2014

Ukraine’s Diagnosis is Total Corruption

Analytical report From the Anti-corruption Action Center

Based on the Annual Pharmaceutical

Procurement Monitoring Report

of Six State Programs

Kyiv, 2015

Who Benefitted from Sabotaging Procurement of Pharmaceuticals in 2014

Contents:Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Treatment Programs and Their Funding in 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Anti-сorruption Action Center’s Oversight of procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5

Part I: Corrupt SchemesOld Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-13New Schemes 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-17

Part II: Systemic Problems Exclusive Sales: Intermediary Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18-19Misbalance in the Distribution of Funds for Certain Pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20-23Proportion of Pharmaceuticals of Local and Foreign Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Misrepresented MoH Statistics in Needs Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25-27Traps in the MoH Bidding Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-29Discriminating Conditions of the MoH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20-31

Part III: Procurement Failure Comparison of Procurement in 2013 and 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32-33Bidding Winners in 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34-37Pharmaceutical Shortage by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38-39

How to Tackle Corruption inProcurement of medicines . Recommendations of the Anti-corruption Action Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40-41

In 2014, the state failed to perform one of its key national functions, namely providing affordable access to medical care.After the victory of the Revolution of Dignity the new administration in the government and the Ministry failed to observe the right for medical aid guaranteed in the Constitution of Ukraine.

The prices for most medicines grew in the bidding process in 2014 compared with 2013. This price growth is believed to result from two key economic factors, namely: hryvnia depreciation and the introduction of a 7% VAT for pharmaceuticals.

In addition to the economic reasons political and corruption-related factors also led to the failure of public procurement of pharmaceuticals in 2014.

The current national system providing citizens with vital medicines was blocked because of systemic political corruption among officials in the Ministry of Health (MoH) and line ministries. As a result, bidding announcements were continuously delayed, and producers got the chance to re-register their prices of the Wholesale Manufacturers Price Registry. The system of referral prices was established that did not reflect the lowest prices in the regions, and the tenders were blocked via the AMCU agencies.

This report contains three parts. First, the authors describe the schemes that existed in the healthcare system in the past, while addressing some new ones that appeared this year. Second, the report also covers other systemic problems that prevent the establishment of a transparent public procurement system for pharmaceuticals and promotes continued corruption in this area. Third, the report describes the consequences of the corrupt practices and systemic problems that became particularly tangible in 2014 and caused the failure of the public procurement program of pharmaceuticals.

That failure led to the shortage of the most vital medicines in many regions of Ukraine, which will be clearly demonstrated by this report.

Introduction

6

diagnosis treatment

Access to medical care in Ukraine is provided through national treatment programs and projects. Ukraine had

17 such programs in 2014, and the Ministry of Health was responsible for their implementation.

Budget allocations for the procurement of medicines, medical products and chemical agents for diagnosis in 2014 included

286 707 100,00Immunoprophylaxis 54,23% of the total need

6 600 000,00ART 21,70% of the total need

166 218 700,00Tuberculosis33,96% of the total need

221 143 300,00Cardiovascular diseases60,76% of the total need

277 063 600,00Adult oncology 14,10% of the total need

22 443 000 Prosthetic implants1,58% of the total need

60 915 300,00Donorship42,42% of the total need

19 740 300,00Diabetes mellitus 27,94% of the total need

32 089 700,00Reproductive health 28,78%of the total need

34 736 800,00Transplantation24,09% of the total need

59 688 000,00Hemophilia26,04% of the total need

284 468 300,00HIV/AIDS33,54% of the total need

10 690 900,00Nephrology9,77% of the total need

414 669 200,00Children’s oncology and oncohematology100,00% of the total need

71 056 500,00Multiple sclerosis 96,68% of the total need

197 166 000,00UN Convention 50,11% of the total need

91 558 800,00Hepatitis20,53% of the total need

One of the ways to implement those 17 programs is through the procurement of medicines and agents for both

and

The covered percentage of the program funding in cash terms is identified following the MoH calculations. At the same time, those

calculations are tentative and are often based on underestimated statistical data. Therefore there are reasons to believe that the real

percentage of the needs coverage is much lower. For instance, according to the MoH data, the budget covers 100% of treatment costs

for children with cancer; however, in reality most of the costs are covered by the benefactors and patients themselves.

2 266 186 900,00

National Treatment Pprograms and Their Financing in 2014

7

90Program / area Measure Funding for 2014 Agreements signed /

funding spent Unsigned contracts % of used funding

1 Tuberculosis Medicines 154 283 100,00 152 896 031,35 1 387 068,65 99

Products 11 935 600,00 10 773 612,00 1 161 988,00 90

2 AIDSMedicines 218 520 800,00 214 043 573,97 4 477 226,03 97

Products 65 947 500,00 63 434 433,73 2 513 066,27 96

3 Adult oncology

Oncology/мedicines 173 759 120,00 173 755 796,84 3 323,16 100

Oncohematology/medicines 43 439 780,00 43 439 719,16 60,84 100

Chronic myeloid leukemia 59 864 700,00 59 861 813,40 2 886,60 100

4Children’s oncology and onco-hematology

Medicines

414 669 200,00

367 617 623,31

11 626 061,44 97Products 34 066 238,80

Reagents 1 359 276,45

5United Nations Convention on the Rights of the Child

Hepatitis/мedicines 7 659 600,00 5 931 170,03 1 728 429,97 77

6 Hepatitis Hepatitis В and С 91 558 800,00 83 856 963,07 7 701 836,93 91

Total 1 241 638 200,00 1 211 036 252,11 30 601 947,89 97,54

Anti-corruption Action Center’s Oversight of ProcurementThe Anti-corruption Action Center (AntAC) monitors pharmaceutical procurement for six out of 17 MoH state programs: treatment of HIV infection/AIDS (1) treatment of tuberculosis (2), prevention of cancer in adults (3) prevention of cancer in children (4), prevention of hepatitis in adults (5) prevention of hepatitis in children (6).

The state provides the biggest funding for those programs compared with others: UAH 1,241,638,200.00 in 2014, with de-facto spending of UAH 1,127,179,289.04.

The AntAC team has monitoredtenders

Over UAH 30 million remained unused

of budget money

8

90-50%1 127 179 289, 04,

Ineffective Use of Funds

New corruption schemes were added after the Revolution of Dignity to the arrangements that had already existed in the public procurement of pharmaceuticals. Instead of fighting corruption mechanisms that had existed in public procurement in the past4, the government created many more problems and corruption mechanisms.

The analysis has shown that of all the money allocated to the six programs monitored by Anti-corruption Action Center,

were spent eather with considerable violations or ineffectively

4 Corruption schemes that existed in 2013 were described in detail in the analytic report Who Benefits from HIV/AIDS and TB Epidemics in Ukraine.

2013 Schemes

2014 Schemes

Cartel collusions

Procurement blockage

Wholesale Factory Price

Registry

Untimely/delayed bidding

Single-pharmaceutical

bids

Bids cancellation

Fighting competitors,

blockage of similar alternative medicines

Change of procurement

terms

9

Old schemes2

Scheme No 1

Cartel collusions have led to a market oligopoly, a situation where each of a small number of players holds a significant share and can control market price with own actions .

When the bidding nevertheless becomes competitive, the MoH uses different sorts of ‘traps’ built into the technical requirements for the commodities in the bidding documents. This may include lots merger, as well as the announcement of the procurement of specific pharmaceutical forms or dosages only.

Cartel Collusions / Backroom Deals Backroom deals between companies to distribute contracts at the public biddings.

Cartel collusions between several companies that belong to different owners but coordinate their actions at biddings;

Biddings simulation between companies controlled by the same de-facto owner (e.g., the so-called Bahriy’s Group);

The above schemes and their participants stayed on in 2014. Although, the configuration of participants slightly changed, the key players kept their positions.

Key forms of cartel collusions un pharmaceutical public procurement:

40%The Security Service of Ukraine has estimated that

pharmaceutical public procurement prices were

overestimated 40% in 2012-2013. The monopolist

companies maintained that corruption margin

and transferred it to the public officials’ pockets as

kickbacks to preserve their oligopoly (control) over

the market.

10

1,26billion of

UAH

damages were inflicted by Liudmyla Pharm to the state budget of Ukraine through pharmaceutical overpricing according to the SSU data in 2012-2014

Examples of Cartel Collusions Between Different Owners

2013 2014

12% 12%17%

Liudmyla Liudmylavs . vs .

In 2013, Liudmyla Pharm LLC with Medpharmkomtsentr Private JSC won bids for 12% of TB contracts and 20% of contracts for children’s oncology.

In 2014, Liudmyla Pharm LLC shared with Medfarmkomtsentr Private JSC bids for 12% of TB funds and 26.5% of funds for children’s oncology.

of all money for TB in 2013 of all money allocated for TB in

the bidding for the same drug, Moxifloxacin

of all money for children’s oncology in 2013 of all the funding for

children’s oncology in 2014

26 lots for

₴116 mln

32 lots for

₴52,2 mln

The AntAC experts presume that Liudmyla Pharm’s competitors play only a formal role. Among them is Medpharmkom Center LLC controlled by the Swiss offshore company PALMA GROUP SA. The final signature right in PALMA GROUP belongs to its nominal director Francois Zurcher, who has worked and continues working in 63 other companies at the same time.

26,5%

Medpharmkom Medpharmkom

11

Old schemes

Scheme No 1

Petro BAHRIY

President of the Ukrainian Pharmaceutical Producers’ Association, mentioned in V. Konovaliuk’s report (drafted following instructions of the Parliamentary Committee for Healthcare in 2008), which describes in detail how almost one half of the budget healthcare allocations was laundered in 2005–2007.

Lumier Pharm LLC positions itself as a Ukrainian pharmaceuticals producer. However, its production is mostly repackaging into smaller packages. It does not submit bids to MoH tenders but sells anti-TB medicines to other companies of Bahriy ’s Group.

was a registered founder of SPC until 2006

Identical prior address

Identical prior address

sells pharmaceuticals to

sells pharmaceuticals to

sells

pharmaceutic

als to

Identical registration address

were members of so-called Bahriy’s Group in 2005-2007, according to V. Konovaliuk’s report.

New Bahriy’s Group: these companies constantly ‘compete’ against each other imitating fair competition.

Serhiy Siora

owned share

identical registered telephone number

Cartel Collusions/ Bbackroom Deals

Hanza LLC

Pharmaceuticals of the Regions LLC

Lumier Pharma

LLC

Sumy Pharmacy Company LLC Pharmadis LLC

Ukrpostach LLC

Sky Pharm LLC

formal owner

Under those six programs, Bahriy Group companies won  UAH 194 mln in 2013UAH 478 mln in 2014

12

98lots in 2013 were won by companies of Bahriy ’s Group

Three clone companies

controlled by Petro Bahriy

participate in competitive

bidding for pharmaceutical

supplies on a regular basis.

They divide a share of the

lots amongst themselves

while imitating competition.

91lots in 2014

Bahriy ’s Group companies won

Anti-hepatitis drugs (for adults)

Anti-HIV/AIDS drugs (antiretrovirals)

Anti-TB drugs Anti-hepatitis drugs (for children)

96%

91%

Pharmadis

Pharmadis

vs .

vs .

of all money allocated for hepatitis in adults in 2014 was received by Bahriy ’s Group

of all MoH funding for anti-HIV/AIDS drugs in 2013 was received by Bahriy ’s Group

of all money allocated for hepatitis in children in 2014 was received by Bahriy ’s Group

у 2014 році 80 мільйонів на 5 лотів з дорослого гепатиту отримав Люмєр Фарма конкуруючи в парі з фармаді-сом. А це 96 відсотків коштів, які були виділені на дорослий гепатит

фармадіс 5,4 млн на 11 лотах з дитячого гепатиту, конкуруючи з укроптпостачем, що становить 91 відсоток коштів на дитячий гепатит

5 lots for ₴80 mln

11 lots for ₴5,4 mln

Lumier

Ukrpostach

Under those six programs, Bahriy Group companies won  UAH 194 mln in 2013UAH 478 mln in 2014

1 lot for ₴15,6 mln

6 lots for ₴43,9 mln

2 lots for ₴10,9 mln

PharmadisSky Pharm

Sky Pharm

Pharmadis

Pharmadis

Ukrpostach

13

Old schemes $€₴

Scheme No 2Registry of "Exorbitant" Wholesale Factory Prices The aim of the Registry of Wholesale Factory Prices is to set maximum prices for pharmaceuticals that the companies cannot exceed in their public procurement sales.

However, an imperfect system of pharmaceutical cost declaration allows the holders of pharmaceutical registration certificates to knowingly overstate the Registry prices. In essence, participating registration certificate holders collude with the MoH to declare overstated prices. Furthermore, according to the AntAC experts, they quote those overstated prices in the bids and split the difference.

In fact, the Registry has become a legal tool to cover up corruption and overestimated pricing in the market of pharmaceuticals procured by the MoH and other state agencies.

What is the rationale for the Registry pricing?

A pharmaceuticals producer or its representative in Ukraine receives a registration certificate for the medicines from the State Pharmaceuticals Service of Ukraine subordinated to the MoH. Furthermore, the certificate holder sends a statement to the MoH declaring the wholesale factory price according to the established formula. Different formulas apply to drugs produced locally and overseas. £Pricing methodology for Registry purposes is rather biased for the pharmaceuticals produced in Ukraine. Along with

the certificate, a registration certificate holder company must submit to the MoH the pharmaceutical’s price that the

company sets for all wholesale deals with all its suppliers. The MoH does not request any documents to corroborate the

wholesale price, and the State Inspectorate does not check it despite its authority to do so. So in reality the producer

can set any price that is not vetted by any state institution.

Price Registration for Local Drugs

14

$€₴Price Registration for Imported Drugs The pricing formula for imported drugs is based on the customs value of the drug stated in its customs declaration issued to a

company at the time of the drug’s entry to the territory of Ukraine. The importers are under no obligation to provide the actual cus-

toms declaration copy to the MoH. Customs declarations are confidential, with access available only to the Ministry of Revenues

and Duties of Ukraine. The report of the Ukrainian Interim Parliamentary Commission discloses that offshore companies are often

used to increase drug customs prices. Ukrainian intermediary companies conduct fictitious business transactions overseas with

several foreign offshore companies. Moreover, drug transfer only occurs on paper, and the drugs are actually delivered from the

producer straight to Ukraine; however, their price is several times higher at that point.

Considering the preferential taxation regime, by overstating the customs price of the pharmaceuticals and medical products the

importers can use those grey methods to siphon the money out of Ukraine and artificially minimize their tax liabilities. Profits settle

in the pockets of beneficiary (actual) owners of intermediary and offshore companies.

By selling pharmaceuticals fictitiously on paper only

to their own intermediaries, the companies de jure

receive no superprofits on pharmaceutical resales,

so they pay negligible taxes. However, de facto they

sell the pharmaceuticals at the prices dozens of

times higher and earn superprofits that further end

up in the pockets of the officials from the MoH and

other controlling authorities who ask no questions

about the huge difference between factory release

prices and their selling price in Ukraine.

offshore

offshoreoffshore

de facto

de jure

Company X Cyprus

Company Y Virgin Islands

Company Z Panama

Ukraine

£Pharmaceutical factory

15

Old schemes

Scheme No 3Bidding with Identical Pharmaceuticals Normally pharmaceuticals with the same active substance are presented under different brands in Ukraine and in the world. For example, the active substance pancreatin is present in Ukraine under more than 12 brands: Creon, Kreazym, Pancreatin, Fermentium, Festal and many others. Each of these brands may come in 4-5 various dosages.

Nevertheless, the intermediary companies usually collude with producers and enter tenders with the same brand and one dosage. In reality, neither distribution companies nor even brands compete with each other because of backroom dealings with producers.

Oncology:Ukroptpostach Company and Liudmyla Pharm LLC submitted bids for procurement of the oncology drugs Methotrexate and Cisplatin with the same brand names produced by EBEWE Pharma Ges.m.b.H. Nfg.KG, Austria, despite availability of other brands registered in Ukraine. Both bidders received producer’s letters of guarantee about the delivery possibilities. There were no other competitors in the bidding.

Tuberculosis:Local producers Kyivmedpreparat PJSC, Zdorovia Pharmaceutical Company LLC, Yuria-Pharm LLC and Research and Production Center Borschahivskyi Chemical Pharmaceutical Factory PJSC won the bidding for anti-TB drugs Kanamycin 100 mg vials, Levofloxacin tablets, capsules, pills, 250 mg, Isoniazid bottles, vials, (syrup), 4,000 mg, Rifampicin tablets, capsules, pills, 150 mg. They competed against intermediaries that submitted bids for the same pharmaceuticals.

Hepatitis:An example of price reduction due to competition can be procurement of pegylated interferons for hepatitis treatment, when bids of a new company with a new drug reduced the prices of one vial by UAH 346, from UAH 1,646 to UAH 1,300 despite the US dollar rate growth.

16

15 mln

Scheme No 4:

A number of pharmaceuticals are registered by the same brand in Ukraine. As a rule, the greatest share of state funding goes to procure those drugs.

Fighting against Competition, or Preventing Competing Products with the Same Substance from Entering the Market

on one drug. Whose Interests Does the State Protect?Every year the state procures antiretroviral drugs with the active substances lopinavir / ritonavir

(200 mg\50 mg) from the Aluvia brand produced by Abbvie Inc. At the same time, in 2012

Ukraine registered cheaper analogue drugs, LOPICIP produced by Cipla Ltd., India, and EMLETRA

produced by Emcure Pharmaceuticals Ltd., India. However, the court decisions canceled

registration for those drugs because of a possible violation of Aluvia’s patent rights. Meanwhile,

the application declared the wholesale factory price for LOPICIP, by Cipla Ltd., at UAH 3.58, while

Aluvia’s price amounted to UAH 4.12 to 4.10 in 2011–2013. Therefore, the state loses at least UAH

15 million annually on one drug alone because of patent rights protection.

17

new schemes

Scheme No 1:Late Procurement In 2013, procurement in six pro-grams started in February and was successfully completed by contract signing in April-May and deliveries in June.

In 2014, the procurement only start-ed in July, and most contracts were signed only in November-December. We have to point out that there were no objective reasons for delaying public procurement in 2014 (except in February).

The MoH had all documents ready back in January-February to begin procurement, but the first an-nouncements were only published in July . The key reasons for pro-curement delays in 2014 were:

Sabotage by bureaucrats, who failed to publish bidding announce-ments on the MoH website. This was followed by clamorous political scandals at the MoH, when the Minister of Health Oleh Musiy blamed his first deputy, Ruslan Salutin, of sabotaging the announcement of the procurement process. He publicly said that his deputy was a hench-man of Mykola Martynenko, one of the key members of Parliament in the pro-government party of the Ukrainian Prime Minister.

Delaying the procurement announcement by four months

Re-registration in the Wholesale Factory Pharmaceutical Prices Registry from April till July while bidding was delayed gave a chance to all pharmaceutical companies to register much higher registry prices. The State Wholesale Factory Prices Registry is an official registry with prices for pharmaceuticals that sets the maximum selling price for public procurement in Ukraine. Bidding price cannot exceed 10% of the pharmaceutical’s price declared in the Registry.

Drug AVELOX®, solution for infusions 400 mg/250 ml, produced by Bayer Pharma AG for TB and cancer treatment. Redeclared from UAH 573 .73 to UAH 1,150 .

CANCIDAS ® powder 50 mg, produced by Merck Sharp and Dohme BV, Netherlands Redeclared from UAH 4,463 .74 to UAH 6,320 .41 .

CISPLATIN "EBEWE", concentrate for infusions, 50 ml (25 mg) per bottle, produced by Ebewe Pharma Ges. m.b.H Nfg. KG, Austria. Redeclared from UAH 79 .93 to UAH 146 .02 .

18

There were hardly any appeals of biddings at the point of announcement in 2013, while in July-October 2014 procurement was blocked by appeals for 50 to 110 lots (pharmaceuticals) in different months11.

The only objective for those mass appeals was a deliberate delay of procurement because in most cases the Antimonopoly Committee did not recognize those appeals as justified and rejected the complaints (only 5 out of 33 complaints were satisfied).

Besides, some appeals were filed by companies that had no pharmaceutical trade licenses or intention to participate in the biddings.

Procurement was also appealed by companies that had participated in the bidding regularly over the past few years but found certain conditions of documentation "discriminating" only this year, although they had participated in the biddings of 2013 under very similar conditions. Moreover, MoH officials often simply ignored sessions of the AMCU Collegium dedicated to complaints review and delayed provision of necessary documents.

Scheme No 2:Mass appeals / Procurement Blockage by Pharmaceutical Companies via the Antimonopoly Committee

Liudmyla Pharm Company that won 25%

of bids last year blocked the bidding this year

because of allegedly discriminating tender

conditions that did not change since last year.

UAH 200 mln The amount of bids for cancer drugs for adults

blocked by two companies, Kalyna Torh and Ros-2

that are not related to the pharmaceutical industry

in any way, and one of them sells leather goods.

11The current Law of Ukraine On Public Procurement in art. 18 identifies two types of bidding appeal procedures: appeal of tender conditions at the time of its

announcement until the moment of the bids opening, and appeal of procurement results after the winner has been established and until the contract is signed. Both

types of appeal may suspend the bidding. At the time of announcement, the participants usually appeal discriminating conditions.

19

new schemes

Scheme No 3:Tender Cancellation

According to the law, when submitted bids exceed expected value, only the customer makes the ultimate procurement decision. The client may either cancel the bid or go through with it.

As a result of artificial bidding delays, medical institutions ran out of stocks of pharmaceuticals.

In addition, the difficult economic situation led to hryvnia depreciation and a continuous growth of prices for imported drugs, and sometimes for local ones as well.

This resulted in numerous protests of public activists and patients and the ousting of the Minister of Health and his deputy from office. Following the Anti-corruption Action Center’s initiative, the law-enforcement authorities launched criminal proceedings into the crime of omission committed by the Ministry’s officials.

lack of bidders,

documents submitted by bidders did not meet requirements,

submitted bids exceeded expected value.

Many more biddings and lots were cancelled in 2014 compared with 2013.

The key reasons were:

20

Scheme No 4:

Change of Procurement Conditions

One of the key reasons for bidding delays was the lobbying of pharmaceutical companies and suppliers.

As of the beginning of October, when most drugs should have been stocked at the hospitals, less than 20% of trading was completed. This concerns the announced bids only, and the percentage of signed contracts was even lower.

At that time a powerful lobby at the Cabinet of Ministers started a blackmailing campaign regarding the drug short-ages and the risks that the funds may remain unused and

therefore would have to be returned to the national budget. Should that happen, next year the funding for certain programs may be cut down by the unused amount, as the budget is normally formed keeping in mind the previous year’s spending.

That lobby initiated drafting amendments to the resolution of the Cabinet of Ministers of Ukraine to increase the terms of 100% upfront payment for pharmaceuticals and medical products to 6 months.

So in fact the suppliers who received a 100% upfront payment have to supply the medicines within 180 days after the contract is signed. Considering that most tenders took place in late November-De-cember, and contracts were signed in December, most drugs that should have been delivered to hospitals back in August-September will only arrive in June of next year, in 2015. This caused a huge gap in supplies of pharmaceutical to patients for more than six months.

We should mention that this is a very dangerous norm for Ukraine, as some winners of biddings for antiretrovirals supplies in 2013, Alba Ukraine PJSC and Sky Pharm LLC still have not delivered medicines for more than UAH 1,393,457.50 to the MoH. Moreover, Alba Ukraine PJSC launched bankruptcy proceedings, and the MoH failed to organize claims to recover fines and losses properly.

Right after the government adopted the abovementioned resolu-tion, the pharmaceutical companies stopped appealing the bid-dings, the number of bidding cancellations went down, and the new stage of bidding announcements started, enabling the MoH to finally buy medicines and use most of the funding.

180100%

days of extension of delivery time

upfront payment

21

Other Systemic Shortcomings "Exclusive" Sales, or How the International Companies Work via Intermediaries

Bharat Serums and

Vaccines Limited, India

Aurobindo Pharma Ltd,

IndiaSanofi Winthrop

Industrie, France

Actavis Group AT, Iceland/Sindan

Pharma srl, Romania

Astellas

Pharma

Orion

Corporation,

Finland

IPSEN PHARMA,

France

GE Healthcare

Besides the spheres of influence, the winners "split" pharmaceuticals production, too. For instance, in all biddings Liudmyla Pharm LLC exclusively represented the products of the following brands:

Liudmyla Pharm LLC 22

Bahriy Group represented exclusively the products of the following brands:

Other winners with "exclusive" rights

Medac Gmbh,

Germany

F . Hoffmann-La Roche Ltd,

Switzerland

Cilag AG,

Switzerland

Sandoz GmbH, Austria,

Germany

Tekhnoloh PJSC,

Ukraine

Macleods

Pharmaceuticals Limited,

India

Ebewe Pharma Ges .

m .b .H Nfg . KG, Austria

Novartis Pharma Stein AG,

Switzerland

Vektor Pharma LLC - Ranbaxy Laboratories Limited, India

Link Medital LLC, Germany

This distribution of brand representation may be the evidence of agreements between bidding winners with the key international pharmaceutical producers. The agreements may cover exclusive rights to represent international producers at the biddings in the MoH and other public institutions.

International operators prefer to work via distribution companies as in that case they take no risks related to sales of pharmaceuticals to the Ukrainian state. They do not have to resolve the matters of bribery, kickbacks, or risk overdue payments, untimely deliveries, etc. Only two companies, Janssen and Glaxo, bid themselves without bogus intermediary companies.

"Bahriy Group"

Cipla Ltd,

India

23

of all pharmaceuticals procured with the state budget funds

Proportion of Local and Foreign-made Pharmaceutical Production

65 406 689,57

1,101,402,691 .1 6%4,8%9,54%1,07%28%66%

child oncology

adult oncolog

child hepatitis

adult hepatitis

HIV/AIDS

In cash terms, local drugs were procured only for UAH 65,406,689.7 out of UAH 1,101,402,691.1

Prevalence of overseas drugs

Ukraine is fully dependent on imported medicines. Locally produced drugs only constituted 6% of all the procured medicines. Medical products are the second most imported category after imports of gas to Ukraine. This threatens the national security of Ukraine, because the country and its patients are almost completely dependent on the foreign exchange rate and supplies. Resolving the matter of absence of Ukrainian drugs against lethal diseases, such as AIDS, TB, hepatitis, should become a priority of the national policy. As of now, local producers cover almost 70% of the mass demand market, but only 6% of the public procurement market for the treatment of lethal diseases.

24

At the same time the MoH reported that the drugs against those diseases had been provided fully. The documents analyzed by the Anti-corruption Action Center proved that the ministry’s reports were based on the data of spendings by the hos-pitals, rather than the number of patients whose treatment was covered by the state.

This happens because the MoH statistical informa-tion about drugs availability at the facilities does not correspond with reality. Their reporting is based on the accounting data that reflects gen-eralized spending within a program and does not provide information about the absence or avail-ability of specific drugs or treatment regimens. That paints a wrong picture of drug supplies in the regions.

But most importantly, medical institutions did not inform the patients about drugs availability. In some cases they simply transferred the patients to new, often ineffective treatment regimens.

Wrong MoH Statistics: Miscalculations and Misreporting

25

In 2014, the state spent UAH 367,617,623 .31 to procure 66 medicines for children with cancer.

The spending for 30 adult oncology drugs in 2014 amounted to UAH 173,755,796 .84,including 69,032,021 .84, or 40% spent on five drugs:

The spending for 27 adult oncohematology drugs in 2014 amounted to UAH 43,439,719 .16, including 18,858,472 .82, or 43% spent on drug Rituxim.

Two drugs, TASIGNA (similarly registered by one trademark) and Glivec for treatment of chronic myeloid leucosis were procured for the total amount of UAH 59,861,813 .40.

Prices in child oncology grew on average by 52%, and in adult oncology by 32% in 2014 compared with 2013.

Oncology

Disproportion of Funding Distribution for Certain Medicines

1 . ОСТАСАМ® 10%

2 . NEULASТІМ®

3 . CANCIDAS®

4 . NOXAFIL®

5 . MYCAMINE

6 . DOCETACTIN

7 . CISPLATIN "EBEWE"

8 . DIFERELIN®

9 . ENDOXAN® 500 mg

10 . ENDOXAN® 200 mg

5 of 30 5 of 66

drugs for child cancer

cost 232 473 730,95, or 63 %

of the total spending:

drugs for cancer in adults constituted 40% of all procurement .

26

Pharmaceutical, brand

Ukrainian MoH pro-curement price

Maximum price in Russia, UAH

Declared price in Bulgaria

Producer’s price in Moldova

Determined price in Slovakia

Maximum price in the Czech Republic

Official sales price in Poland

Single trademark registered in Ukraine

CANCIDAS®,50 mg, Merck Sharpe and Dohme

6132 5686,68 5968,52

Single trademark registered in Ukraine

MYCAMINE, 100 mg, Astellas Pharma Europe

11755,5 7309,17 7661,2 5372,9

MYCAMINE, 50 mg, Astellas Pharma Europe

5948,1 4582,17 5107,54 5141,35

OCTAGAM 10% / OCTAGAM® 10%, OCTAPHARMA

5360 3598,84 3588,46 3492,16 3334,55

Single trademark registered in Ukraine NOXAFIL® 105 ml, Schering-Plough 11320 9638,13 9427,24 10605,84

CISPLATIN "EBEWE", 50 mg, Ebewe Pharma Ges. m.b.H Nfg. KG, Austria

278 197,52 114,28 127,33 157,83

Single trademark registered in Ukraine TASIGNA, 200 mg, Norvatis Pharma 738,3 448,76 560,47 513,69

Glivec®, Norvatis Pharma 1337,5 1092,74 1097,18 1147,83 1151,75

Comparison of pharmaceutical prices in Ukraine and in the neighbor countries

Oncology

At the same time, experts of the Anti-corruption Action Center compared prices for cancer drugs, for which the biggest amounts of budget funds were spent, with the prices for the same drugs in the neighbor countries (prices were compared in the hryvnias according to the currency exchange rate at the day of procurement with a 7% VAT added according to the Ukrainian legislation). According to the calculations of the Center, the average difference of procurement prices constituted UAH 62,277,352.12. 62

Eight cancer drugs were overpaid by UAH

mln

27

Drugs Procured in 2014

HIV Infection / AIDS Anti-TB Drugs Pharmaceuticals for treatment and prevention of HIV infection / AIDS were procured for UAH 214,043,573.97 in 2014, including UAH 95,989,537.20 spent on only one drug, ALUVIA, that currently has no alternatives in Ukraine.

Anti-tuberculosis drugs were procured for UAH 152,896,031.35 in 2014. Compared with 2013, the prices grew by 40% on average, and most funding was spent on second line drugs: UAH 31,573,918.45 on Capreomycin (under two trademarks Capoci and Capreomycin), UAH 19,027,879 on Avelox and UAH 37,945,754.00 on Cycloserine (with two trademarks, Helpocerin and Cyclorin procured).

Notably, compared with other procurement areas, prices for antiretrovirals grew least in 2014, by 25% on average

ALUVIA

95 989 537,20Capreomycin

Avelox

Cycloserine

31 573 918, 45

37 945 754, 00

19 027 879

28

Hepatitis

Prices for PEG-interferons

The MoH procures anti-hepatitis drugs (PEG-interferons) since 2011 for children and since 2013 for adults.

Sole suppliers of those drugs since 2011 are Bahrii Group’s companies that set prices for those medicines. As of today, pharmaceuticals from two brands, Merck and Hoffmann-La Roche, are registered in Ukraine for hepatitis treatment, and

their procurement is covered from the state budget. Bahrii Group’s companies exclusively represent both of them.

After the state adult anti-hepatitis program was approved in 2013, the MoH procurement price went down by more than 50%. This is further evidence of ‘manual’ control of pricing by distributors and producers, rather than healthy competition at the pharmaceutical market.

Merck Hoffman-La Roche

"Bahrii’s Group"→→

0

600

1200

1800

2358

928,77

1299

2400

2012 2013 2014

We make no conclusions regarding medical appropriateness of this particular distribution of budget money for procurement, but we believe that the facts of significant spending on the most "exclusive" drugs is suspicious, especially if we take into account their considerable overpricing compared with other countries.

29

The Greatest Corruption Opportunities Present Themselves at the Stage of Drug Needs Assessment

The commission uses several documents at the same time to form that list: the State Record of Medicines, as well as the List approved by Government’s resolution on May 5, 1996 No 1071 On the Procedure of Pharmaceuticals Procurement by Budget-Funded Healthcare Institutions and Establishments (amended), that creates risks and opportunities for inclusion of drugs preferred by suppliers rather than patients.

18→21 66→362013 20132014 2014

TB Adult oncology

For instance, the procured list on anti-TB drugs included 18 names in 2013, and in 2014 — already 21 names

The nomenclature of anti-cancer drugs for adults listed 66 medicines in 2013 and 36 in 2014.

Every year the nomenclature review commission

decides on a list of pharmaceuticals procured from

the state budget . Because no unified methodol-

ogy or approach is applied to form the list of drugs

(nomenclature) to be procured, the amounts and

names of those drugs change dramatically every

year without any reason .

30

Quantitative drug needs assessments are made on the basis of methodologies approved by the MoH or without them. For example, when procurement for anti-hepatitis drugs was announced, the MoH did not have information about the necessary quantities of pegilated interferons of different dosage. As a result, the procurement announcement included five different dosages without the breakdown of required quantities by dosage. The Antimonopoly Committee ruled that this bidding condition was discriminatory and instructed to amend the bidding documents.

Besides, in September-October this year most regions did not have second line medicines, and instead had six-month stocks of first line drugs, which once again demonstrates the weakness of the needs planning system.

44→35 96→632013 2013 20142014

Adult oncohematology Child oncology

The nomenclature of adult oncohematology listed 66 names in 2013 and 35 in 2014.

The nomenclature of children’s oncology is changing several times a year: 12 drugs were added in 2013, and 33 drugs were removed in 2014.

31

Pitfalls in the Ministry’s Tender Procedures in Detail

Tender procedures followed by most customers

→

→ → → →

→ → → →

Determining the scope and an-nouncing procure-ments

Submitting bids and opening envelopes

Deciding on the winner

Examining and evaluating bids

Concluding a contract

TENDER COMMITTEE organizes the tender process and makes decisions at every stage (usually, it has 5 to 15 members)

Tender procedures followed by most ordering parties. The Ministry’s tender procedure is a very com-plicated and long process. Moreover, the agency has made the procedure established by the law even more complicated by adding internal documents, more stages and parties to the process with the view to:

Avoid responsibility for decision-making.

Create additional corruption mechanisms during tenders.

In fact, such a system of procurements drops the Ministry’s Tender Committee from decision-making and gives no chances to hold officials liable.

32

Tender Procedures Followed by the Ministry of Health Care of Ukraine→

→

→

→→ →

→ → → →Determining the scope and an-nouncing procure-ments

Special task group to develop inputs (11-14 members)

Special task group of experts in the area (11-14 members)

Public companies specially designated by the Ministry

Submitting bids and opening envelopes

Deciding on the winner

Examining and evaluating bids

Concluding the contract

Ministry’s tender committee (12 officials)

Drafts an announcement based on the scope of procurement

Determines the scope of procurement

Provides an opinion on compliance of drugs offered by bidders with requirements

Accepts bids and opens envelopes

Examines other docu-ments of bidders

Decides on the winner following examination of documents The Ministry’s tender

Committee and of-ficials are suspended from concluding and administering contracts

Every year the Minister signs an order to authorize three companies accountable to the Ministry to conclude and administer contracts (Politekhmed, Ukrmedpostach and Ukrvaktsyna)

Members of the special groups and the Tender Committee are very often spe-

cialists from the same units in the

Ministry

Regional institutions account-able to the Ministry

Units in the administrative office of the Ministry

33

Liudmyla Pharm and Medpharmkomtsentr submitted documents about losses; though it was not a ground for the Ministry to reject their bids – despite its own requirements .

Ministry's shell companies or how to make money out of thin air

Ukrvaktsyna

Politekhmed

Ukrmedpostach

Ministry's Discriminatory Conditions

The Ministry's documents fail very often to indicate how bidders can confirm with documents their compliance with tender terms and conditions. This enables it to make a biased decision to reject a bidder.

The Ministry requires that bidders should provide information about their solvency. Nevertheless, some bidders who were involved in procurements and won most tenders fail to provide information about their financial losses.

The Ministry used to combine drugs with different unit strength into one lot. As a result, only companies able to offer the whole scope of procurement could be bidders. This approach narrows the list of potential bidders and inflates prices for drugs. In particular, the Ministry announced tenders to buy hepatitis medications and combined all unit strengths in one lot during two consecutive years.

In a contract for procurement, the Ministry includes some material terms and conditions which are in conflict with Ukraine's applicable laws and infringe rights of bidders. For example, such contract requires that a supplier should indemnify an ordering party for expenses related to delivery of drugs to end customers (medical institutions) and other expenses related to performance of the contract by the ordering party.

34

23 201 801,33

Since 2011, the Ministry has annually issued an order to authorize three public companies directly accountable to the Ministry to support and administer procurements. After tenders these very companies make contracts on behalf of the Ministry, ensure performance of these contracts, accept drugs at their storage facilities and arrange delivery of medications to medical institutions.

Moreover, these companies make additional agreements with tender winners to oblige suppliers to indemnify them for expenses of drugs’ delivery to medical institutions, such indemnification being 1.5% to 2.12% of the products' price. Bidders include this percentage in the price of drugs in advance.

This condition is binding on winners and is blatantly discriminatory. However, leaders of the Ministry's tenders do not object to it.

The National Financial Inspectorate has established that regular tender winners take storage facilities on lease from the Ministry's companies (Pharmadis rents such premises from Ukrvaktsyna).

Such situation demonstrates long-standing agreements between the Ministry and key market players.

Total public expenses for such purposes under contracts ana-lyzed by the Anticorruption Ac-tion Center (AAC) make over UAH

Private Companies Who Win Tenders Take the Ministry's Premises on lease.

35

Procurements 2013 and Procurements 2014

0

75

150

225

300

0

75

150

225

300

January March May July September November January March May July September November

2013

To understand procurement practices in 2014, we have analyzed the same in 2013.

When tenders are announced, the scope of procurement is divided into parts called lots. Every drug makes an individual lot.

Every day the Ministry may announce 10 procurements for 100 lots. Bidders may file bids for every lot individually.

The AntAC has analyzed 6 programs: 240 lots in 2013 and 210 lots in 2014.

36

7,99

9,9 11,6 11,713

14,615,6

0

4

8

12

16

January March May July September November December

0

75

150

225

300

0

75

150

225

300

January March May July September November January March May July September November

tenders announced (q-ty of lots)

tenders cancelled (lots)

tenders ended in contracts (lots)

tenders blocked through appeals (lots)

2014

USD Exchange Rate 2014

37

Bidding Winners

Winners in 2014

WinnersHIV/AIDS

Winners TB

In most tenders, contracts were awarded to two big players who have won the Ministry's tenders for the past four years: Liudmyla Pharm and companies of the so called Bagriy's Group, including Pharmadis, Ukroptpostach, Lumier Pharma and Hanza.

The Center's analysis in every field of the tenders shows that both groups of companies are in collusion and distribute spheres of influence between each other even before tenders are announced.

43% Bagriy's Group

37% Liudmyla Pharm

9% Vektor

4% Apopharm

2% Link

2% Glaxo

3% Others

53% Bagriy's Group

26% Vektor

13% Liudmyla Pharm

3% Kyivmedpreparat

2% Diatom

2% Yuriya Pharm

1% Glaxo

0.1% Borshchahivsky Chemicals and

Pharmaceuticals Plant

55% Liudmyla Pharm

24% Vektor

12% Bagriy's Group

9% Glaxo

Analyzing tender results, it is better to isolate drugs and medical products. Out of UAH 1,211,036,252.11, drugs made UAH 1,101,402,691.1 and products made UAH 109,633,560.98.

Therefore, UAH 1,101,402,691.1 allocated for drugs procurements were divided among pharmaceutical companies as follows.

38

Winners TB Hepatitis in Adults and Children

Winners Oncology

44% Bagriy's Group

42% Liudmyla Pharm

7% Apopharm

3% Link Medital

2% Biopharma

Oncolo

gy and

oncohem

atolo

gy in child

ren

Oncolo

gy in adults

Oncohem

atolo

gy

in adults

Chronic m

yelo

id

leukem

ia

Bagriy's Group

Liudmyla Pharm

Pharmex Group

Norton Ukraine

Link Medital

Apopharm

Vektor

Biopharma

Bagriy's Group

Liudmyla Pharm

Biopharma

11,73%

24,77%

61,39%

58,86%

72,32% 100%

10,75%

23,93%

In total, UAH 988,350,295.68 (95%) were divided among only six companies, of which four belong to Bagriy's Group (the same who won tenders last year, except Vektor. Nevertheless, it won tenders in other ICD diseases last year).

39

companies are controlled by one individual — Petro Bahriy4 of 695%6companies divided

Tender Results

40

companies are controlled by one individual — Petro Bahriy

95%of drug procurements for HIV/AIDS, TB, hepatitis and oncology sufferers

41

The above corruption schemes and systemwide shortcomings resulted in a total failure of six programs and deficit of drugs nearly in all Ukrainian regions

Hepatitis Oncology in children and adults

According to the AAC, stocks of hepatitis drugs were exhausted in

Ternopil, Zaporizhzhia, Khmelnytsky, and Mykolaiv oblasts in October

2014. No drugs could be found in Odessa, Luhansk, Donetsk oblasts

and the Crimea.

A tender for hepatitis medications took place on December 31, 2014.

Patients who waited for treatment in 2014 did not receive the vital

therapy.

In October, no drugs were available for cancer-affected adults and

children in Vinnytsia, Volyn, Rivne, Mykolaiv, Kharkiv, Luhansk, Donetsk

oblasts, Kyiv city and the Crimea.

Simferopol

Vinnytsia

Dnipropetrovsk

Donetsk

Zhytomyr

Zaporizhzhia

Ivano-Frankivsk

Kirovohrad

Luhansk

Lviv

Mykolaiv

Odessa

Poltava

RivneSumy

Ternopil

Kharkiv

Kherson

KhmelnytskyCherkasy

Chernivtsi

Chernihiv

Uzhhorod

Lutsk

Kyiv

Simferopol

Vinnytsia

Dnipropetrovsk

Donetsk

Zhytomyr

Zaporizhzhia

Ivano-Frankivsk

Kirovohrad

Luhansk

Lviv

Mykolaiv

Odessa

Poltava

RivneSumy

Ternopil

Kharkiv

Kherson

KhmelnytskyCherkasy

Chernivtsi

Chernihiv

Uzhhorod

Lutsk

Kyiv

42

Simferopol

Vinnytsia

Dnipropetrovsk

Donetsk

Zhytomyr

Zaporizhzhia

Ivano-Frankivsk

Kirovohrad

Luhansk

Lviv

Mykolaiv

Odessa

Poltava

RivneSumy

Ternopil

Kharkiv

Kherson

KhmelnytskyCherkasy

Chernivtsi

Chernihiv

Uzhhorod

Lutsk

Kyiv

Tuberculosis HIV/AIDS

Oncology in children and adults

The AntAC has found that at least 12 Ukrainian regions lacked particular antiretroviral

drugs and HIV/AIDS test systems to measure viral load, test newborns and pregnant

women and make enzyme-linked immunoassay in late 2014.

Such a situation may have a dire impact on patients as treatment interruption causes

quick virus mutation, a rise in prices for treatment, the death of patients or an increase

in their number as timely HIV/AIDS tests are unavailable. Funding from the Global Fund

was also used to buy necessary drugs.

As a result, patients had no treatment

for three months (see letters from

regional health care departments).

In late 2014 and early 2015, the

critical need in such medications

was met with the help of additional

procurement financed by the Global

Fund to Fight AIDS, Tuberculosis

and Malaria in Ukraine (it provided

$460,000) and drugs bought using

funds of a Global Fund's grant.

Therefore, over 14,400 people with

MDR TB received treatment.

Simferopol

Vinnytsia

Dnipropetrovsk

Donetsk

Zhytomyr

Zaporizhzhia

Ivano-Frankivsk

Kirovohrad

Luhansk

Lviv

Mykolaiv

Odessa

Poltava

RivneSumy

Ternopil

Kharkiv

Kherson

KhmelnytskyCherkasy

Chernivtsi

Chernihiv

Uzhhorod

Lutsk

Kyiv

ART drugs unavailable

Test systems unavailable

Funding from the

Global Fund

2Letter from the Center for Control of Socially Dangerous Diseases:

https://drive.google.com/drive/folders/0B75fbG3r_2TwfnlWLXhpQmlNRWc3WWV3ZU5NeDB0MFVIY051

ZS1raXpPTzBtdzlkUi03U1U

The AntAC has found that between August and October 2014 most Ukrainian

regions lacked second-line TB drugs used for treatment of MDR TB and XDR TB.

Treatment

interruption

14,400 patients

with multidrug-

resistant TB

The deficit of drugs

was addressed with

the help of money

from international

organizations .

43

Seven Simple Steps to Combat cCorruption in Public Procurement in Ukraine

1 .2 .

3 .

Ensure that drugs are bought through international organizations – partly done today. The Verkhovna Rada adopted a law enabling the use of this mechanism, yet it is still unclear what areas of procurement it will cover. The temporary use of the mechanism will guarantee the high quality of drugs and prevent delay in delivery.

Improve domestic procurement procedures and remove irrelevant stages and parties involved in organization of tenders. Procurements through international organizations can be a good alternative while domestic procedures are improved. In particular, An institution may be set up independently from the Ministry to ensure proper procurements. This institution will have no chance to influence tenders "manually".

Clear and transparent criteria are to be in place to develop a range of drugs to narrow the list of drugs to be bought with public funds according to the best practices and WHO recommendations.

Ensure electronic collection of needs and registration of patients to avoid any subjective factors.

Conduct regular effective audits of all procurements and remove discriminatory conditions.

Create an advanced system to manage drug stocks and control their use. The broader public and patients should control the supply and use of drugs by accessing a dedicated electronic drug control system which shows real-time information about quantity of drugs and medical products available in healthcare institutions.

44

4 .5 .6 .7 .

Negotiate with key market players, primarily, with foreign and domestic drug manufacturers to prevent unnecessary influence on prices and tender results.

Ensure deregulation in parallel with negotiations by removing registration of prices, simplifying registration of drugs and medical products in a move to boost competition.

Not allow companies designated by the Ministry (Politekhmed, Ukrvaktsyna and Ukrmedpostach) to participate in procurements. First, conduct an independent audit to see whether prices for the companies' logistical services are justified and hold an open tender for such services, authorize a tender committee to conclude and administer procurement contracts.

Hold open competition for key positions in the Ministry (departments) and its subordinate institutions (National Drugs Services, National Expert Center and subordinate companies) to prevent any "manual" influence on the quality control, production, state registration, licensing and sales of drugs and medical products, results of examination of registration materials, clinical trials and state registration of medical products).

45

This product is published within the framework of the project "Through transparent and effective public

procurements to save lives of seriously ill Ukrainians — Stage 2" with the financial support of Ukrainian

Network of PLWH as part of the project "Building a sustainable system of comprehensive services on

HIV/AIDS prevention, treatment, care and support for MARPs and PLWH" funded by the Global Fund to

Fight AIDS, Tuberculosis and Malaria. It is also a part of the project "Through transparent and effective

procurements to saving Ukrainians with cancer" supported by the International Renaissance Foundation.

Opinions contained herein are opinions of the organization that published this product or opinions of

the Global Fund to Fight AIDS, Tuberculosis and Malaria, Ukrainian Network of PLWH, and International

Renaissance Foundation. The Global Fund to Fight AIDS, Tuberculosis and Malaria and International

Renaissance Foundation were not involved in approving the published product or opinions that may arise

from it.

Any part of this product may not be reproduced or used in any format, including graphical, electronic,

photocopying or other means, without giving a reference to the original.

The book is published in Ukrainian and English in print and electronic format. Online version of the

document is available at the Center’s website antac.org.ua. Printed copies are distributed free of charge.

The Anti-corruption Action Center allows distribution of the text if the source is cited.

46

Legal and Information FrameworkIn its report Ukraine’s Diagnosis is Total Corruption: Who Benefitted from Sabotag-

ing Procurement of Pharmaceuticals in 2014, the Anti-corruption Action Center discloses information it collected during its day-to-day operations, exercising its constitutional right to freedom of speech and expression.

The AntAC uses information, which is only in the public domain, has already been published or may be accessible and distributed to any number of people. There-fore, this information is not restricted.

Opinions and conclusions of the Center in the Report in regard to decisions, ac-tions or omission thereof by officials or businesses are not statements of violation of current laws. Such opinions and conclusions are judgment-based and are not subject to challenging. Moreover, the AntAC makes no conclusions about proven offences and responsibility for them.

At the same time, the Center leaves open the possibility for public institutions and businesses mentioned in the Report to provide facts and evidence to rebut infor-mation and conclusions contained herein.

47

Dima . Dx: HIV

Arseniy . Dx: Cancer Nona . Dx: Von Willebrand disease

Andriy . Dx: Hemophilia

Ira . Dx: Hepatitis