City Incurs ‘Unnecessary Expenses’ for Medicines – COA

● Cebu City’s purchase of expensive drugs and medicines places the city at a ‘disadvantageous situation’, COA says.

The Commission on Audit (COA) has discovered that the Cebu City government has incurred unnecessary expenses when it purchased millions of pesos worth of assorted drugs and medicines at higher cost.

COA said the purchase price of these medicines are higher compared to the price of those medicines sold at the government-owned retail drugstores managed by the Department of Health.

Random Audit

The state auditors had conducted random audit to some of the city’s financial transactions amounting to P2,323,002 and found
out that the cost of the medicines is higher by P1,637,343 because such drugs and medicines can be purchased at only P685,658 in DOH pharmacies.

COA claimed that the transactions of the city for these expensive drugs and medicines can be considered “disadvantageous” to the government because instead of realizing savings of P1.6 million in public funds, the city incurred unnecessary expenses with no economic benefits obtained.

Government Pharmacy

The Department of Health runs a pharmacy that serves as a wholesale and distribution hub for low cost but quality medicines. This State-run pharmacy caters to organizational entities with duly established retail drugstore or hospital pharmacies managed by Local Government Unit (LGU), Botika sa Barangay, drugstores operated by cooperatives and community-based organizations.

COA said although some of the medicines needed by the city may not be available in the DOH pharmacy as it sells only items listed in the Philippine National Drug Formulatory, it would be advantageous to the city to buy its medicines there considering the price disparity from private suppliers.

Direct Procurement

The creation of government pharmacies nationwide aims to benefit the procuring government institution, particularly the LGUs.
They are allowed to use the direct contracting mode of procurement as provided for by Republic Act 9184.

But the state auditors observed that the city did not make use of such government drugstores when it procured medicines from private suppliers at a higher price.

“This condition seemed to give undue favor to certain suppliers and did not benefit the city,” the state auditors said in its Annual Audit Report (AAR) for the city’s financial transactions last year.

The city officials explained that Bids and Awards Committee (BAC) for Goods and Services has conducted a public bidding in
compliance to the provisions of the Implementing Rules and Regulations (IRR) of the Government Procurement Act.

City Hall believes that the government-owned retail pharmacies could cater the city’s needs and executive officials assured that starting this year, they will try to comply with the state auditors’ recommendations.

The city has allocated P20 million for its City Hospitalization Assistance and Medicine Program (CHAMP) by providing drugs and medicines worth P5,000 to each of the poor city residents.