as of May 13, 2022, at a value of US$ 79 million, approvals have been granted for 1,222 invoices, but only 375 invoices at a value of USD 21.7 million had been spent to purchase the necessary pharmaceutical items by the MSD which is approximately 21 per cent of the approved amount. 
As per a decision taken by the cabinet, approval that was granted to purchase medicine under the Indian Credit Line or by any other means, the MSD was granted powers to purchase the medicine under an emergency situation and the Health Ministry Emergency Procurement Committee had approved making the purchases directly. 

Under emergency situation, Emergency Procurement Committee of the Health Ministry had approved 48 medical items including drugs to be procured under direct procurement. Accordingly, National Medicines Regulatory Authority (NMRA) had issued 48 Waive of Registration (WOR) letters to private companies to import 48 pharmaceutical items in December 2022. But the NMRA had deviated from the responsibility vested on it by the Act by assigning the responsibility for the quality, safety and efficacy of the medicines to the Procurement and Technical Evaluation Committees and the Director of Medical Supplies. Out of the quality failed  medical supplies in  2020, 2021 and 2022, presence of shards of glass, visible particles, dead cockroaches, pill breakage and discolourations had been identified in many medicinal drugs that were used. These drugs were used as antibiotics and to cure allergies, asthma, cancer, heart disease, eye infections and kidney diseases. These drugs had been withdrawn and withheld after complications suffered by patients were reported. 
Out of the medical supplies issued to government hospitals in 2022, drugs, surgical and laboratory materials valued of Rs. 349 million have been withdrawn due to quality failure and further pharmaceutical items valued of Rs. 31.7 million had been temporarily withheld due to drop in quality.

“Out of the stocks that were purchased under WOR, a patient had died after receiving an injection and another patient complained of suffering serious reactions after an injection was administered at the Peradeniya Teaching Hospital. Director MSD should tell whether NMRA had informed him at the time of issuing WOR letters that the latter will not take any responsibility for the procured pharmaceuticals which they have not evaluated or whether he accepted to take the responsibility in the event any such disaster occurred,” sources said.
When contacted, MDS Director Dr. Kapila Wickremanayake promised to call back as he was attending parliament sessions. Until the article went for publication he did not send his responses to the queries posed to him by this newspaper.

Although NMRA issued WORs, as per Section 109 of NMRA Act No: 5 of 2015, any medicine or medical device shall not be manufactured or imported without registering with the Authority and obtaining a licence from the Authority. However, the Authority was given powers to issue letters of exemption from registration only in special cases such as to save a life, to prevent the spread of infectious diseases or epidemics with national interest and national security at heart.
According to the 2021 audit report issued by the National Audit Office on NMRA, they have observed, that letters of exemption for registration had been issued to the State Pharmaceutical Corporation and private institutions for 67 medicines and 140 medical equipment claiming it was due to the cancellation of registration, lack of registered suppliers, etc., which do not fall under such circumstances.

Although the audit maintains this stance, the NMRA states that it doesn’t agree with the observation made by the National Audit. According to the former, actions have been taken in terms of Section 109 of the Act with the approval of the Ministry of Health, in special cases such as to save a life or to prevent the spread of an epidemic disease, cancellation of registration, non-availability of registered suppliers, non-importation of medicines and occurring crisis situations regarding medicine in the country due to shortage of medicines in public and private sector because of factors like declining trend of registration.
However, the audit states that the entry of uncertified medicines into the country should be minimised by not issuing letters of exemption from registration only in specific cases mentioned in the Act.

Although there are no epidemics or any emergency situation in the country, the Health Ministry is accused of continuing this practice allegedly to benefit through commissions.  
Meanwhile questions have been raised as to why the Ministry of Health, the State Ministry of Health and the NMRA have so far failed to introduce a system to test the quality of samples of all medicinal drugs and devices procured despite having the ability to carry out quality inspection activities from the Pharmaceutical Laboratory of Industrial Technology Institute (ITI) built at a cost of Rs.99 million in 2019; it is an independent accredited third party testing laboratory maintained for the development of the pharmaceutical sector in Sri Lanka