While politicians alternate in high positions, medical thieves continue to procure dubious medications for children with cancer. The notorious pharmaceutical mafia figure Boris Litovsky has been particularly prominent in this matter.
This is what “Left Bank” writes:
"The Ministry of Health is deciding what to do with questionable medications for children with cancer. This concerns medications under the Children's Oncology program."
The Ministry of Health promises that 73 drugs for children with cancer will be purchased in the near future through the British company Crown Agents.
Another 11 "require clarification of information regarding their registration in EU countries, as well as information from the registration dossier regarding pharmaceutical equivalence." These 11 include Vincristine Mili and Etoposide Mili, manufactured by the Indian company Venus, as well as Linezolid, manufactured by Yuria-Pharm, which has sparked a scandal in the industry community.
As previously reported, Crown Agents is one of the companies that will purchase pharmaceuticals for Ukraine. This private company is included in Ukrainian legislation on procurement through international organizations.
Discussion of the feasibility of purchasing the drugs proposed by Crown Agents began after Larisa Lavrenyuk, head of the "Krab" charitable foundation, stated on her Facebook page that some of the items on the list seemed highly questionable and had no proven use in either Ukraine or the EU. These included the aforementioned "Vincristine Mili" and "Etoposide Mili" from the Indian company Venus, and "Linezolid" from the manufacturer Yuria-Pharm. Following the volunteers, Svetlana Donskaya, chief pediatric hematologist and head of the Okhmatdet Children's Oncology and Bone Marrow Transplant Center, also criticized these drugs.
The documents Lavrenyuk released also revealed who Crown Agents intends to purchase the Indian Venus medications from: Norton, a company familiar to Ukrainians from its participation in tenders and linked to the infamous pharmaceutical mafia figure Borys Litovsky. LB.ua has already written about Litovsky, Norton, and the quality of the medications Litovsky imports.
Oksana Korchynska, head of the board of trustees of the Okhmatdet Children's Hospital, a member of parliament, and deputy chair of the parliamentary committee on health, also warned about the dangers of the drugs supplied by Litovsky back in 2015. She appealed to the State Expert Center at the Ministry of Health to remove these drugs from registration, stating that "they're not just chalk, they're drugs that cause severe intoxication in patients." Among those on the list was Linezolid, manufactured by Yuria-Pharm, which is now planning to purchase Crown Agents for Ukrainian children with cancer.
In 2014, a number of patient organizations—including the board of trustees of Okhmatdet, the Patients of Ukraine Charitable Foundation, the Network of People Living with HIV, and the Wings of Hope Charitable Foundation—appealed to the Minister of Health with a request to deregister a very large list of drugs from the Indian manufacturer Venus, including Vincristine Mili and Etoposide Mili.
The State Expertise Center under the Ministry of Health will conduct testing of the 11 questionable drugs. It, as a reminder, only checks the compliance of all documentation, not the actual quality of the drugs.
This year (for last year, funds were transferred back in December 2015), UNICEF, UNDP, and Crown Agents will carry out procurement for Ukraine worth UAH 2,2 billion. Crown Agents received both the pediatric and adult oncology and oncohematology programs.
Let us recall the history of the issue:
Boris Litovsky Group
It's no coincidence that we began with Boris Litovsky. This figure's small government contracts shouldn't be misleading. His real, shadowy influence on the pharmaceutical market is difficult to overestimate. A citizen of Canada and Israel, Boris Litovsky entered the domestic pharmaceutical market in 1995 as a co-founder of the company "Vipex." This enterprise was considered a business unit of the powerful Solntsevskaya organized crime group. As is well known, at that time, Semyon Mogilevich himself was the direct overseer of the transnational gang's Hungarian "branch." Thanks to his connections, he brought Boris Litovsky into the market not only of Ukraine but also of several CIS countries. Some to this day consider him the manager of the influential Solntsevskaya businessmen in Ukraine. That the Solntsevskaya connection is not a mere fiction is evidenced by the lobbying of the interests of Moscow businessman Igor Salo (Pharmex Group LLC, NVC Bionika LLC) in recent tenders.
Borys Litovskyy's connections in medical, political, and law enforcement circles are difficult to overstate. Throughout his years of activity in Ukraine, he enjoyed the patronage of senior officials in the Security Service of Ukraine (SBU). He also managed to establish influence over then-President Viktor Yushchenko through his daughter, Vitalina. The businessman immediately invested his political and administrative capital in profits in the pharmaceutical market. One of his methods for extracting profits was obtaining exclusive certificates for the supply of retroviral and oncology drugs.
These medications are few in number, but they are all vital for patients. To this day, anyone wishing to enter the Ukrainian pharmaceutical market with these drugs must pay tribute to Boris Naumovych. Another source of the businessman's excess profits is said to be the packaging of cheap generics as expensive drugs. Following the appointment of Ilya Yemets as Minister of Health, Boris Litovsky attempted to carry out a large-scale redistribution of public procurement, displacing Petro Bagriy. The attempt failed, largely due to the minister's unwillingness to play his lobbyist's game, but Boris Litovsky continues to try to increase his share of public procurement.
Nikolai Kuzma's group
Nikolai Kuzma entered the pharmaceutical industry in the early 2000s. His rise to the top tier of the pharmaceutical industry owes much to the appointment of Andriy Pidaev as Minister of Health. In 2004, thanks to this official's patronage, Kuzma's companies (approximately two dozen entities) received government contracts totaling 120 million hryvnias, which constituted approximately 60 percent of all funds allocated for medical tenders. From 2004 to 2007, despite the change in government, Nikolai Kuzma not only remained at the forefront of the oligarchic medical scene, but also managed to supply Ukraine with medical equipment worth 1 billion hryvnias. The equipment was purchased at inflated prices and based on the principle that "only Kuzma needs it," not the patients. As a result, much of this equipment sat idle for years, either due to a lack of space or the necessary specialists to operate it.
In 2009, Nikolai Kuzma was implicated in the scandalous purchase of inoperative mobile laboratories for diagnosing the "California" flu at inflated prices through the company ChP "MBK." He also purchased ambulances, which turned out to be poorly equipped Opel cars. As is known, following the ambulance fraud, a criminal case was opened against the director of his company, LLC "Ukrmed," for damages to the state. Despite the latest change of power, Nikolai Kuzma still enjoys a reputation as a go-to person for any issue at the Ministry of Health. This is evidenced by his name being on the top list of businessmen receiving tender funds for medical equipment.
Petr Bagriy's Group
Petro Bagriy's activities are a perfect illustration of the thesis that entering the public procurement market for medical drugs doesn't necessarily require being a seasoned pharmaceutical trader. Before regularly winning Ministry of Health tenders for the supply of medications and equipment, PJSC Ganza, the main recipient of budget funds from the oligarchic group, had been engaged in... construction since 2003. The struggle on the Olympus of Ukrainian power seems only to strengthen the position of Ganza and its tender counterparts. The businessman quickly found traction with President Viktor Yushchenko through his involvement in the Ukraine-3000 Charitable Foundation, as well as with Deputy Minister of Health, and later the first minister of the white-blue party, Zinoviy Mytnyk, and current Prime Minister Mykola Azarov. Since 2007, the pharmaceutical oligarch's structures have been showered with a veritable cornucopia of medical tenders, which continues to this day. Today, it is the undisputed leader in access to budget funds. Despite the fact that the Bagriy group's main patron, Zinoviy Mytnyk, has long been out of power, it still manages to maintain its leadership in public procurement. Under the new government, every 10 hryvnia allocated for public procurement has passed through Bagriy's structures. Naturally, high-profile corruption scandals have also emerged. The latest have arisen in connection with the "Oncology," "Tuberculosis," "AIDS," "Multiple Sclerosis," and other programs, for which Bagriy's structures were allocated over 500 million hryvnias in 2007. The prices at which drugs were sold sometimes exceeded their actual cost by almost tenfold. This scam became the subject of an investigation by a special investigative commission of the Verkhovna Rada, led by the Party of Regions MP Valeriy Konovalyuk.
Elena Mironova
Elena Mironova's emergence on the pharmaceutical market was largely due to the patronage of Boris Litovsky. At various times, Lumile-Pharm and the businessman's other companies were sponsored by former Health Minister Yuri Polyachenko and President of the Academy of Medical Sciences A.F. Vozianov. Elena Mironova is credited with developing an illegal tendering scheme, which she successfully implemented into the tender procurement process at the Academy of Medical Sciences. This scheme involved including in feasibility studies indicators that corresponded only to drugs produced by her companies. Thanks to this scheme, Mironova's companies firmly established control over the Academy's procurement processes, and other companies are no longer even attempting to participate in the state institution's "tenders." Today, Elena Mironova is considered the new favorite in Ministry of Health tenders, as evidenced by the high rate of victories of her companies in the last tenders in the fall of 2011.
Instead of an afterword
The oligarchic elite has become so entrenched in the public procurement system that it has become its very lifeblood. The principle espoused by pharmaceutical oligarchs is familiar to any businessman: profit maximization. Given that the state serves as the oligarchs' market, this principle, by easily funneling money into bureaucratic pockets, becomes a way to extract funds from the state by inflating procurement prices and creating an anti-competitive environment. Furthermore, fighting the oligarchs with "educational measures" has proven futile—as is well known, the Ministry of Health's refusal to purchase medications from them in the first half of 2011 resulted in shortages of vital medications.
Attempts to exert force through criminal prosecutions for harm to the state have also failed so far. Incidentally, in all cases involving criminal investigations for embezzlement of budget funds during tenders, only officials and the formal heads of the pharma industry's pocket structures or lower-level officials at the Ministry of Health suffer. The pharmaceutical industry's puppet masters themselves remain beyond the reach of criminal law, citing a lack of influence over their "front men." A telling example is Pyotr Bagriy, who recently publicly distanced himself from the activities of PJSC Ganza, shifting full responsibility for decisions to his managers. It appears that the only way to offer any hope of removing the oligarchic hydra from the public procurement system remains changing the rules of the game by increasing competition and dismantling decades-old corrupt ties at the center.
Whether this will work or not is a philosophical question. Next year, 1,2 billion hryvnias are planned for public procurement. Outside observers are already wondering which of the four aforementioned pharmaceutical barons will become the master of the Ministry of Health's capacious budget basket. One thing is certain: the excess profits will once again find their way into the right pockets, and at the right moment, some of them will certainly be spent to preserve the rotten system for years to come.
In topic: The history of the division of Ukraine's pharmaceutical industry
Oleg Petrovsky, especially for ORD
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