You're reading: Patients suffer as reforms sabotaged by profiteers

It appears corrupt officials in Ukraine don’t mind bilking hospital patients, even if they’re dying of cancer.

Crown Agents, a British aid organization, was tasked with purchasing cancer drugs on behalf of the government in November 2015. But months into the project, the nongovernmental organization faced a rebellion from its own client, the Ukrainian state.

After a delay in a drug shipment led to months of media stories painting the United Kingdom organization as a murderer of cancer patients and calls from deputies to ban it from pharmaceutical procurement, Prime Minister Volodymyr Groysman intervened in mid-September to defuse the row.

At its root, the dispute was over who decides how state budget funds get spent — state officials or the private, independent group.

Christine Jackson, a Crown Agents senior procurement consultant, said that the Ministry of Health signed a contract to give the organizaiton control over spending for cancer drug procurement.

The effort is part of a larger push to eliminate corruption from Ukrainian pharmaceutical procurement, first by transferring control to foreign organizations, and then establishing a Ukrainian government agency for procurement that would be separate and independent of the Health Ministry.

According to Acting Health Minister Ulana Suprun, Crown Agents came under attack because it was seen as the weakest link among other aid organizations working on pharmaceutical procurement.

The other two entities – the United Nations Development Program and the United Nations Children’s Fund – have worldwide reputations that Crown Agents lacks.

“It’s very difficult to attack a UN organization,” said Suprun. “The oncology portion was chosen to be attacked so as to make the entire change in the way we’re doing national procurement fail, which would then make creating an independent procurement agency fail.”

The Kyiv Post could not find anyone to talk about who was behind the rebellion.

But the implication is that officials who used to be in charge of procurement, and companies and politicians with an interest in the business, were out to thwart anti-graft reform at the Health Ministry by sabotaging Crown Agents’ operations.

Tumorous legacy

Crown Agent’s work has already had positive consequences.

According to National Cancer Institute Director Olena Kolesnyk, the organization managed to achieve “significantly lower” drug prices – up to two times cheaper in some cases.

For Kolesnyk, this help could not have come at a better time.

The surgeon was elected to lead Ukraine’s Cancer Institute in April 2015 after reports of mass corruption at the cancer hospital. Since taking office, Kolesnyk said, she had cut food costs by up to 45 percent as part of the ProZorro electronic procurement pilot project – the institute’s supplies procurement was one of the first to use the internet-based transparency initiative.

Kolesnyk added that the savings had allowed the hospital to feed its patients meat and fish for the first time in years.

Given that patients are supposed to be guaranteed free access to state-purchased medicine under Ukrainian law, Kolesnyk has made the hospital’s pharmaceutical inventory available on the institute’s website, updated weekly. This prevents doctors from extorting bribes from patients by telling them that a given medication is unavailable, and that only a payment to the physician will make it obtainable.

“The doctors can no longer resell drugs, or take them away, or tell the patients that the drugs aren’t there,” said Kolesnyk. “That process has been destroyed.”

But Kolesnyk added that the British organization had wanted to procure drugs that were new to the Ukrainian market, adding administrative problems.

The Soviet Union left highly polluting heavy industry scattered around Ukraine. When combined with nonexistent environmental regulations and the Chornobyl disaster, which left a chunk of the country irradiated, the frequency of cancer has skyrocketed. None of this is helped by high smoking rates and a diet involving lots of alcohol and fatty foods.

But according to Kolesnyk, the real problem is more that patients die at a higher rate in Ukraine due to a lack of appropriate care.

“The possibility of receiving full treatment in Ukraine is unfortunately lower than abroad,” Kolesnyk said.

Timeline of a scandal: Crown Agents, a UK quasi-governmental aid organization, was embroiled in a row over the procurement of cancer drugs for Ukraine over the summer after a sub-contractor refused to pay taxes on imported drugs. It took the intervention of Prime Minister Volodymyr Groysman to resolve the problem.

Timeline of a scandal: Crown Agents, a UK quasi-governmental aid organization, was embroiled in a row over the procurement of cancer drugs for Ukraine over the summer after a sub-contractor refused to pay taxes on imported drugs. It took the intervention of Prime Minister Volodymyr Groysman to resolve the problem. (Stella Shabliovska)

Crown under attack

Crown Agents was hired to oversee the procurement of cancer drugs and equipment for both children and adults. To that end, the organization can boast results of 25 percent across the board savings on cancer drug procurement since it began operating.

But according to both Crown Agents and Suprun, the organization has been blocked by forces within the Ukrainian government since its contract period began.

Crown Agents cannot buy medicine until the Health Ministry approves a request. Government officials dragged their feet on this, Jackson said, partly because the ministry was understaffed and lacked a minister from April, when Prime Minister Volodymyr Groysman started to form the government, until Suprun’s appointment in late July.

“Shortly after we started, (former Health Minister Oleksandr) Kvitashvili submitted his resignation,” said Crown Agents Ukraine Representative Tetiana Korotchenko. “The ministry was actually without any top management for some time.”

A number of minor issues with Crown Agents’ operations in Ukraine appeared to irritate the organization’s Ukrainian counterparts, Jackson said. Chief among these issues was Crown Agents’ use of Ukrainian distributors to import drugs.

While Crown Agents itself had received an exemption from the government from having to pay customs duties, it opted to sub-contract the import of the drugs it procured to private distributors – who ended up having to pay taxes on the shipments.

Ludmila-Farm, a distributor that had been “vocal” on the issue, according to Jackson, took matters to a head in June when the company refused to pay taxes on a $5.1 million cancer drug shipment.

“To use this particular program with oncology drugs maybe is a bit unfair to people,” Jackson said. “Immediately when the situation occurred, we informed the ministry, saying there was a need for their ruling.”

According to Suprun, the government offered to transfer the drugs to a different warehouse where different customs regulations applied, but the distributor refused, saying it didn’t believe that the tax service would back down.
Ludmila-Farm’s intransigence on the issue led to a summer-long media circus in which Crown Agents was painted as a callous murderer of Ukrainian cancer patients.

Ludmila-Farm has been on the drug distributing market in Ukraine for over a decade. In July 2012, Ukrainska Pravda reported that the company was awarded an Hr 28.6 million ($1.1 million) contract as part of the same tender in which then-Health Minister Raisa Bohatyreva’s son and a friend of former Prime Minister Mykola Azarov received Hr 40 million ($1.5 million) in contracts.

Ludmila-Farm did not reply to a request for comment.

National Cancer Institute Director Olena Kolesnyk in her Kyiv office on Oct. 19. Though Kolesnyk has succeeded in cutting costs, around one third of patients at the institute still need to pay for their own equipment and medicine. (Kostyantyn Chernichkin)

National Cancer Institute Director Olena Kolesnyk in her Kyiv office on Oct. 19. Though Kolesnyk has succeeded in cutting costs, around one third of patients at the institute still need to pay for their own equipment and medicine. (Kostyantyn Chernichkin)

Exerting influence

On July 28, Rada health committee chairwoman Olha Bogomolets issued a press release calling on Crown Agents to “take responsibility” for delays in medicine delivery. Bohomolets later came out with a bill that would have removed the British organization from the project.

“We’ve met them, we’ve given them the facts, they’ve made an accusation and we’ve said that’s not true, but it makes no difference whatsoever,” Jackson said.

According to Korotchenko, some parliamentarians may have been more worried about losing certain levers of influence on the Health Ministry than having any specific financial interest in procurement.

“It’s just an attempt to intervene in the operational work of the ministries,” Korotchenko said. “Politicians (were) exerting the power to be allowed to intervene.”

Bohomolets did not reply to requests for comment.

The delay continued for 90 days, until September, when a meeting was convened between all stakeholders, including Prime Minister Volodymyr Groysman, allowing all parties to “duke it out,” Suprun said.

At the same time, Ludmila-Farm continued to deliver other shipments of drugs, making the delay in the supply of cancer drugs – and the related press and political furor – seem more like an orchestrated plot to subvert reform, Suprun said. She said Crown Agents had been “the fall guy” in an attempt to preserve the old procurement process.

Some say the British nongovernmental organization could have done better with certain aspects of the process. The organization was extremely reluctant to respond publicly to the allegations against it, meaning that for the first few months of the conflict, there was no information coming out of it in support of the project.

“If you’re not communicating, somebody will be communicating instead of you,” said Korotchenko.