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By Avigail M. Olarte and Yvonne T. Chua, Philippine
Center for Investigative Journalism
First of Three Parts
THE young mother was frantic. A seven-month-old
baby was burning with fever in her arms, barely able to breathe. The
doctor at the rural health unit quickly attended to the child, who
was suffering from serious respiratory tract infection. But she had
no medicine to give the baby: her supply of Ventolin or salbutamol,
which would have given the infant instant relief, had run out.
The doctor, who ministers to the needs of
residents of a poor municipality in Bulacan, could only wring her
hands. It took two weeks before the poor mother could scrape
together P50 to buy the drug. Fortunately, the baby survived,
although it had to suffer the fever and cough longer than it should
have.
The doctor sees 90 to 100 patients a week and
the medicines the local government buys for her clinic always run
out. Worse, she says, the drugs she is supplied with are overpriced
by sometimes over 100 percent, with the difference lining the
pockets of local officials.
Since the Local Government Code devolved public
health centers and other health programs and facilities from the
Department of Health (DOH) to local government units in 1993, local
officials have had more discretion on how health budgets should be
spent. While there are some bright spots, evidence suggests that a
culture of waste, corruption and patronage pervades health care in
many local governments.
Doctors, suppliers and local officials and
employees interviewed for this report estimate that kickbacks from
the purchase of drugs—also known as standard operating procedures
(SOPs), rebates, internal arrangements and “love gifts”—given
to mayors, governors and other local officials range from 10 percent
to 70 percent of the contract price.
The result: a system that can barely answer the
needs of the poorest one-third of the population that relies on
local-government-funded health-care centers.
“Before the devolution, all the corruption was
happening in Manila,” says Ped de la Cruz, a DOH official when
Juan Flavier was still secretary. Transferring resources to local
governments should have directly helped communities, he says, but in
far too many instances, corruption has thrived instead. Devolution,
says de la Cruz, seems to have resulted only in “democratizing
corruption.”
“Increases in discretion enjoyed by local
governments lead to increase in local-level corruption,” says a
2000 study on decentralization in the Philippines by the US-based
Center for Institutional Reform and the Informal Sector (IRIS).
“When officials enjoy more discretion, they have greater
opportunities to demand bribes.”
The failure of devolution
Decentralization was expected to reduce
corruption, especially in drug procurement. Yet for the most part,
such practices as overpricing, rigged biddings, short and ghost
deliveries and the purchase of substandard drugs remain pervasive.
These problems are demoralizing the ranks of
doctors assigned to the more than 1,600 rural health units (RHUs)
and urban health centers. Too often, these doctors find themselves
battling with local officials who divert precious resources to
corruption and patronage. “The doctors are leaving,” says a
municipal health officer from the Calabarzon area (Cavite-Laguna-Batangas-Rizal-Quezon).
Problems have dogged the devolution of health
services from the start. Unprepared local governments had trouble
paying for the salaries and benefits of about 70,000 health workers
and to run health centers and hospitals now under their
jurisdiction. The problem persists, but the national government and
international agencies have come to their aid.
All these imperil the delivery of
frontline-health services. The 2003 National Demographic and Health
Survey found more Filipino households visiting public health centers
than private clinics and hospitals. Barangay health stations, which
are supervised by the RHUs and urban health centers, had the most
clients, followed by the RHUs and urban health centers themselves.
A survey done by the Social Weather Stations for
the World Bank in 2001 also shows the country’s poorest 30 percent
seeking help mostly from the local health centers for their aches
and pains.
These health centers are the poor’s primary
source of medicines as well. Yet many local governments are
allotting less money for health services, choosing instead to spend
tax money on fancy municipal buildings, basketball courts and
waiting sheds.
Corruption at rural-health level
Moreover, many local officials see health as
another source of illicit income and demand hefty shares from
suppliers of drugs and hospital equipment. Of the nearly P1 billion
allotted in 2003 for the maintenance and other expenses of all rural
health units, P100 million to P700 million could have been lost to
graft.
Such amount could have been used to purchase at
least 100 million pieces of 500 mg tablets of paracetamol, which is
prescribed for simple fevers and aches, or more than 62,000 tablets
per health unit.
Today most RHUs and urban health centers have
little or no medicine for their patients. Too often, the
deliveries—if they were made at all—fall short of what had been
promised, in both quality and quantity. A municipal health officer
in Laguna recalls an instance when she issued a prescription, only
to be told by her staff that their RHU had run out of the needed
medicine. Yet the doctor knew that two weeks before, there had been
a delivery of supplies.
“I went to the supply closet, and there was
indeed no medicine,” she says. “So, I went to the police [and
told them], ‘Papuntahin mo ‘yung ahente dito at ihatid ang gamot
ko kung ayaw niyang maghalo ang balat sa tinalupan [Get that agent
to deliver my medicine if he doesn’t want the sh__ to hit the
fan]!’”
The doctor who had no medicine to give to the
feverish baby recalls that in the past, she would order 10 boxes of
assorted medicines every two months. But there came a time when only
four boxes arrived at her office. When the confused doctor was asked
to sign the payment voucher, she noticed that the prices had been
“adjusted.”
The doctor says she had copied onto the
requisition voucher the prices of the medicines based on the
handwritten list given by the medical representative. Later, she saw
a typewritten copy of that list with figures twice the actual price.
This served as the basis of the payment voucher. Since then, the
doctor has been leaving the price column blank, reasoning,
“They’ll just change it anyway.”
Overpricing most common fraud
Heidi Mendoza, auditor at the Commission on
Audit (COA), says overpricing of supplies is the most common form of
fraud. “One city mayor told an auditor casually that where price
difference falls within the range of 50 percent to 100 percent, that
is not overpricing,” Mendoza says. Drugs can be overpriced by as
much as 700 percent, COA records show.
A drug distributor admits having sold to a local
government in northern Luzon the antibiotic amoxicillin for three
times more than its actual price of P280 a box of 100 tablets.
“Does it affect the health system?” she asks. “Yes, because I
can sell it for P380 a box. I’m OK with that P100 markup. Even P50
a box is fine. So that [should have been] 300 boxes instead of
[just] 100.”
According to the supplier, 30 percent of the
contract went to bribes, or P256 a box. But she says the share of
the contract price going to “love gifts” now starts from 50
percent up. Other suppliers and health officers, meanwhile, say that
30 percent of the contract amount goes to the mayor; 15 percent goes
to accountants, budget officers and to whoever else has to sign or
approve the contract. Five percent sometimes goes to the doctor at
the health center.
Under Republic Act 9184, the Government
Procurement Reform Act, all government purchases must go through
competitive bidding to ensure the best quality at the least cost.
The Local Government Code says that each town or city is supposed to
have a Committee on Awards composed of the mayor, treasurer,
accountant, budget officer, general services officer and the
department head, which in cases involving medical supplies is the
RHU or urban health center doctor.
But Mendoza says the procuring official and the
bidder always find “creative” ways to avoid public bidding.
There are also instances where a winning contract is almost already
decided even before the conduct of actual bidding.
Bagging the supply contract
Suppliers say members of the awards committee
are the key people in “bagging” a contract. The amoxicillin
supplier says the contract is practically guaranteed as a done deal
once one has settled the “sharing” of the spoils. According to
the supplier, the doctors are the starting point: “If you can make
them your friends, then you can have [the contract].”
“When a doctor doesn’t cooperate, there will
be no medicines,” another supplier explains. “The budget will be
realigned. Bubuwisitin nila yung doctor [They will pester the
doctor].”
The next people to talk to would be the mayors,
treasurers or general services officers to negotiate the contract
and settle the “love gifts.”
Delivery of 20 percent to 50 percent of the
negotiated amount is done early on as down payment. The rest of the
money comes after the collection to guarantee the processing of the
papers. The amoxicillin supplier says mayors prefer cash, since
checks leave a trail.
To make it appear as if a bidding had taken
place, the amoxicillin supplier says she borrows her friends’
company names and registration papers, promising them a 5-percent
share later on, and adds two other fictitious competitors for good
measure.
The supplier says she sometimes has to
“adjust” some more to meet the demands of increasingly greedy
local officials while ensuring she still gets a profit. Such
“adjustments” could mean substandard drugs, confesses the
supplier. Sometimes, wracked with guilt, she tells officials that a
higher kickback would mean medicine of lesser quality.
One doctor says she took one of the medicines
available at her health center when she was having stomach trouble.
The drug didn’t work, she says, making her worry about her
patients. She laments, “What can I do? That’s the kind of drugs
they deliver.”
This doesn’t happen only in the provinces. In
2000 the Quezon City government bought some P8-million worth of
medicines in three batches. Of these, medicines totaling P1.8
million—including 6,028 bottles of multivitamins with lysine syrup
and 740 boxes of amoxicillin capsules—failed the Bureau of Food
and Drugs (BFAD) tests conducted as part of a special audit. Despite
the BFAD finding, the local government still paid the contractor, La
Croesus Pharma Inc., in full. The supplier did pull out questionable
medicines, but the replacements it delivered again failed the BFAD
tests.
When the COA verified the prices of the
medicines that passed the tests, it also found these to have been
overpriced by P4.3 million. City officials, however, maintained that
La Croesus Pharma’s bid was the lowest. The COA argued that the
city should not have limited its evaluation to the submitted bids,
but could have compared them with prevailing market prices. Three
hospitals in Quezon City, in fact, were able to purchase similar
medicines at lower prices during the same year.
Some provinces have also shown that a systematic
pooled procurement can drastically bring down costs. In Pangasinan,
which is one of the pioneer provinces that have enforced the Health
Sector Reform Agenda (HSRA) of the health department, bid prices
went down by 52 percent through bulk procurement.
State auditors say the absence of a procurement
plan is a red flag.
The Cainta experience
Cainta, Rizal, which the COA says circumvented
rules six years ago because it had no annual procurement program for
medicines. The Local Government Code, which then governed the system
of procurement, requires that projects be in line with the
procurement program of an office before any purchase is made, except
in cases of emergency.
According to the COA, Cainta avoided public
bidding for medicines from January 1999 to October 2000 by
purchasing in separate and smaller batches, each below P60,000. At
one point, Cainta’s local health office made up to 11 purchases in
just a month’s time.
Cainta’s then-municipal health officer said
she did this because the local government didn’t have funds to
conduct public biddings. But the COA noted that the frequency of the
purchases indicated that Cainta did not suffer from any financial
lack. The absence of specifics on the purchased medicines made the
transactions even more questionable.
As a rule, before any procurement takes place,
the doctor prepares a requisition voucher on which he or she lists
the medicines, specifying the quantity and cost for each drug. In
Cainta’s case, the municipal health officer provided no such thing
although she was obviously privy to the purchase.
In some instances, however, the health-center
doctor could be clueless about the local government’s procurement
of medical supplies. A doctor in the Visayas says some local
governments there just make the heads of health units sign the
payment vouchers. Many of the doctors sign just so their RHUs can
have supplies. But there are those who refuse—and later face the
wrath of local officials.
One young doctor left his post at an RHU in
Mindanao after the fuming mayor jabbed a finger at him at the town
hall and berated him as the entire municipal work force looked on.
The doctor—the town’s first in more than a decade—was almost
reduced to tears, and all because he had refused to sign the
delivery receipt of medicines bought by the mayor’s office. The
doctor said the medicines had been overpriced by more than 100
percent. He knew the real price because he had met the supplier just
weeks before.
After his public humiliation, the doctor, then
just 26, packed his bags and left the town. Corruption, he says, has
mired that fifth-class municipality in poverty. The doctor has sworn
never to be a community physician again.
(To be continued)
Part 2 |
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