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 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 Juan
A. Perez III, who was 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 Perez, 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 U.S.-based Center for Institutional Reform and the
Informal Sector (IRIS). "When officials enjoy more discretion, they
have greater opportunities to demand bribes."
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 region.
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 local 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 facilities 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 units 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.
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.
TABLE 1: Selected Medicine Purchases of Quezon City, 2000
|
PARTICULARS
|
QUANTITY
|
PRICE
AS PURCHASED
|
PRICE
PER AUDIT
|
DISALLOWANCE
|
|
Unit
Price
|
Total
Cost
|
Unit
Price
|
Total
Cost
|
|
Amoxicillin
Suspension 125 mgs (btl x 60 ml)
|
7,525
|
83.73
|
630,068.25
|
18.39
|
138,384.75
|
491,683.50
|
|
Mefenamic
Acid Tablet 250 mgs (box x 100s)
|
1,488
|
255.00
|
379,444.00
|
56.54
|
84,131.52
|
295,308.48
|
|
Paracetamol
Syrup 125 mgs (btl x 60 ml)
|
9,636
|
59.93
|
577,485.48
|
7.22
|
69,571.92
|
507,913.56
|
|
Cotrimoxazole Suspension 200 mgs/40 mgs (btl x 60 ml)
|
5,007
|
69.90
|
349,989.30
|
17.05
|
85,369.35
|
264,619.95
|
SOURCE: Commission on Audit
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."
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 per box of 100 tablets. "Does it affect the health
system?" she asks. "Yes, because I can sell it for P380 per box. I’m
already okay with that P100 markup. Even P50 per box is fine. So that
(should have been) 300 boxes instead of (just) 100."
TABLE 2: Price Comparison of Cainta’s Drug Purchases from January 1 to June 30, 2001
|
MEDICINE
|
UNIT
|
QUANTITY
|
PRICE PER HEALTH OFFICE
|
PRICE PER RHO IV (plus 10% allowable price variance)
|
DIFFERENCE
|
PERCENTAGE (%)
|
|
Amoxicillin
capsule, 500 mg.
|
box
|
454
|
1,100.00
|
203.50
|
896.50
|
440
|
|
Amoxicillin
suspension
|
bottle
|
2,160
|
92.00
|
17.60
|
74.40
|
421
|
|
Cotrimoxazole
tablet, 400/80 mg.
|
box
|
50
|
720.00
|
82.83
|
637.17
|
769
|
|
Salbutamol syrup
|
bottle
|
1,152
|
55.00
|
14.85
|
40.15
|
270
|
|
Salbutamol tablet, 2mg.
|
box
|
50
|
245.00
|
46.47
|
198.53
|
427
|
|
Rifampicin, 450 mg.
|
box
|
20
|
1,756.50
|
382.91
|
1,373.59
|
358
|
According
to the supplier, 30 percent of the contract went to bribes, or P256 per
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
while 15 percent goes to accountants, budget officers, and to whoever
else has to sign or approve the contract. Five percent, meanwhile,
sometimes goes to the doctor at the health center.
Under
Republic Act 9184 or 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, meanwhile,
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.
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 to 50 percent of the negotiated amount is done early on as
downpayment. 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 five-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 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 BFAD tests.
When
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
competitive bid. 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, bidded prices went down by 52 percent
through bulk procurement.
TABLE 3: Household Utilization of Health Facilities (%)
SOURCE: 2003 National Demographic and Health Survey
|
Barangay health station
|
22.4
|
|
Rural health unit/urban
health center
|
16.3
|
|
Municipal hospital
|
3.8
|
|
District hospital
|
3.4
|
|
Provincial hospital
|
4.9
|
|
Regional hospital/public
medical center
|
3.3
|
|
Private clinic
|
14.0
|
|
Private hospital
|
9.4
|
|
Other
|
2.0
|
State
auditors say the absence of a procurement plan is a red flag. Take the
case of Cainta, Rizal, which 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 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 they did this because the local
government didn’t have funds to conduct public biddings. But 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 workforce 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.