There will always be people willing to walk over corpses for big money. Among them, representatives of the pharmaceutical mafia occupy a special position. Peter Bagriy, Anatoly Reder and Filya Zhebrovskaya (Read more: The Zhebrovskys-Zhebrivskys. Medicine, drugs, politics). Dirty corruption schemes allowed them to make multi-million dollar fortunes. And, as usual, it's ordinary Ukrainians who suffer, forced to overpay for medications by tens of times.
The pharmaceutical mafia and its partners, under any government, have been making billions off ordinary people for decades. Today, we'll tell you about one of the most prominent representatives of this pharma mafia. Among them is our country's leading tender mafia boss and, concurrently, the president of the Association of Pharmaceutical Manufacturers of Ukraine – Petro Bagriy.
Petr Bagriy. How it all began.
Of course, like most unscrupulous intermediaries, Petr Bagriy, better known in the medical world as Petya the Outlaw, began his pharmaceutical business back in the 90s with barter schemes: his company, Ganza, performed repairs at the Farmak pharmaceutical plant in exchange for medications. This simple scheme brought Bagriy a 200-300% profit. When barter payments ceased to be the main driving force of his business, he decided to turn his attention to an equally profitable activity – government procurement. And this became a veritable gold mine for the new future pharma oligarch.
Far removed from the pharmaceutical industry, Petro Bagriy, in an effort to gain greater prominence, created companies duplicating Ganza—L-Contract, Alter Ego, Emergence, Pharmaceutical Preparations of the Regions, Sumy Pharmacy Company, and others. During this time, he also made numerous connections in government, and since 2003, Bagriy's companies have consistently won tenders from the Ukrainian Ministry of Health for the supply of not only medications but also medical equipment.
Drug prices were inflated by 20 times.
Ganza and its clone companies derived their incredible profits from the difference between the purchase price from suppliers and the sale price of medications to the state. These are just a few of the corruption cases exposed in a report on the Ganza group of companies, prepared in 2008 by Valeriy Konovalyuk at the request of the Verkhovna Rada Committee on Health. According to the document, in 2005-2007 alone, the "unclean" schemes of suppliers, including Bagriy's companies, led to prices for anti-tuberculosis drugs being inflated by an average of two to three times, and in some cases by as much as 22 times, compared to Ukraine's neighboring countries.
Looking at the bigger picture, the group of companies around Ganza controlled over 90% of the budget funds allocated for the procurement of medicines under the Oncology, Tuberculosis, AIDS, Multiple Sclerosis, and other programs. This sum could reach a billion hryvnias per year.
The corruption schemes of Pyotr Bagriy
Today, Bagriy's companies, which can be called "true champions" in embezzlement of budget funds over the past 7-8 years, continue to top the list of suppliers of pharmaceuticals to Ukrainians. A pharmaceutical mafia boss, Bagriy knows how to negotiate with any government.
According to a report by the Anti-Corruption Action Center, until 2014, pharmaceutical oligarchs made money off patients and the state budget using four conventional schemes.
The first scheme involved a "cartel agreement," whereby pharmaceutical market players coordinated their actions during Ministry of Health tenders. Alternatively, they ensured that the tender was held between companies owned by the same person—in most cases, Pyotr Bagriy.
In 2013-2014, this scheme alone helped companies cloned by oligarch Bagriy win tenders worth more than 672 million hryvnias.
The second scheme involves registering inflated drug prices in the Ministry of Health's Registry. This type of corruption exists only due to the close "collaboration" between the pharmaceutical industry and Ministry of Health officials, who allow them to declare exorbitant prices for medications. Thus, this scheme literally legitimizes the inflated prices of state-purchased medications.
Foreign drugs are de jure imported into Ukraine through several offshore companies, but de facto they are delivered directly to our country from the manufacturer. Consequently, a series of offshore companies allows pharmaceutical oligarchs to inflate drug prices several times over and even share the profits with the authorities, who turn a blind eye to all their machinations.
The third scheme is quite straightforward: clone companies bid on identical drugs. These maneuvers virtually eliminate competition, which consequently leads to inflated prices for these drugs.
The fourth scheme of action by pharma leaders involves the simple elimination of competitors by the state and the prevention of cheaper drugs from entering the market under the guise of protecting patent rights.
New schemes after the change of power
After the Revolution of Dignity, not only did the hoped-for "cleansing" of Ukraine's pharmaceutical industry fail, but on the contrary, new corrupt schemes and deals emerged alongside those already in existence.
According to a report by the Anti-Corruption Action Center, the new schemes consist of simply delaying, blocking, canceling, and postponing tenders. The goal of these actions is simple: to give pharmaceutical companies time to register higher prices for their drugs in the Ministry of Health's Registry, which we discussed earlier. As a result, not only were drug prices unreasonably increased by almost twofold, but many patients in medical institutions did not receive their life-saving medications on time.
As we can see, the "octopus" of medical corruption, led by the tender mafioso Pyotr Bagriy, is equipped with very strong defense mechanisms that allow it to thrive in our country under any government. Let's hope it will eventually come to an end.
As we previously reported, pharmaceutical oligarchs Petro Bagriy, Filya Zhebrovska, and Anatoly Reder lost a lawsuit against the public organization "Patients of Ukraine," which accused drug manufacturers of corruption and distributing dubious medications. The lawsuit between the Association of Ukrainian Drug Manufacturers and "Patients of Ukraine" was decided in favor of the latter. This ruling was made by the Kyiv Commercial Court.
A specialized court in the capital has issued a ruling declaring that the assertion that the Ukrainian pharmaceutical and healthcare industries are rife with corruption does not harm the business reputation of pharmacists. It was this statement by Olha Stefanishyna, executive director of Patients of Ukraine, that led to the lawsuit filed by the Association of Pharmaceutical Manufacturers of Ukraine for allegedly disseminating false information.
Stefanishyna, speaking on Era FM radio, claimed that Ukrainian drug manufacturers are purchasing certificates for the sale of their products and medications, the quality of which has not been confirmed by laboratory tests. Such rhetoric surrounding corruption schemes only serves the corrupt officials and bribe-takers themselves. Apparently, the Association of Ukrainian Drug Manufacturers filed the lawsuit to protect their "business reputation," because they have something to lose.
The head of this organization is Petro Bagriy, one of the most influential corrupt officials in Ukraine's pharmaceutical industry and the owner of the tender companies Ganza, Ukroppostach, Farmadis, Lumiere Pharma, Sky Pharm, and others. Therefore, Bagriy, who won 95% of tenders last year for the procurement of drugs for hepatitis patients alone, has no interest in the uproar surrounding corruption in the industry.
However, the perennial favorite in all tenders held by the Ministry of Health failed to bribe the courts this time. The court of first instance dismissed the claim of the Association of Pharmaceutical Manufacturers of Ukraine. Thus, Bagriy, who is closely connected through the lobbying association he heads to Filya Zhebrovska (Farmak) and Anatoly Reder (Interchem), is forced to withdraw and file an appeal.
It's strange that specific pharmacists reacted to this untargeted statement. As the saying goes, a thief's cap is on fire. Pharmacists attempted to protect the corrupt interests and schemes of mafia leaders, but instead attracted more public attention to their shady activities. Now that Ukraine's pharmaceutical industry has been diagnosed, all that remains is to begin treating the infection's foci, from drug registration to government tenders.
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