Procurement of Medicines and Medical Equipments

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Avoidable Excess Expenditure in Procurement of MRI Scanners in Tamil Nadu
(CAG of India, 19-10-2022) CAG of India
Lapses on the part of heads of three Government hospitals caused delays in site identification for installation of MRI scanners. This resulted in an avoidable expenditure of INR 1.12 crore and delay of over one year in commencement of MRI scan services to needy patients.
Avoidable Excess Expenditure on Upgradation of Linear Accelerator in Chhattisgarh
(CAG of India, 25-07-2015) CAG of India
Up-gradation of Linear Accelerator with Image Guided Radiation Therapy system by inviting fresh tender and overlooking the available valid rate led to avoidable excess expenditure of ₹ 52.88 lakh.
Avoidable Expenditure Due to Non Execution of AMC for MRI Machine at Shillong Meghalaya
(CAG of India, 19-12-2019) CAG of India
Due to non-execution of Annual Maintenance Contract for maintenance of MRI machine, the Department incurred an avoidable expenditure of INR 1.50 crore towards its repair besides depriving the patients the benefit of its services for almost three years.
Avoidable Expenditure on Central Excise Duty by Karnataka Drugs Logistics and Warehousing Society
(CAG of India, 06-07-2018) CAG of India
Karnataka State Drugs Logistics and Warehousing Society failed to insert specific clause in the tender/contract document for availing concession on Central Excise Duty. This resulted in avoidable expenditure of INR 76.55 lakh towards purchase of ambulances.
Avoidable Expenditure on Procurement of Medicines in Goa
(CAG of India, 29-01-2021) CAG of India
Delay in finalisation of tenders by Goa Medical College and Hospital for the year 2016-17 resulted in avoidable extra expenditure of INR 10.75 crore on procurement of medicines through local purchase.
Compliance Audit of Procurement of Medicines with Special Emphasis on Quality Aspect in Assam (2013-2016)
(CAG of India, 31-03-2017) CAG of India
Timely supply of drugs is necessary for the purpose of ensuring quality medical services to citizens. This involves an efficient procurement and distribution system as well as sound logistics management. The Director of Health Services (DHS), Government of Assam (GoA) procures medicines for distribution among 26 District Hospitals, 13 Sub-Divisional Hospitals, 108 Community Health Centers, 852 Primary Health Centers, 358 Ayurvedic Dispensaries, 75 Homeopathic Dispensaries and six Medical College Hospitals. Medicines are procured from Small Scale Industry (SSI) units through the Assam Small Industries Development Corporation (ASIDC) Ltd., and firms approved by the State Medical Stores Purchase Committee (SMSPC) through a process of open tenders at rates fixed by the Technical Committee and approved by the SMSPC. In emergency situations (epidemics, floods, earthquakes etc.), medicines are purchased at the Directorate level at institutional (market) rates. The Drugs Controller of the Department is responsible for overseeing the quality control aspect of procured drugs through the Drugs and Cosmetics Act, 1940 in the State. The Drugs Controller is assisted by a Joint Drugs Controller, a Deputy Drugs Controller, eight Senior Inspectors and nine Inspectors. The Compliance Audit of ‘Procurement of medicines with special emphasis on quality aspects’, covering the period from 2013-14 to 2015-16 was taken up to analyse the efficiency of the system of procurement and distribution of medicines in Assam. This compliance audit showed that absence of adequate funding and an established procurement policy, in conjunction with a weak internal control mechanism, resulted in lack of financial discipline and short supply of medicines, as also supply of sub-standard medicines. Not-observing of storage norms, non-eceipt/ delayed receipt of laboratory test reports, also defeated the purpose of maintaining the quality of drugs being supplied to health care units.
Compliance Audit on Procurement and Distribution of Drugs, Medical Consumables and Equipments by Odisha State Medical Corporation
(CAG of India, 03-04-2021) CAG of India
Odisha State Medical Corporation Limited (OSMCL) is an independent procurement agency for the Department of Health and Family Welfare (H&FW), Government of Odisha. The key functions of OSMCL are timely procurement of quality medicines, surgicals, equipment, instruments, furniture, etc., through fair, transparent and competitive bidding process. Audit of procurement and distribution of drugs by OSMCL for the period 2016-19 revealed the following: • There was inordinate delay ranging between five and seven months in the finalisation of annual procurement plans for drugs and medical consumables and six to 17 months in respect of Equipment, Instrument and Furniture (EIF). Delay in finalisation of procurement plan impacted the procurement process and supply of drugs and medical consumables to health institutions. (Paragraph 2.1.2) • Against the indented/ approved quantity of 692.97 crore units, OSMCL could supply 336.94 crore (49 per cent) units of drugs and medical consumables to health institutions during 2016-19. Non-supply of indented quantity resulted in non-availability of essential drugs in health institutions which resorted to local purchase at higher costs and stock out of essential and critical drugs. (Paragraph 2.1.3) • Out of 3,471 Purchase Orders (POs) placed for supply of drugs and medical consumables, 791 (23 per cent) POs were partially executed and 252 (7 per cent) POs were not executed at all, which led to less supply of drugs and consumables to the health institutions. (Paragraph 2.1.4) • Deficiencies in stock management led to expiry of 349 kinds valued at ₹4.18 crore during April 2017 to May 2019. Expiry of drugs was due to ineffective monitoring of indents, distribution, consumption, stock position of drugs through e-Niramaya software. (Paragraph 2.1.6) • Short supply of drugs and medical consumables by OSMCL led to the health institutions procuring these items locally incurring extra expenditure. During 2018-19, test checked health institutions had incurred extra expenditure of ₹98.12 lakh (44 per cent) in procuring medicines worth ₹2.24 crore. (Paragraph 2.1.7) • OSMCL could procure only 43 per cent EIF against the approved quantity during 2016-19. As of June 2019, 19 per cent of the procured EIF had not been installed and were lying unutilised with different indenting agencies. (Paragraph 2.1.8) • Quality test reports of 22 per cent drug samples were received with a delay ranging between 16 and 244 days due to which the drugs received remained quarantined without supply to health facilities. Instances of non-replacement of sub-standard drugs by the suppliers were also noticed. (Paragraph 2.1.10) • Monitoring of distribution of drugs and medical consumables through the online inventory management system (e-Niramaya) was not adequate and effective. Lack of monitoring at the level of H&FW Department/ State Drug Management Unit/ OSMCL/ health institutions ultimately resulted in shortage of essential drugs and wastage of government resources due to expiry of unused drugs, supplied in excess. (Paragraph 2.1.13)
Compliance Audit on Procurement of Machines Equipments and Accessories for Dental Institute RIMS Ranchi
(CAG of India, 04-08-2022) CAG of India
The Rajendra Institute of Medical Sciences (RIMS), Ranchi is an autonomous medical institute of the Government of Jharkhand (GoJ) under the administrative control of the Health, Medical Education & Family Welfare Department (the Department). A Dental Institute, with a capacity of 50 annual intakes in Bachelor of Dental Surgery (BDS) course, was started from the Academic year 2017-18 in RIMS for which 176 types of dental equipment worth ₹ 37.17 crore was procured. On the request of the Secretary of the Department, audit of procurement of equipment for Dental Institute, RIMS was conducted between July 2019 and May 2020 for the period 2014-15 to 2018-19 to assess whether the tendering process was regular and equipment were procured economically. Main audit findings are summarised below: 1. Against an original proposal of ₹ 5.80 crore for procurement of dental equipment as approved by the Governing Council, the Director, RIMS submitted detailed budget of ₹ 9.29 crore to the State Government. However, RIMS procured dental equipment valued at ₹ 37.17 crore during 2014-19 which was 400 per cent of the budget. 2. In a tender invited in January 2016, technical and financial evaluation was not done on combined scoring pattern as per terms of the NIT giving weightage to the technical qualification and financial offers without recording any reasons. The purchase and technical committees approved the lowest rates from the rates quoted by technically qualified bidders without giving scores at any stage. Against this tender, 20 items valued at ₹ 18.52 crore were procured. 3. Though instructed by the Health Minister, the Director, RIMS neither crossverified the compliance submitted by the accused supplier nor surveyed the market price or procurement price of similar equipment in other medical institutions prior to payment of outstanding bill of ₹ 5.40 crore and further procured equipment valued ₹ 11.40 crore from the same supplier without obtaining the approval of the Health Minister. 4. The Finance and Accounts Committee did not decide the tenders though required under the Regulations of RIMS. Instead two different committees (Purchase Committee and Technical Committee) having no defined role in the Regulations were entrusted with the decision of tender by RIMS. 5. There was absence of uniformity and transparency in technical evaluation of bids besides arbitrariness in deciding technical qualification in favour of a bidder with respect to procurement of basic and advance dental chairs, mobile dental van and 15 other items valued at ₹ 25.70 crore. 6. RIMS incurred avoidable expenditure of ₹ 14.25 crore on procurement of dental equipment (Chairs, Mobile dental van and RVG) compared to the rates given in the budget estimates. 7. Attachments and accessories with basic dental chairs, advanced dental chairs and Mobile Dental Van were either missing or of lower specifications. Two out of ten supplied Radiovisiography systems were of different model. RIMS also failed to impose penalty of ₹ 2.37 crore for delayed supply. 8. Dental equipment worth ₹ 12.02 crore supplied to the Dental Institute was not found entered in inventory and was thus fraught with the risk of misuse. 9. Equipment worth ₹ 1.94 crore purchased (August 2016) for laboratory and the operation theatre (OT) was found lying idle in the store as laboratories and OT had not been set up as of May 2020. Disinfectants worth ₹ 17.85 lakh purchased in August 2016 for use in the OT had expired.
Compliance Audit Paragraph on Irregular Purchase of Medicines & Equipment in Bihar
(CAG of India, 01-08-2013) CAG of India
Irregular purchase of medicines and equipment in violation of State Health Society's prescribed procedures resulted in excess payment of Rs 1.33 crore. This irregular purchase also resulted in imparting undue favours to those private suppliers.
Deficiencies in Procurement of Medicines and Equipments by J&K Medical Supplies Corporation
(CAG of India, 23-09-2020) CAG of India
There were delays in finalisation of rate contracts and consequent delay/ non-procurement of medicines/ drugs, instruments, machinery, equipment; thereby defeating the purpose of creation of the Company. Audit came across instances of non-levy of liquidated damages of INR 7.92 crore for delayed supplies, undue favour to a supplier by rejecting the seven bidders and procuring suture items at negotiated rates for INR 25.48 crore from the eighth bidder, non-operationalisation of 102 Ambulance Service in the State over a period of more than three years despite receiving INR 3.18 crore and non-observance of prescribed procedure for empanelment of testing laboratories leading to extra-expenditure of INR 9.47 lakh.
Deficiencies in Quality Assurance while Procuring and Disributing Drugs in Karnataka
(CAG of India, 06-07-2018) CAG of India
Poor quality assurance by the Karnataka State Drugs Logistics and Warehousing Society resulted in distribution of non-standard quality drugs. Besides, the Society did not recover INR 2.11 crore being the cost of these non-standard quality drugs.
Excess Expenditure on Purchase of Medicines and Equipments by Two Medical College and Hospitals in West Bengal
(CAG of India, 25-03-2022) CAG of India
NRS Medical College & Hospital (MCH) and RG Kar MCH incurred excess expenditure of INR 2.71 crore on purchase of medicines and equipment in contravention to clarifications of Finance Department on treatment of pre-GST contracts during GST regime.
Excess Payment to Supply Contractors on Purchase of Medicines in Goa
(CAG of India, 29-01-2021) CAG of India
Non-deduction of Excise duty component from prices of purchased medicines after implementation of GST as per procedure prescribed by Government resulted in excess payment to the supply contractor.
Failure to Claim Refund of Customs Duty Exemption by the Firm
(CAG of India, 04-04-2018) CAG of India
Jawaharlal Institute of Postgraduate Medical Education and Research, Puducherry failed to claim refund of customs duty exemption availed by a firm on imported equipment resulting in loss of ₹ 1.08 crore.
Fictitious Purchase of Implants and Equipments in Karnataka
(CAG of India, 09-12-2020) CAG of India
The Director of the Koppal Institute of Medical Sciences had issued cheques worth INR 64 lakh out of SCP/TSP funds for purchase of implants/ equipment which were never indented or supplied.
Idle Expenditure on Medical Equipment at Base Hospital, Almora, Uttarakhand
(CAG of India, 2015) CAG of India
Medical equipment worth ₹ 60.52 lakh were not put to use for the benefit of patients and kept idle for periods ranging from six to eight years.
Improper Procurement Planning Resulting in Idle Equipment
(CAG of India, 04-04-2018) CAG of India
Improper planning in procurement of equipment by National Institute of Nutrition as well as failure to enforce performance on terms of supply order by supplier resulted in equipment worth ₹ 1.52 crore lying idle and equipment worth ₹ 2.13 crore not being put to optimal use for more than five years.
Information Technology Audit of Drugs and Vaccines Distribution Management System in Punjab (2015-2018)
(CAG of India, 27-02-2020) CAG of India
With a view to strengthening and streamlining the supply chain management system for storage and distribution of drugs and consumables in the State of Punjab and to eliminate the prevailing manual system of processes followed in the hospitals where the chances of human errors are significant, a customized Drugs and Vaccine Distribution Management System (DVDMS) named ‘e-Aushadhi’ was implemented (August 2014) in Health and Family Welfare Department (Department). An information technology audit of the ‘e-Aushadhi’ brought out shortcomings/deficiencies in its implementation that undermined the achievement of its objectives in the State. Some of the significant audit findings are summarised below: Highlights 1. The Department had not prepared any time-bound roll-out plan for implementation of e-Aushadhi system for 360 health institutions still to be covered. (Paragraph 2.1.6.1) 2. In the absence of a barcode system, users were not entering the data on real time basis resulting in critical data input errors. (Paragraph 2.1.7.2 (ii & iii)) 3. As many as 4,405 delivery challans were freezed after a delay of up to 531 days. In 1,424 instances, the drugs/consumables were accepted with shorter shelf-life by three Drug Warehouses. The users while verifying the supplies of drugs/consumables ignored the system alert with regard to shorter shelf-life in these cases. (Paragraph 2.1.7.3 (i)(a) & (ii)) 4. 1,324 samples of drugs/consumables were sent for quality check to Central Quality Control Cell (CQCC) after a delay of up to 412 days. (Paragraph 2.1.7.4 (iii)) 5. Test reports of samples of drugs/consumables were received after a delay of up to 315 days (387 batches) from Government laboratory and up to 51 days (686 batches) from empanelled laboratories. Activation of drugs not of standard quality (NOSQ) and their distribution showed that the system was not robust and lack of internal control diluted the quality assurance for testing ofdrugs/consumables. (Paragraph 2.1.7.5 (ii & iv to vii)) 6. Inadequate logical access controls, application standards, audit trails and non-conducting of internal audit showed weak information system security of e-Aushadhi. (Paragraph 2.1.8)
Injudicious and Excessive Procurement of Drugs in Tamil Nadu
(CAG of India, 24-06-2021) CAG of India
RAMO, Madurai and DMRHS (ESI) did not follow the prescribed medicine indenting procedure, based on the number of patients, resulting in locking up of Government funds of INR 16.39 crore in the form of excess procured medicines.
Irregular Procurement and Idling of Medical Equipments in Tamil Nadu
(CAG of India, 24-06-2021) CAG of India
Irregular procurement resulted in an avoidable expenditure of INR 4.29 crore in respect of medical kits supplied to the seven sampled Medical College Hospitals as the equipment procured were neither required nor put to use. This raised a question on the entire procurement at a cost of INR 10.60 crore.

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