Kyiv, April 17, 2014 – Oleh Musiy, Minister of Health of Ukraine and Vladimir Kochetkov-Sukach, the external affairs coordinator of Government’s Anti-corruption committee reported on ways to overcome corruption in the pharmaceutical industry during a briefing at the Ukraine crisis media center.
The process of overcoming corruption schemes, declared by Oleh Musiy on the second day after his appointment as Minister of Health, is gradually gaining publicity. Tender procurement, licensing procedures, falsification of medicines, certification of foreign drugs, import licensing, quality control are all part of the corruption schemes through which the government of ex-Prime Ministers Azarov robbed the Ukrainian people.
One of the most high-profile cases is the investigation of the State Service of Ukraine on Drugs headed by Alexey Soloviev. “Initially, this structure was to serve as an inspection, but due to family ties with Mykola Azarov it has eventually became virtually licensing authority of a complex corruption scheme – said Mr. Musiy. – Pharmaceutical market in Ukraine comprises 40 billion Hryvnyas. Around 2 billion of those are taken by corruption. This means that about 5% of the funds that we are daily spending on drugs, are spent on feeding corruption.”
The Minister spoke about some corrupt schemes associated with the organization. In particular, the existence of more than 10 state-owned enterprises through which the State Drugs Service was exercising its powers. For example, one is checking products of the world’s leading pharmaceutical companies for compliance with GMP standards by a Ukrainian company. “It’s like reviewing in Ukraine the quality of Mercedes cars, – reported Mr. Musiy. – What’s the point? After all, we just do not have the appropriate specialists at this level. Then these companies exhibited two inspection reports: positive and negative. For the first they demanded money. That’s the way it worked.” The Minister of Health also spoke about the corruption schemes in the production of over 20 types of medical products. “Azarov’s government virtually destroyed the Ukrainian producers of cotton wool, bandages, etc. products. By their actions they have monopolized the Russian manufacturer, providing multi-million infusion of public funds into private pockets. It’s a crime,”- said Mr. Musiy.
Fighting corruption schemes is in process, but some of the management positions are still taken by people associated with the abuse of powers. The Minister explained the nature of the difficulties he faced in the fight against corruption: “Unfortunately i,n Ukraine there is no such mechanism for the Minister just to be able to release the relevant civil servants from duty. This can be done only by the resolution of the Cabinet of Ministers. But we take steps in order to speed up this process. For example, I personally offered Mr. Solovyov to voluntarily resign, but he refused. Then I submitted to the Attorney General the letter to immediately suspend that person. Also, I had a request to the Cabinet of Ministers on the transfer functions of State Drugs Service to the Ministry of Health. The new Ukrainian government simply can not keep these people in the state positions because they were donors / sponsors of separatists and continue to fund split in Ukraine.”
Volodymyr Kochetkov-Sukach said that a journalistic investigation helped reveal family connections and a conflict of interest: O. Solovyov’s father, Stanislav Mykhaylovych, runs two companies – Istok Plus and Istok Plus Ltd. – which serve as an intermediate link in a corrupt scheme, with their income increasing by 77% over the last year. The Service has virtually monopolized the closed cycle, from the registration of drugs to their sale in Ukraine. “Official investigation is ongoing at the Ministry of Internal Affairs and the State Security Service of Ukraine,” he said, “We are waiting for criminal proceedings to be instituted. This will provide grounds to remove Head of the Medicinal Products Service, Mr. Solovyov, from office, while the Service itself will most probably not be liquidated, instead it will only perform the inspection functions. We already have a plan for reform and a new concept for the Service.”
Also, according to the Minister, an investigation will soon be launched into all cases of violations relating to several controversial construction projects during the preparation for EURO-2012. In particular, the Security Service of Ukraine will be provided with evidence of money laundering during the construction of prenatal centers and the controversial construction at the Okhmadyt children’s hospital. “Fortunately, the Ministry of Health had nothing to do with it. UkrMedBud company was in charge of it all,” said Oleg Musiy, “We know that the cost estimates were overstated by three times. In addition, this ‘pseudo-developer’ will be audited. We have already filed a request to transfer this property to the Ministry of Health.” The Minister also reported on the completion of an inspection in respect of the purchase of ambulance cars, stating that findings were produced regarding the corruption involved. The Interior Ministry is conducting an inspection of all procurements made last year.
Apart from that, Oleg Musiy managed to achieve the dismissal of Ms. Vyshnevska, the Director of “Indar” pharmaceutical factory. “The factory manufactures insulin and takes part in public procurement. But in fact, Ms. Vyshnevska has also turned it into a trading company that used corrupt schemes to participate in tenders with items such as vaccines, which it never produced.” The Minister said that some parliament members who belong to the ex-ruling party tried pressuring him, but he assured that he is ready for this and that he is also ready to continue to protect the state’s interests and prevent certain individuals from “picking Ukrainians’ pockets.”
Mr. Musiy said that a bill was submitted to the parliament regarding the reference price mechanism: “It should enter into force already in January next year and provide a pricing basis for drugs, both for public procurement and for the market in general. We expect this to help us bring the prices down by 20–30%. This scheme will be introduced first of all for the people suffering from AIDS, diabetes and tuberculosis.”
As for the recent increase in drug prices in Ukraine, Mr. Minister said: “Unfortunately, more than 70% of the drugs are made abroad and the prices are heavily dependent on the dollar exchange rate. We are currently witnessing a 50-60% increase in prices. Once the dollar exchange rate stabilizes, the prices will be adjusted accordingly. However, the Ministry of Health is not in the position to interfere with pricing in the market and will have no influence on the pricing policy of private pharmacies. It is the competence of the State Inspectorate for Price Control and other authorities.”
At the end of his speech, Oleg Musiy repeated his strict stance on corrupt schemes: “I will try my best to eliminate corruption. To do that, I have all the authority, I have the power of Maidan which actually delegated me to this position and I have a team. We can eliminate corruption in the healthcare sector in the next 1.5 years.”