Kharkiv-based Pharmstandard-Biolek, whose vaccines killed 11 children, has found a new "friend" in the Ministry of Health and is resuming production.
The Kharkiv-based company Pharmstandard-Biolek is known for the deaths of 11 children following the use of its vaccines in 2012. Previously, one of its co-owners was the son of former Health Minister Raisa Bogatyreva, which helped the company establish cooperation with the Ministry of Health.
Today, Biolecom is owned by a Russian billionaire, and the minister's seat is occupied by someone else. But this hasn't affected the company's warm relationship with the ministry. Despite violations uncovered during SBU inspections, the company has successfully resumed vaccine production.
A scandalous story
Kharkiv-based Pharmstandard-Biolek is one of the largest pharmaceutical manufacturers in Ukraine, and has been embroiled in numerous scandals throughout its long history.
The most high-profile of these erupted at the end of 2012, when 11 children died after receiving the hepatitis B vaccine produced by Biolek.
At the time, Raisa Bogatyreva headed the ministry, and her son, Oleksandr, owned 19% of the plant. As a result of this "family" partnership, the company earned approximately 40 million hryvnias in one year from Ministry of Health procurement. After the death of the children, the Prosecutor General's Office took over these tenders.
In addition, the State Service of Ukraine for Medicines (SSUMP) conducted an inspection at the enterprise itself, which identified 14 critical and 22 significant violations in drug production.
Following the inspection, the State Service temporarily banned the sale of certain vaccines.
Following a high-profile scandal and a number of media publications, it became known that in February 2013, Bogatyreva's son sold his stake in the company.
Today, 96% of Pharmstandard-Biolek shares belong to one of the largest Russian pharmaceutical companies, Pharmstandard, owned by billionaire Viktor Kharitonin.
New checks and old problems
Although the scandal gradually died down and the plant ceased to attract media attention, the State Service for Medicines continued to conduct scheduled inspections there.
According to their results (available to INSIDER), the company constantly identified technical and legal inconsistencies with legislation, which, despite the regulator's demands, were not corrected.
One of the most recent inspections took place in March 2014. Based on its results, the service identified significant violations in the production of the drug "Tuberculin PPDL" (the Mantoux test for children).
One of the main violations is the lack of registration of the raw material from which the drug was manufactured—the "tuberculoprotein allergen." It is listed in the company's documentation as a semi-finished product, but in the finished product documentation, it is listed as the active ingredient (semi-finished products do not require registration).
According to the regulator's report, the production and use log for this raw material contained no dates or signatures from responsible employees. The quantities of tuberculoprotein reported varied, and there were no documents verifying its suitability.
The Kharkiv branch of the Security Service of Ukraine (SBU) also conducted an inspection of Pharmstandard-Biolek a month earlier. Its findings were similar to the reports of the Medical Service. However, according to a letter sent to the Ministry of Health, security officials also discovered that the "tuberculoprotein allergen" was presumably illegally imported from the Russian Federation and manufactured back in 1976.
"Tuberculin allergen" is quite durable, but maintaining its suitability requires strict adherence to complex storage conditions and constant quality checks, which, according to the documents, were not carried out at the plant.
The Ministry's response
According to an INSIDER source familiar with the case, despite the Bogatyrev family no longer having any ties to Biolek, the company's interests are still being lobbied for by senior management at the Ministry of Health.
"A criminal investigation was opened into the violations identified, but nothing further was done. The ministry organized a roundtable discussion, inviting representatives from the SBU and the civil service, and made it clear there would be no investigation," the source said.
Information about the roundtable was confirmed by a letter from the ministry, in which SBU officers were invited to discuss the issue of production violations at Biolek.
"One of the deputy ministers said at a roundtable discussion that there are no violations in production there, and if someone urgently needs a license, he can issue one right on the spot," INSIDER's source added.
In July of this year, Health Minister Oleh Musiy told INSIDER in an interview that most of the ministry's conflicts were related to his first deputy, Ruslan Salyutin, who was appointed against his will under the Batkivshchyna quota.
According to the State Procurement Bulletin, Pharmstandard has not won a single tender since the child death scandal, raising the question: to whom does the company sell its medications?
The answer is partially provided by the company's 2013 financial statements, posted on the website of the Agency for the Development of Stock Market Infrastructure. According to the document, Biolek produced most of its products for export to Russia and Kazakhstan. The only products not listed for the immunoglobulin and tuberculin products are the ones whose destination country is not specified.
During the scandals of early 2013, in addition to regulatory authorities, Batkivshchyna MP Andriy Senchenko also investigated Pharmstandard's violations. In his statement, he detailed the schemes by which the company obtained government contracts.
The company was assisted in creating false competition by the companies Valange-Pharm and Bizkarta, which offered vaccines of its own production.
In July 2014, Valange-Pharm also won tenders to supply tuberculin to children's hospitals and other medical institutions. Similar contracts were also awarded to approximately 10 other companies, both well-known and relatively new.
The problem is that the tender documentation does not specify the manufacturer of the drug purchased from the winning bidders. But the choice is limited, as, besides Biolek, only the Danish Statens Serum Institute has the relevant certificate.
The vaccine, whose quality has never been confirmed, poses a threat not only to Ukrainian children. Pharmstandard-Biolek is also the sole supplier of tuberculin in Kazakhstan. According to Zakon.kz, the plant recently signed a contract to supply nearly 400 liters of the drug to meet the needs of medical institutions across the country. The shipment is scheduled to take place by the end of September.
The State Service for Medicines told INSIDER that a week after the March inspection, Pharmstandard-Biolek sent them a letter stating that all violations had been corrected.
“Based on letters from Pharmstandard-Biolek, an unscheduled inspection of the enterprise was conducted on June 11-12, 2014, and permission was granted to resume production of the drug Biolek tuberculin PDDL,” the service reported.
During this inspection, regulator representatives confirmed that the "tuberculoprotein" was produced at the facility and not imported from Russia. Production has now been suspended; existing raw material reserves will be used to produce the finished product. According to the SBU letters, these reserves are sufficient to meet the needs of the Ukrainian population for the next 30-40 years.
The government agency referred questions about the safety of this raw material and the drug made from it to the Ministry of Health, which had not responded at the time of publication.
An INSIDER correspondent also asked Health Minister Musiy about the activities of Pharmstandard-Biolek, but he referred the questions back to the civil service.
"This is not our area of expertise; all questions should be directed to the Medical Service," Musiy said.
The company itself declined to answer INSIDER's questions over the phone. An email inquiry was also unanswered.
INSIDER
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