Thugs in Lab Coats

They are unapologetically ruthless, striking the most vulnerable. They spend enormous resources scouting for victims whom they eventually rip of vital organs. I don’t mean the predatory animals of Serengeti or Kruger, and neither am I yapping about the sea pirates off the east coast of Africa. I am talking about big pharmaceutical companies - the thugs in corner offices who employ guys in laboratory coats. When not seeking to steal knowledge from indigenous people, they are busy scheming on how to raid the public coffers.

In the past few months, uSpiked Investigative Team has been ploughing through gigabytes of data and related records to find out how big pharmaceutical companies have maintained their ‘friendly’ appearances while in reality they are simply healthcare hitmen.

From South Africa, Angola to India and Europe, pharmaceutical companies don’t seem to care who they crush in their mad quest to remain profitable. If creating artificial shortages of Active Pharmaceutical Ingredients or even foregoing a few contracts today is all that is required to score big money tomorrow, then why not? As long as diseases plague the earth, pharmaceutical companies will remain in business just like the food industry – people must eat.

As revealed in the accompanying report, some of the big pharmaceuticals operating in South Africa long identified government’s ‘weakest spots’, including the obligation to adequately stock health facilities with essential medicines. In some instances, the companies determine which medicines are vital and go on to create the now commonplace shortages. From Qaukeni in the Eastern Cape to Khutsong in Gauteng, no public healthcare facility is safe, and the list continues to grow uncontrollably like a eucalyptus tree. In the wake of the tumult, several well-intentioned businesses are left bruised and rejected.

Big pharma holds us captive and sets high ransoms for our freedom. The National Department of Health has failed to effectively hold these scumbags accountable, or are they simply part of the problem?

Lost in the discourse after the IMF cut South Africa’s growth to barely above 0% in July was the negative contribution to this low economic growth by a decapitated healthcare system. When the majority of citizens who rely on public systems cannot access healthcare, the implication manifests itself in the economy.

I am not an economist, but this I know: when tenders are awarded and the winning bidders fail to supply the products for whatever reasons, the impact is immeasurable. Officials at National Department of Health must be quite familiar with this fact.

Crafty suppliers exploit the state’s obligation to provide essential medicines to force upward price adjustments of their contracts shortly after they are signed.

We have consulted many trade experts over the past months, but none has provided convincing justification for price escalations of up to 31% of contract values within months of awarding of the tenders. Unfortunately for taxpayers, this is now the norm.

Department officials who have allowed the price hikes seem oblivious of corporations’ various risk mitigation measures available for large corporations, including stashes of foreign currency in offshore locations, as well as the following:

• Currency Options
• Using Exchange-Traded Funds
• Foreign Exchange – Value Tomorrow & Spots
• Foreign Exchange Forwards Contract
• Creating a hedge position on futures platforms
• Insurance policy against possible currency fluctuations

Due to the volatility associated with forex trade, most importers are hesitant to consider any additional risks. Moreso if there could be an alternative, for instance, manipulating and extorting a weak state department.

The abuse and corruption in the public procurement system is getting out of hand. When bidders for public tenders are not colluding with officials to get an upper hand, they get busy cheating the system by underquoting for their products and services, only to demand price hikes once they clinch the contracts. This, in my books, is grand-theft-tendering.

Some remedy must now be employed to permanently seal the loopholes that allow unscrupulous suppliers to get unfair advantage over competition and to steal from the public coffers. 

One suggestion that has been put forward to uSpiked, and which I have personally shared with the office of the Chief Procurement Officer at the Treasury, is to consider capping price adjustments after tenders are awarded. We call for a regulation that would cap price escalations and with harsh consequences for offenders.

As long as pharmaceutical suppliers like Dr. Reddy’s Laboratories, Biotech Laboratories, Bayer, MSD, Mylan and Triton remain ethical, surely we can banish the likes we are witnessing playing about with the public’s funds.

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