The Cabinet has sanctioned a proposal by Health Minister Keheliya Rambukwella to use the Indian credit line to buy medical supplies—without competitive tender—from a handpicked, locally unregistered Indian manufacturer named Savorite Pharmaceuticals (Pvt) Ltd despite there being multiple authorised suppliers holding valid National Medicines Regulatory Authority (NMRA) registration for each of the required products.
Cabinet approval is pending for Minister Rambukwella’s proposal to entertain an unsolicited proposal from a second Indian entity named Kausikh Therapeutics (P) Ltd under the credit line and “other means of funding”. The Sunday Times has seen relevant documents.
Waiver of registration
The minister also sought blanket clearance to procure drugs via unsolicited proposals by inserting the clause through “other selected suppliers” into his Cabinet memoranda. It would’ve given Health Ministry officials—and the minister—widespread discretion to make purchases from favoured entities bypassing the competitive tender process. The Cabinet did not consent to this.
The Health Ministry has now applied for a “waiver of registration” (WoR) from NMRA for a two-page list of drugs to be imported from Savorite. The medicines cannot be cleared through Customs without this formality, which is typically granted as an exception and not a rule.
But the NMRA database shows that pre-registered suppliers, most of whom have a long history of selling medicines to Sri Lanka—and many of them Indian—currently hold valid licences for a majority of the required drugs. Should the ministry require a product that is not registered, the usual practice is to check with licensed suppliers first. This was not done.
“The preference is to request a WoR for a product from a registered supplier—as the manufacturing facility is already vetted—than an unregistered one,” said an authoritative source. All sources spoke on condition of anonymity for fear of reprisal.
For a company to sell medicines, the NMRA must license its manufacturing facility according to World Health Organisation standards as well as register its local agent and each drug (or “molecule”) to the company name. This is to ensure that the quality of every product sold by respective companies matches the required standards.
There are valid registrations for all but five of the ‘molecules’ being ordered from Savorite, with more than one product licensed in most categories,” a pharma source revealed. The Sunday Times has documentation to back the claim.
“Competitive tenders could’ve been called to ensure optimum product quality and best price,” he maintained. “The pharmaceutical industry would’ve bid. Given the urgency, tender evaluation could’ve been expedited. There is no necessity to reinvent the wheel. This is a question of the safety, quality and efficacy of drugs.”
A recent complaint of the Health Ministry is that pharma companies do not bid for tenders as they are owed over Rs 30bn in unpaid bills. However, as the latest procurement is funded by Indian credit—and payment is, therefore, guaranteed—the industry would have actively participated, pharma sources said.
Cabinet told one thing, public told another
Minister Rambukwella first submitted a Cabinet paper on October 25 flagging the dire urgency of purchasing medicines for the health sector. In public, and in Parliament, he has repeatedly said there are only some shortages and that they are being managed.
The Cabinet note said 151 vital and essential medicines, 5,278 surgical equipment and consumables, 850 laboratory and 18 radiological items are out of stock. He predicted that the situation would deteriorate over the coming weeks.
The minister also maintained that the normal route to buy medical supplies—calling for tenders through the State Pharmaceutical Corporation (SPC)—took too long. And the SPC, he added, had only used US$ 68.5mn (Rs 25bn) out of its total allocation of US$ 114.9mn (Rs 42bn) to buy medical supplies. The contention was that this procedure was too tardy, given how acute the scarcity was.
This was then used to justify a request for the Health Ministry to sign an agreement with Savorite “and other selected suppliers to pay back in an agreed payment plan, utilising the ICL [Indian credit line] and other funding resources”.
If his attempt to widen the scope of unsolicited proposals goes through—using, not only the Indian credit line, but “other funding sources”—it will open the floodgates to the haphazard, unregulated procurement of medical supplies, multiple health sector sources strongly warned. There is also a much higher risk of corruption.
The Cabinet paper names Savorite as the selected company but does not specify the criteria under which it was picked. It merely says this entity had agreed to a three month’s supply of medicines and wants permission to pay for it using the Indian funds.
The minister also states that only medical supplies “approved by the SPC” will be imported, notwithstanding the fact that the Corporation does not license medical supplies. The NMRA does.
Finance Ministry calls the bluff
In its observations to the Cabinet on Minister Rambukwella’s note (dated November 2), the Ministry of Finance, Economic Stabilisation and National Policies—headed by President Ranil Wickremesinghe—correctly points out that the “proposed supplier mentioned in the Cabinet Memorandum is selected on an unsolicited basis”.
“Therefore, prices and quality of medical supplies should be reviewed and negotiated by the Cabinet Appointed Negotiation Committee (CANC) or Health Sector Emergency Procurement Committee (HSEPC) which is already appointed by the Ministry of Health to obtain realistic and reasonable prices on par with the market rates and also the quality of the drugs,” the observations state.
“The Ministry of Health should follow the procedures which are applicable for private sector pharmaceutical suppliers who import drugs on behalf of the State Pharmaceutical Corporation under the Indian Credit Line Scheme for the proposed supplier,” the observations continue.
The Finance Ministry suggests that the Ministry of Health and the proposed supplier enter into an agreement regarding the prices and quality of drugs before importation.
“If there are any private sector supplier [sic] who comes under unsolicited basis to provide medical supplies under the Indian Credit Line, the Ministry of Health should follow the process a, b and c, above for them,” it asserts. “Further, if funds utilise [sic] other than the Indian Credit Line, the appropriate Procurement Guidelines should be followed by the Ministry of Health.”
To solve the problem of the SPC needing longer lead time to import medical supplies, the Finance Ministry recommends that—considering the prevailing shortage of drugs—SPC should develop an in-house mechanism “to address this emergency situation by reducing the lead time for procurement process with the approval of the relevant authorities”.
It does not, as Minister Rambukwella proposes, envisage the solution to be the widespread adoption of unsolicited proposals—using a variety of financing options—for the procurement of medical supplies.
The Finance Ministry says the Ministry of Health “should develop a proper monitoring and coordinating mechanism within the institutions come under [sic] the purview of the Ministry to overcome such unnecessary delays in the procurement process”.
“Further, the Ministry of Health should follow the appropriate procurement planning process by keeping lead time and buffer stock to avoid shortage of any medical supplies in future,” state the observations, which are signed by President Wickremesinghe.
Health Minister tries again
But on December 5, Minister Rambukwella submits another note to the Cabinet regarding the “Maintenance of Uninterrupted Supply of Medical Supplies to Sri Lanka”.
He once again states that, due to the current foreign exchange crisis, the Health Ministry has “encountered the problem of importing essential medical supplies to Sri Lanka in required minimum quantities”.
The note claims that the Cabinet had previously approved the procurement of a three months’ supply of medical supplies “from the selected suppliers within 45 days using Indian Credit Line and other funds”. It does not mention that approval was conditional to the Finance Ministry’s recommendations being adopted.
It states that hospital stock levels of 21 pharmaceuticals and 2002 surgical items and consumable “are already zero”. “It is also observed that stock levels of essential surgical items such as suture materials and anaesthetic drugs are running out and at very low levels [sic].”
In the latest Cabinet paper, the minister pushes for procurement from Kausikh Therapeutics, stating that the company has “agreed to provide a sufficient stock of medical supplies to Sri Lanka for a period of 03 months within 45 days, using the Indian Credit Line and other means of funds”. There are 28 types of supplies included in the annexe. Kausikh is also not registered with the NMRA.
Cabinet approval for this unsolicited proposal is pending. But this week, Kausikh Therapeutics hosted the minister for a three-day factory visit in Chennai. He was accompanied by the Chief Executive Officer of the NMRA which, by law, is the “independent” health sector regulator.
A Health Ministry letter to the Secretary to the Ministry of Foreign Affairs seeking protocol assistance for the Minister and the NMRA CEO reveals that he has been “invited for inspection of Kausikh Therapeutics (P) Ltd factory in Chennai”. The minister claimed on social media that “NO [sic] state funding was used for this venture, as I have funded my own travel whilst the NMRA was independently funded & as such, added no burden to the State.”
The Sunday Times has seen the invitation letter tendered to Minister Rambukwella by Kausikh Therapeutics and the booking for a three-night stay made on his behalf at ITC Grand Chola, which is listed on the internet as “a five-star luxury hotel” in Chennai, India.
The cost of accommodation is INR 97,940 (Rs 433,300). The booking voucher provides an Indian telephone number and an email address starting with “kausic…”
If the Cabinet approves the Kausikh procurement, the Health Ministry will apply for another WoR from NMRA for the list of 28 medical supplies.
Meanwhile, several of the products listed to be imported from these two companies are manufactured in Sri Lanka in collaboration with the State Pharmaceutical Manufacturing Corporation.
Minister: ‘Went on a “fact-finding” misson with private funds on official business’
Health Minister Keheliya Rambukwella on his Twitter handle published his response to media reports this week about his “controversial” visit to India.He said he was there on a “fact-finding” mission. He also claimed he used his private funds to carry out Health Ministry business.The tweets said: “Am currently in #India with the CEO of the #NMRA – the regulator that examines quality & ensures that medicinal products meet the standards of safety & quality. A few weeks ago another team from @MoH_SriLanka headed by an additional secretary & NMRA officials met with and examined the quality of medicinal products from pharmaceutical companies based in another part of India as part of this work.”“Once the preliminary fact-finding visit concludes & quality approvals are given by the tech experts, my job is to expedite & fast track the supply from gov to gov, cut through any unnecessary red tape & ensure a constant supply of quality medicines to the #lka people.”
“As with all medicinal procurements, quality control tests must be satisfied before purchasing. I must also stress that NO state funding was used for this venture, as I have funded my own travel whilst the NMRA was independently funded, & as such, added no burden to the State.”
• “It is a sorry state of affairs that during times such as this, when the ministry is working hard to ensure the procurement of quality medicines for the Lankan people, certain disruptive political elements seem to be shamelessly working overtime to sabotage these efforts.”