Drug supply agency for government hospitals in financial crisis

THIRUVANANTHAPURAM: The drug procurement and supplying agency for government hospitals in the state, Kerala Medical Services Corporation Limited (KMSCL), has plunged into a deep financial crisis. The government has to give Rs 129 crore to KMSCL this year to clear the dues for the payment of drugs purchased from different companies.
The corporation authorities have now written to the government to sanction at least Rs 100 crore immediately or else the drug companies will not take part in the tendering process next year.This is the second consecutive year KMSCL is facing such acute financial crisis.
In 2013-14 the government had made arrears of Rs 50.87 crore and in 2014-15, the government had to pay Rs 96 crore to the KMSCL towards drug procurement.
The total arrears the government had to pay to KMSCL were Rs 220 crore in the past five years till 2014-15. But the government paid Rs 190 crore in three instalments to overcome the crisis.
This year the government has to release Rs 129 crore when the KSMCL has already purchased drugs worth Rs 361crore.
“The budgetary allocation to KMSCL is less than what the actual orders placed for the drug purchase every year. Now the KMSCL has no cash in hand as the budgetary allocation for the year 2015-16 has not reached the KMSCL,'' said an official of the corporation.
In the year 2013-14 KMSCL had procured drugs worth Rs 267.03 crore and in 2014-15 drugs were purchased for Rs 434.7 crore. In 2015 16 drugs worth Rs 361 crore was procured for the distribution to the government hospitals and government pharmacies.
“The arrears the corporation has to get from the government has amounted to Rs 220 crore in the past five years. This was cleared partly only in 2015,“ said the KMSCL official.
As per the agreement with the drug companies, the payment has to be cleared within 45 days of the drug supply to the government. Since there was delay in the payment in the last two years, the drug companies had delayed the supply of the drug this year. Only 70% of the total drugs ordered have reached the state till date.
However, the drug companies have informed the corporation authorities that they will not take part in the next tendering process if their dues are not cleared before that.