Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI



Policy Coherence To Boost East Africa Pharmaceutical Industry

Intellectual Property Watch


KAMPALA, UGANDA – The pharmaceutical industry in the East African Community is approaching a higher level of production quality and manufacturing practices. To benefit the industry and increase access to medicines, stakeholders are working towards a united regulatory policy framework aimed at harmonising industrial, health and regulatory policies. 

“The main objective of the industrial policy is to develop a viable local industry which is competitive, reliable, innovative, productive and responsible,” said Ermias Biadgleng, legal affairs officer, United Nations Conference on Trade and Development (UNCTAD). “While the main aim of the health policy is to promote health for all through universal health coverage in terms of prevention, treatment and rehabilitation.”

Biadleng was moderating a panel of experts attending a regional pharmaceutical workshop on policy coherence for local production of pharmaceutical products and other means to improve access to medicine and medical products in the East African Community, held in Kampala, Uganda from 21-23 September. The workshop was organised by UNCTAD, Deutsche Gesellschaftfür Internationale Zusammenarbeit (GIZ) and the East African Community (EAC) Secretariat.

EAC has so far adopted the Regional Pharmaceutical Manufacturing Plan of Action, 2012-2016, the Regional Intellectual Property Policy on the Utilisation of Public Health-Related WTO-TRIPS Flexibilities and the Approximation of National Intellectual Property Legislation, 2013. TRIPS is the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights, which contains flexibilities for developing countries in enforcing the agreement.

“The East African Community Regional Pharmaceutical Manufacturing Plan of Action, 2012-2016, (RPMPOA) is a regional roadmap to guide the East African Community towards evolving an efficient regional pharmaceutical manufacturing industry that can supply national, regional and international markets with safe, efficacious and quality medicines,” said Jennifer Gache, Senior Industrial Engineer, EAC Secretariat.

The RPMPOA is divided into six strategic intervention pillars, which if effectively implemented are expected to lead to a strong local pharmaceutical industry. Implementation of RPMPOA is part of the EAC Industrialization Policy and Strategy, which has prioritized the development of regional pharmaceutical industry among regional industries through collective efforts of the EAC partner states.

According to Thomas Walter, “The implementation of RPMPOA has been much more successful than anticipated. It will be revised next year for the next five years. The next action plan will have a bigger scope, focusing on those areas which have been a bit neglected in the ongoing plan.”

Walter is the senior adviser Industrialization, TRIPS and Pharmaceutical Sector Promotion, EAC-GIZ Programme on Regional Integration.

“We have not had any significant utilization of the TRIPS flexibilities neither by companies nor by governments in the EAC,” said Thomas. “The reasons are complex. One of the main reason companies are not utilizing TRIPS is because all the pharmaceutical products produced locally are generics, and production of generic medicines do not require utilization of TRIPS flexibilities. This situation may change in future as we are moving to new treatment regimes.”

Utilization of TRIPS flexibilities towards improved local production of pharmaceuticals is pillar 5 of the RPMPOA.

World Health Organisation describes a generic drug as “a pharmaceutical product, usually intended to be interchangeable with an innovator product that is manufactured without a licence from the innovator company and marketed after the expiry date of the patent or other exclusive rights.”

In a presentation from the private sector perspective titled, The State Of EAC Internal Market And ECT: Implications For Drug Policy (pdf), Pierre Claver Niyonizigiye from Siphar Pharmaceutical Manufacturers, in Burundi, revealed that according to 2014 RPMPOA estimations, the market share of locally produced pharmaceutical drugs per country is: Kenya 30% of the estimated 558 USD million market, Tanzania 31% of the estimated 350 million USD market, Uganda 5% of the 270 million USD market, Rwanda 0.00% of the 75 million USD market, and Burundi 3% of the 75 million USD market.

The region has about 65 pharmaceutical companies, with Kenya having 42 of the companies.

With the enactment of the EAC Common Markets Protocol, the pharmaceutical industry now has a regional market of over 143.5 million people. Trade between EAC partner states in pharmaceutical products in 2011 was estimated at USD 264 million. This situation presents both opportunities and challenges to the pharmaceutical sector in the region given that only 30 percent of the medicines demand is met through local production.

According to Thomas, “the main cause for this is lack of access to a competitive market. Once the manufacturers have access to a bigger market, not only the national public procurement but also the international procurement agency, the utilized capacity will shoot up.”

Article 35, of the Common Market Protocol calls on partner states not to discriminate against suppliers, products or services originating from other partner states, for purposes of achieving the benefits of free competition in the field of public procurement.

“Many of the procurement laws of the partner states have not adapted to the regulation of the common market protocol even though the heads of state have committed to this protocol,” Thomas said. “It’s up to the heads of government to enforce the required approximation of the legal framework in order to actually create this market. National procurement laws and regional common market still have elements of incoherence which need to be eliminated.”

The EAC governments are the largest clients for the region’s local pharmaceutical products. The preferred method of procurement is international competitive bidding. Other methods used are restricted procurement, direct purchase and local tenders. The source of funds for this procurement comes from revolving funds, government funding from the central government and complementary financing, and grants from Global Fund for AIDS, Tuberculosis and Malaria and development partners.

To assist the manufacturers develop their capacity, EAC governments have provided a number of policy incentives. These include: tax and customs exemption, price control, preferential procurement and import classification.

In the EAC treaty, Chapter 21, Article 118 provides for developing a common regional medicines policy, which includes establishment of quality control capacities, good procurement practices and harmonisation of drug registration procedures.


Regional economic communities can borrow from each other aspects of regulatory framework. The EAC is borrowing from the Ghana model, whose government has established a very supportive system to develop the local pharmaceutical industry over the last 20 years.

Kwabena Asante-Offie represented the Pharmaceutical Manufacturers Association of Ghana at the conference. “In East Africa,” he said in a panel discussion, “the industry sector is leading the development of the pharmaceutical sector. While in West Africa, it was the ministry of health that led the development of a robust pharmaceutical industry”. This is because the industry started more as a public health concern rather than an industrial development strategy.

Other Policies

Other key policy and regulatory initiatives of EAC are at the working stage. These include an EAC Anti-Counterfeit Bill (2013) which is being modelled into the Competition Act, the proposed African Community Medicines and Food Safety Commission Bill, the Medicines Registration Harmonization initiative, launched in 2012, and the procurement of essential medicines and health supplies.

Ghana should repay $3.8 million to Global Fund in faulty condom deal

Lauren Gelfand
December 11,  2014




Tender for more than 120 million condoms was riddled with fraud — and the goods were bad

Ghana’s Ministry of Health spent some $3.8 million of a Global Fund grant on faulty condoms procured in a tender that was riddled with fraud, the Office of the Inspector General has found. In addition to developing a plan to recover the funds, the Secretariat will be placing all purchasing for Ghana under the pooled procurement mechanism and requiring greater oversight by the local fund agent.

The investigation report published on 11 December confirmed that the procurement of 128 million male condoms purchased for the Ghana Health Service between 2010 and 2013 were “substandard, over-priced and bought through a non-competitive tender process involving forged documents”.

The tendering process was flawed from the outset, according to the report. Advertised only locally for a very short time period, the bid was whittled down to a single source with the immediate disqualification of two other bidders. An evaluation by the Ghana Central Tender Board was not reviewed, making the process decidedly untransparent.

Only a month after the bid was approved, the MoH agreed to a 35% per unit cost increase — an increase worth nearly $1 million over what had been a fixed-price contract that was ostensibly not subject to adjustments. According to the investigation, there is no evidence that the supplier, Global Unilink, provided the Ghana Health Service with documentation including market-pricing data to justify the price increase.

Moreover, the tender was predicated on the provision of falsified documents. Global Unilink provided misleading information related to where the condoms were manufactured, including a falsified manufacturer’s certificates that declared the condom manufacturer was WHO-certified.

This led to the other major problem: the condoms were of decidedly inferior quality. The investigation confirmed that the supplier did not source the product from a WHO-certified manufacturer, as it had been contracted to do. The purchased prophylactics did not meet WHO specifications or standards, even though the samples submitted during the tender for quality tests did come from a WHO-certified manufacturer. What this means is that quality condoms were provided for testing and low-quality ones supplied for use.

These quality issues came to light when end users reported that they burst too easily, did not contain enough lubricant and, according to one Ghanaian media report, were not big enough.

Why the Ghana Health Service failed to continue to carry out quality control tests on the Be Safe condoms remains to be seen; going forward, Aidspan understands from the Global Fund Secretariat: “the Secretariat will provide the Ghana Food and Drug Authority with advance notice of the dispatch of critical health products and commodities procured for Global Fund programs from whatever source. The LFA will verify the quality testing has been conducted before distribution.”

Other safeguards have been put in place, specifically related to the procurement of health products and commodities for Ghana. Since 2012, Ghana has been enrolled in the pooled procurement mechanism and global drug facility, meaning that ARVs, HIV test kits, drugs and diagnostic kits for malaria and TB drugs are all now procured by the Global Fund on Ghana’s behalf. The MoH is now only responsible for the procurement of products such as gloves and cotton swabs.

The Secretariat should pursue the recovery of the full $3.84 million spent on the faulty condoms — funds that Ghana itself has since 2013 been seeking from the supplier, Global Unilink, according to Ghanaian media reports.

A majority of the faulty condoms remain undistributed, stored in an MoH warehouse that, itself, has been subject to major scrutiny for the poor quality and conditions. In one Ghanaian media report, the facility was described as having a leaky roof and poor temperature controls — less than ideal conditions even at the best of times. The condoms are to be withdrawn and destroyed by the MoH and Ghana Health Service in line with “international procedural and environmental regulations” — whether this will happen is unclear.

Ghana has a generalized HIV prevalence rate of under 2% but within certain key populations, including commercial sex workers and men who have sex with men, the rate is considerably higher. Results from a demographic and health survey supported by the Global Fund should be published in 2015: the best way to determine whether there has been an increase in infection rates. It will not, however, be possible, to make any causatory inference that a spike in infections is due to the use of these problematic prophylactics.

Procurement irregularities and over-pricing in Madagascar

by David Garmaise

January 8, 2014

Suppliers alleged to have colluded on bids

An investigation by the Office of the Inspector General (OIG) into procurement contracts for five malaria grants to Madagascar has found evidence of non-compliant expenditures, over-priced goods and collusion among suppliers. A report on the investigation was released on 3 January.

Procurement activities from four Round 9 grants under investigation involved two government and two non-government bodies: the central support office for health sector projects (UGP: Unité de Gestion des Projets d’Appui au Secteur de Santé ) and the central governments health products procurement office (SALAMA: Centre d’Achats de Médicaments et de Matériel Médical); Pact and the Madagascar intercooperation association (AIM: Association Intercoopération Madagascar). Procurement activities under a Round 7 grant were also investigated, with UGP as the PR.

By April 2012, when the investigation was launched, some $70.8 million had been disbursed over the five grants; expenditures of $12.2 million were examined.

The investigation has implicated three of the four PRs in non-compliant expenditures worth some $1.1 million, including $462,670 in over-pricing; only AIM was exonerated for any suspect spending.

Table: Summary of non-compliant expenditures and amounts of over-pricing identified by the OIG

PR Grant

Disbursed as of 30 April 2012

Reviewed by the OIG

Amount of non-compliant expenditures

Of which, amount of over-pricing

UGP MDG-910-G17-M


$6.0 m.





Pact MDG-910-G19-M


$1.4 m.





$ 2.3 m.



AIM MDG-910-G18-M


$2.5 m.





$12.2 m.




With respect to the grants administered by UGP, the OIG uncovered evidence that groups of vendors colluded and submitted bids for procurement contracts that had not been independently prepared. In a restricted national tender launched by UGP in 2010 for supplies and equipment for an indoor residual spraying campaign, the OIG found that contracts worth $640,146 were compromised; of this amount, slightly more than half was charged at above-market rates.

Such practices needed the collusion of a procurement unit official, according to the OIG.

The grant administered by Pact required the PR to use SALAMA as a procurement agent. During 2011–2012, Pact entered into three contracts with SALAMA. The OIG found that two of the contracts – $270,643 for laboratory equipment and $29,029 for rapid diagnostic tests – were overpriced by $74,464 in total. The OIG said that Pact exercised insufficient oversight of the contracting process with SALAMA. However, the OIG acknowledged that Pact undertook corrective measures shortly after the issue was raised, and managed to recover some of the excess.

With respect to the grant for which SALAMA was PR, the OIG said that in January 2011, a contract was awarded for $17,068 to IDA Foundation to supply an anti-malarial medicine manufactured by REMEDICA, a supplier approved by the World Health Organization.

However, the medicines actually delivered by IDA and distributed by SALAMA were produced by another manufacturer, Guilin Pharmaceuticals, which was not an approved supplier, resulting in an overcharge of roughly $5,000.  IDA has since committed to refund the excess charges.

The OIG found fault with SALAMA, IDA and the local fund agent (LFA) for the fact that the wrong drugs were distributed to patients.

An annex to the report included detailed comments from the UGP, Pact and SALAMA on an earlier draft of the report. These comments prompted changes to the final report.

In an attached letter, the Global Fund’s executive director, Mark Dybul, said that the Secretariat has moved to respond to the findings, including limiting the scope of the grants to essential malaria activities; suspending the signing of Phase 2 of the UGP NSA grant; moving to 100% verification by the LFA; and requiring pooled procurement for most commodities. SALAMA has also been removed as a PR, and its grant is in closure. A recovery plan should be in place by March 2014, Dybul added.

Separately, the OIG said it had been advised of the findings of a forensic audit commissioned by Pact and conducted on one of Pact’s sub-recipients. The OIG said that the audit identified procurement irregularities, which will be followed-up directly by the Global Fund Secretariat.

The report of the OIG investigation can be found on the Global Fund website here.

South Africa’s Department of Health to clamp down on tender system

Political Analysis

October 18th, 2012

Health Minister Aaron Motsoaledi has stated that tender-based procurement for the Department of Health needs to be reduced. It is his contention that these tenders are destroying the public health care system, and proposes that the majority of work should be carried out in-house. It remains to be seen whether or not the tender process will be separated from the healthcare system, and what repercussions might follow such a decision.

South Africa spends relatively more on health care than many other countries, considerably more than the expenditure recommended by the World Health Organization, yet health services are poor, and patient care is on the decline. With the discrepancy between healthcare spending and results being so significant, it is clear that the Department of Health is not performing adequately.

Motsoaledi claims the problem can be attributed to uncontrolled commercialism; the procurement of even basic essentials is deferred to the tender process, drawing out transaction periods and inflating prices at both the private and public level; Discovery Health and various other medical aid agencies have been forced to hike premiums and reduce coverage in efforts to keep up with inflated healthcare costs in the country. According to the annual budget, the Department of Health spent R6 billion of the R121 billion on security companies, further highlighting the peculiarity of the extant procurement process and the transactions that it foresees.

Motsoaledi proposes to cut costs by implementing an employment system that calls for contracts directly between the Department of Health and prospective employees, instead of contracting jobs through tenders to private contractors. The system will include staff training, however, which will itself require contracting to external bodies; without drastic re-imagining, the healthcare system cannot operate without some form of tender procurement being issued.

By internalising skills and resources, and reducing the concentration of tenders in the procurement process, the Department of Health will reap greater returns on transactions characterised by faster turnaround and lower margins for non-value-adding services, thus increasing the yield of productivity per Rand, which will in turn lead to superior healthcare and lower rates across both the private and public markets.

(For further analysis and tailored research, please contact our analysts,

Swaziland: Nurses join public sector strike

Swaziland Media

By Richard Rodney

July 17th, 2012

Nurses are to join teachers and civil servants in the growing public sector strike in Swaziland.
They will strike from tomorrow (18 July 2012) in pursuit of a 4.5 percent salary increase.
Teachers have been on indefinite strike for nearly a month and civil servants joined them last week.
Members of the Swaziland Democratic Nurses Union (SWADNU) are expected to strike for two days and then review the situation.
Swaziland has been in turmoil in recent weeks as police on several occasions attacked peacefully protesting strikers, using rubber bullets, teargas and batons. The rough handling by the police has been condemned by trade unionists across the world.
Nurses said they would to join the strike, but they are undecided about whether to hold a public protest. Some said they feared attacks from police if they did so.

TriWest on Brink as Contract Loss Shows Peril of Government Bets

Bloomberg Businessweek

Logo of TRICARE, the health care plan for the ...
Logo of TRICARE, the health care plan for the United States military. (Photo credit: Wikipedia)

News From Bloomberg

By Kathleen Miller and Danielle Ivory

March 21, 2012

TriWest Healthcare Alliance Corp. (1893Q) and its 1,800 employees may learn today whether the company has a chance to survive.

The U.S. military’s health program, called Tricare, stunned company executives last week when it announced a $20.5 billion contract would go to UnitedHealth Group Inc. (UNH), the nation’s largest health insurer by revenue. UnitedHealth will manage care for active-duty military, retirees and their families in 21 states, mostly in the West, starting April 1, 2013.

The work has been TriWest’s lifeline for 16 years, generating more than $20 billion in awards for the closely held company since fiscal 2000, according to data compiled by Bloomberg Government. The probable loss of that revenue stream holds a lesson for businesses dependent on federal contracts as the government cuts back, said Charles Tiefer, a former member of the Commission on Wartime Contracting.

Contractors may feel that they have hit the jackpot when they get a lucrative defense contract, but their feast can turn into a famine,” Tiefer, a professor at the University of Baltimore Law School, said in an interview…Read more.

To contact the reporter on this story: Kathleen Miller in Washington at

To contact the editor responsible for this story: Stephanie Stoughton at

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