A delegation from the Auditor General of South Africa (AGSA) presented their report on the performance audit of the management of pharmaceuticals at the Department of Health. Key findings of the report were separated into different levels of the distribution of pharmaceuticals. These included policies and planning, procurement, distribution to patients and the storage and safeguarding which took place at medical depots and health institutions respectively. The delegation highlighted that their report found inefficient and ineffective practices within the value chain and these were broken down into four categories. Under the policies and planning stage, the first finding was that standard operating procedures were not implemented and that adherence to it was not monitored. The second finding was that the budget was incrementally based on historical information, instead of actual health care needs. The third finding was the shortage of pharmacists and pharmacist assistants to deliver pharmaceuticals and to provide operational support.
This meant that there were no pharmacists at health care centres and clinics, and in turn their work was done by nurses, which were people possessing competencies less than what was required. This was an issue of great concern for the Committee and they expressed that it was something that needed to be dealt with quickly as it was non-negotiable. The delegation also showed that they understood that it was also impossible for a person, serving hundreds of people whom travelled for a long distance to the health centre and who could not afford to go back without receiving what they came for, to follow all the required protocols and procedures when dispensing the medicine. This, along with working conditions, was identified as the root cause of the lack of adherence to medical dispensing procedures.
The common themes across performance audits looked at issues such as leadership and oversight, funding, project management and operations, and inter-governmental coordination. The delegation identified that leadership and oversight was needed at local, provincial, and national levels. The delegation also highlighted funding as an issue, and questioned the adequacy of funding because it did not reflect the current need but only historical information. Project management and operations failed to ensure that an investment of R17 billion provided the necessary return, questioning to what extent it reached the patient. As an example, a member of the delegation highlighted the human resource aspect which affected the hiring of pharmacists and pharmacist assistants. They found that in some provinces, vacancies remained unfilled, even if the positions were advertised.
The key recommendations were also discussed and it was highlighted that these recommendations were a mirror of the key problem areas which were highlighted in the key findings and common themes. The recommendations were divided into national and provincial departments with regards to policies and planning, which included development of national core standards, the implementation of standard operating procedures, reconsideration of incremental budgeting, reviewing and updating of human resource plans. With regard to procurement of pharmaceuticals, the AGSA recommended paying of suppliers within 30 days of receipt of invoice, imposition of late penalties for late deliveries and updating the stock visibility establishment. With regards to distribution to patients, they recommended the development and implementation of dispensing registers, instituting measures to update and retain patient records at health institutions and identifying health institutions with insufficient or non-compliant waiting areas, storerooms, dispensaries and consulting rooms.
Key initiatives which were implemented at national and provincial departments of Health were also mentioned in the presentation. At national level, platforms were established to discuss policies and procedures, human resources and supply management. The performance of suppliers was monitored and national core standards were developed with the assertion that provinces could assess themselves. The provincial departments needed to make sure that they implemented the recommendations proactively.
The Acting Chairperson welcomed everyone in attendance and introduced himself as the Acting Chairperson because the Chairperson of the committee was on sick leave until next month. He then handed over to the delegation to commence with their presentation.
The Acting Chairperson explained that the presentation was concerning a very important matter which was the performance audit of the management of pharmaceuticals by the Department of Health. He explained that this included the entire health sector in all nine provinces. He mentioned that it was a very important presentation because medicine was one of the key deliverables in the Department of Health therefore the special focus on the performance of pharmaceuticals was very key in improving the health outcomes in South Africa. He continued by saying that the report was very key in the sense that Members of Parliament would be better equipped and better informed to understand what the state of pharmaceuticals in provinces were. But at the same time it was going to enrich them to effectively perform their roles of oversight as Members of Parliament. He said that the information given by the presentation would be used as a tool to strengthen their oversight responsibility.
Briefing by AGSA
Mr Kimi Makwetu, Auditor General, AGSA explained that he would be presenting on the outcomes of the performance audit that was performed, which affected the value chain and performance of pharmaceuticals. He referred to page 80 of the distributed performance audit report as a background for the presentation. He then flagged conceptual issues in the performance audit report which he deemed of importance. On page 80 of the report, the important conceptual issues were the EEE, that is, the Economy with which the pharmaceuticals were procured, the Efficiency of their application in terms of distribution, storage and other specific activities which were there to ensure that the handling and disposal of pharmaceutical products was handled in such a manner that was efficient. The third E was for the Effectiveness of the delivery of pharmaceuticals. He further explained that the presentation would look at how the respective players within the value chain responded to the expected roles which they were expected to play.
He then referred specifically to slide 2 of the presentation and stated that they were looking at issues pertaining to the policies and planning for pharmaceuticals with regards to the need, the procurement of pharmaceuticals once the need was established, the storage and safeguarding of pharmaceuticals at the respective sites where it was kept after it was received and the area of distribution with regards to how it ultimately got to the final patients. He said that it was the value chain they were looking at because all of these were part of what enabled a particular pharmaceutical for medicines to be available right at the local clinic. He further on explained that in the scope of the work that the AGSA conducted, as far as the performance audit was concerned, it also looked at the role that was played by the national Department of Health since they were largely concerned with issues of policy while the nine provincial Health departments across the country had a specific role in effecting the delivery of pharmaceuticals. He further on said that the examination also covered a number of medical depots where the medicines and pharmaceuticals were kept, as well as the number of selected hospitals and community health centres where the actual distribution happened. He explained that within the scope of the work they conducted, they performed follow-up work on the areas where they found weaknesses because they came across quite a number of commitments and demonstration of activity that took place in some of the provinces post the work which the AGSA performed.
He then highlighted the key role players in the value chain which were mapped on slide 3 by isolating the specific roles played by the national Department of Health and the specific roles of each of those functions. He said that the AGSA looked specifically at the role played by the provincial Department in planning for the acquisition of materials and employment of required Human Resource where needed. He also stated that the focus was to ensure that the expenditure of provincial departments of R16.8 billion did in fact go to the 44 million intended beneficiaries. He made reference to poor storage facilities which caused the medicine not to stand a chance to be kept for the duration of its useful life. The major determining factors to this were the temperatures and security of the storage facilities. He also noted that a lot of the funding for pharmaceuticals was determined by historical patterns and not the health need at the moment. This might, in the future, result in having much less medicine than what was actually needed.
One of the highlights they picked up in the report, was that Free State, Limpopo and Eastern Cape, comparing 2013 to 2014 and 2015 to 2016 periods, did a sterling amount of work in dealing with the stock-out rate because they used to have a higher number of stock out in 2013 to 2014 compared to the 2015 to 2016 year. He further explained that stocks were now available at rates that were higher than before and this was due to the implementation of a number of initiatives including the stock visibility system. He then highlighted the key findings of the audit report. There were a lot of inaccuracies in the dispensing of medicines because of working conditions. The issue of security and access were not diligently observed and access was not regulated. Observation of expiry dates was another issue that was highlighted as well as record keeping.
He then moved on to highlighting the key findings and common themes being examined across performance audits that had to be given attention. The key findings were separated into the different levels of the distribution of pharmaceuticals. These were policies and planning, procurement, distribution to patients and the storage and safeguarding which took place at the medical depots and health institutions respectively. He said that the report found inefficient and ineffective practices within the value chain. He made an example that under the policies and planning stage, the first finding was that standard operating procedures were not being implemented and that adherence to them was not monitored. The second finding was that the budget was incrementally based on historical information instead of actual health care needs. The third finding was the shortage of pharmacists and pharmacist assistants to deliver pharmaceuticals and to provide operational support. This meant that there were no pharmacists at health care centres and clinics and in turn their work was done by nurses, who were people possessing competencies less than what was required. However, he also stated that he understood that it was also impossible for a person, serving hundreds of people who have travelled a long distance to the health centre and could not afford to go back without receiving what they came for. He explained that this situation was the root cause of the lack of adherence to medical dispensing procedures.
The common themes across performance audits looked at issues such as leadership and oversight, funding, project management and operations, and inter-governmental coordination. He further explained that leadership and oversight was needed at all levels. He also highlighted funding as an issue, and questioned the adequacy of funding because it did not reflect the current need but only reflected historical accounts. Project management and operations failed to ensure that an investment of R17 billion provided the necessary return. As an example, he referred to the human resource aspect which affected the hiring of pharmacists and pharmacist assistants. He said that they found that in some provinces, vacancies remained unfilled, even when positions were advertised. He then moved on to conclusively discussing the key recommendations.
He highlighted that the key recommendations were a mirror of the key problem areas which were highlighted in the key findings and common themes. The recommendations were divided into national and provincial departments with regards to policies and planning. These included the development of national core standards, the implementation of standard operating procedures, reconsideration of incremental budgeting, and reviewing and updating of human resource plans. With regard to procurement of pharmaceuticals, AGSA recommended the paying of suppliers within 30 days of receipt of invoice and imposing late penalties for late deliveries, as well as updating the stock visibility establishment. With regards to distributing to patients, they recommended the development and implementation of dispensing registers, instituting measures to update and retain patient records at health institutions and identifying health institutions with insufficient or non-compliant waiting areas, storerooms, dispensaries and consulting rooms.
He then mentioned the key initiatives which were implemented at national and provincial departments of Health. At the national level, platforms were established to discuss policies and procedures, human resources and supply management. The performance of suppliers was monitored and national core standards were developed with the assertion that provinces could assess themselves. He said that the provincial departments needed to make sure that they implemented the recommendations proactively.
Dr W James (DA) emphasised the efficiency of the delivery system and asked about the mismatch in burden of diseases and the supply of medicines. He asked where the AGSA got their numbers from when they said that there was a mismatch between disease and medicine. He also asked where they drew the data from and about their knowledge base for asking questions.
Mr W Maphanga (ANC) thanked the AGSA for the presentation. He highlighted the issue of payment within 3 days and asked if there was improvement with regards to the 30 days payment to service providers. He also asked about the implementation of the program of the clinic and if there was improvement.
Mr D Khosa (ANC) suggested an investigation had to be conducted as to why the departments did not adhere to the standard operating procedure. The second question was why not set up a strict policy regarding the budget. The third question was why not train pharmacists in order to reduce the stress nurses worked under.
Dr S Thembekwayo (EFF) said it was very much worrying that the budget was not enough, but at the same time it was contradictory to the information about storages and safeguarding medical depots. She said that it was clear to them that medicines were available but it was upon the distributing aspect or efficiency. She said it all depended on who did the monitoring of sufficient and timeous delivery and added that there was a lot of wastage.
Ms D Senokoanyane (ANC) said that if one looked at rural provinces, most people were not insured, thus they needed health services from government. She alluded to the shortage of pharmacists and said that she did not know why young people were not attracted to the profession. The other area she highlighted was the issue of loses and expired stocks and referred to the depots, that most clinics received the medicine when they were close to their expiry date but also said that this might be due to the fact that procedures were not followed. She asked how much of the pharmaceuticals were lost in transit, because there were loses not just from damage or internal loses. She said that they heard stories of trucks being diverted to other areas. She asked the delegation to give an indication of how much the losses were. With regards to the shortage of personnel, she agreed, and also highlighted the issue of chronic medication and only a few facilities providing the service of separating the queues.
Dr P Maesela (ANC) said that the presentation was a mirror of the inadequacy of provision of health services and highlighted that it might result from a faulty way of thinking that somehow things would be fine. He then expressed that things would not be fine unless they were made to be fine. He said that they went to places where they found that there was a problem of shortage of pharmacists or no pharmacist at all because in the whole system one found nurses doing what pharmacists should be doing and this created problems. He then suggested that the problem be tackled bit by bit, for example first provide training for pharmacists and deploying them where there were proper facilities. He said that it was of no use to deploy pharmacists if there were no proper storage facility for medicine. He then said there was inadequacy in the whole system, from problems of human resources to facilities to equipment. He said that the population was growing but human resources, facilities and equipment were not growing in tangent to the need. The budget was according to projections on historical facts. He said what needed to be done was that all the stakeholders had to sit down and ask what must be done? We needed so much and these were the requirements. He concluded that this process needed deliberate steps to solve these problems and not say eventually they will be worked out.
The Acting Chairperson asked what the observation was in terms of the efficiency and effectiveness of management. He said that there were no norms that the national Department set in terms of allocation of budget per uninsured person. Did that mean there were no national norms which had to guide the provinces and if there were, what was the reason for the diversion? He questioned the issue of the shortage of pharmacists and pharmacist assistants, and wanted to know if it related to the issue of remuneration or was it merely an issue of there being not being pharmacists. For example, Mpumalanga and Limpopo lacked pharmacist tertiary education. He asked if there was a link between these two. Were we competing with the private sector?
The issue of comparing 2013 to 2014 and 2015 to 2016 indicated a huge decline in the availability of pharmacists in the Mpumalanga and Gauteng. Was this a result of poor budget with the exception of Eastern Cape, Western Cape, Limpopo and Free State? What was the observation around National Health Insurance (NHI) pilot sites? Lastly, he asked what the explanation was from provinces for their failure to comply in terms of payment within 30 days, taking into consideration that the area of work fell under non-negotiables, thus, payment should have taken place within the required time and not be an issue because it affected the supplier from time to time. He said the PAC did audits around the performances of Health facilities and asked if they shared information? Were there commonalities?
Dr James said that half the depots were not licensed by MMCC.
Mr Makwetu painted a broad picture of the value chain and pharmaceutical distribution system. He mentioned that there was no way that this area of medicine storage depots and late payments could be looked at in isolation. He said that the delayed payment issues were deep seated in poor management of human resources. He found that there were interlinks in the system which indicated that slowness in the value chain, lack of accountability, and the non-compliance and non-adherence to basic operating controls did not allow things to be captured. This resulted in basic low levels of controls.
An official from the AGSA said that proper implementation of operating procedures depended on district pharmaceutical committees which made it difficult. She said that with regards to the payment within 30 days, a total of 125 suppliers improved to under R400 million. She added that some documentation got lost, or the supplier would not get the required original documentation which indicated that human error caused delays throughout the process. She also alluded to the question why standard operation procedures were not being implemented and attributed this to the shortage of qualified pharmacists and recommended someone from the Department had to be sent on a monthly basis to supervise and train people.
She said there was a strict policy for budgeting, and there were no norms for the budget that they knew of. She also referred to the number of pharmacists and pharmacist assistant particularly in rural areas, how low this number was. She mentioned that it was difficult to keep qualified pharmacists and pharmacist assistants in the province when they received their education and training. One of the key causes of this was in terms of salary and another reason she highlighted was that they left because of the working environment. This then led to poor monitoring in terms of stock management. She mentioned that monitoring was extremely important at all levels. She also stated that there were procedures on outdated or short dated stock such as the “first expiry first out principle”.
However, these procedures were not followed because of insufficient work flow and poor infrastructure. For example, referring to a comment of a member about chronic medication dispensing, she agreed that one would find that there was no separate queue for chronic medication at local health centres. She mentioned the CCMP system and task shifting where tasks were shifted from pharmacists to nurses, particularly in rural areas, as also one of the challenges to the dispensing of medicine. She mentioned the National Health Insurance (NHI) project, and that there was a difference between a clinic with NHI and the ones without. She mentioned that in the clinics without NHI, nurses could not use most of the technology. She mentioned that the Mpumalanga Province had outsourced an external service provider who was paid a percentage of the national budget. This was done on a quotation basis; she mentioned that it was not economical to hire an external service provider. She said that the norms in terms of budget were not set. Referring to the shortage of pharmacists, she said that 80% of all registered pharmacists were working in the private sector and not in public sector because of poor working conditions in the public sector. Referring to the procurement of pharmaceuticals, she said that depots in Kwazulu Natal, Eastern Cape and Mpumalanga were not registered.
Mr Makwetu said that the AGSA issued three reports on audits last year. He said that they have engaged the other two with its portfolio committees. He suggested that the in-year monitoring program could be an opportunity to address key issues. He mentioned that the issues were complicated and that it was not a one element thing. He also gave suggestions and way forward which mirrored the key recommendations. He said that they would incorporate these suggestions from their side in their annual general audits.
The Acting Chairperson said that another challenge was that most of these things happened at provincial level but at national level they would say they were doing their best and most of these things were not in their control. He said that recommendations had to be implemented to the fullest.
Dr James mentioned that the national and provincial cooperative governance committees had to be engaged in these issues.
The Acting Chairperson said they must see how the system was working and what needed to be done if it was not working. He thanked Auditor General and the team for the presentation.
The meeting was adjourned.