Rattled by the recent defence scams, the finance department of the Ministry of Defence (MoD)has shot down the contract to outsource medicines for the Services to private companies, which was cleared by Defence Minister A K Antony. The contract for hiring private vendors to procure and dispense essential medical supplies to six regional centres under the Ex-Servicemen Contributory Health Scheme (ECHS) was cleared by Antony on January 16, 2013. However, the plan hit the MoD Finance roadblock even before it could take off on April 1, 2013.
The total expenditure of ECHS in 2011-2012 was approximately Rs 1,224 crore including Rs 366 crore for medicines and Rs 797 crore as payments to hospitals. The scheme was launched in 2003 as a Medicare system to provide quality medical help to 36 lakh retired personnel of the armed forces through 426 polyclinics spread across the country. MoD Finance, however, feels that privatisation means additional financial implications to the tune of Rs 110 crore. It contended that the correct approach would be to strengthen the existing mechanism rather than bypass the same and impose an uncertain liability on the government.
Documents and ministry notes accessed by The Sunday Standard reveals the MoD Finance’s decision triggered a turf war with the department of Ex-Servicemen Welfare (ESW) both based in South Block. ESW accuses Finance of shooting down a reform process, which would have strengthened the delivery of quality medicines to Army hospitals. The MoD Finance claims that the entry of private players would increase the taxpayers’ burden as the latter could easily manipulate the supply process.
GLITCHES AND THEFT: Justifying the outsourcing of medicine supply, a note dated March 14, 2013 by ESW claimed that the 35 per cent of prescribed medicines are not provided to patients due to the glitch-ridden supply chain of the Directorate General of Armed Forces Medical Services (DGAFMS) under the MoD. DGAFMS is responsible for the sourcing and supply of medicines.
Pointing out the inefficiency in DGAFMS system, ESW blamed theft and pilferage as the main reason for losses to government exchequer and strongly advocated that the ministry’s finance department be relieved of the responsibility.
“The stores supplied are not as per demand; many items are not supplied or are sent in less quantity. Often stores which have not been demanded are also supplied (amounting to dumping),” the ESW note said. It added that medicines are overstocked and losses caused due to drugs crossing the expiry dates are not reported by babus.
“For the purpose of analysis we may assume that such losses account for 10 per cent of the value of medicines which works out to about Rs 36 crore,” department of ESW said.
Attacking the sub-standard medicines procured by existing system, the ESW note observed that the medicines supplied are of poorer quality than those available in the market.
The Sunday Standard