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)