Drug firms continue to deny wrongdoing in sticky Tamiflu scandal

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Four Vietnamese drug companies have voiced further objections to charges that they unlawfully withheld US$6.6 million in government funds during the creation of a controversial Tamiflu reserve.

The defense was mounted at a press conference held on Monday (September 13) in Ho Chi Minh City, one week after government inspectors accused the Ministry of Health of poorly monitoring the creation of a 20 million capsule stockpile of the anti-viral drug.

Company representatives and the nation's former Health Minister have publicly denied all wrongdoing.

The inspection findings

The investigators alleged that the Health Ministry failed to properly oversee a costly and arguably unnecessary stockpile of anti-viral medicine. In essence, their accusations amount to an allegation that the domestic firms overpaid for raw materials from foreign suppliers in exchange for kickbacks.

The inspectors further alleged that the four companies failed to properly report their financial exchanges to the government and never conducted quality control on the stockpile of medication, which expired soon after its purchase.

Inspectors also accused the ministry of failing to place competitive price caps on raw material purchases made by the drug companies. Instead, they say, the firms were allowed to buy raw materials at an exorbitant price that exceeded offers from other suppliers

They have asked three of the contracted pill producers to return $2.8 million that was allegedly kicked back by a raw material importer and called for a police investigation into $3.8 million that they say is being held by a single firm, Pharimexco.

Pill makers bite back

Since the release of the findings, the companies have countered that they made every effort to explain their actions to inspectors and that their efforts have been ultimately ignored. They have further alleged that the funds in question are the result of complex but legitimate payment agreements.

At the press conference on Monday, Imexpharm General Director Tran Thi Dao, called the inspectors' demands baseless and claimed that her company's funds were properly audited by independent agencies back in 2006.

Beyond that, Dao claimed that the Ministry of Health in late 2005 instructed her firm to purchase raw materials at any cost. "Now we're being driven into a corner," she said. "It's unreasonable that the government is now asking for the money back."

Dao claimed that their foreign raw material supplier offered technical advice that failed to produce 10,000 capsules per kilogram of raw materials the agreed upon ratio. As a result, Imexpharm sent the supplier a letter asking for $986,000 in compensation, Dao said, adding that two other domestic capsule manufacturers received the same compensation amounting to a total of $2.8 million.

"We explained it [to the inspectors] many times, but it wasn't accepted," she said.

As for the $3.8 million, a spokesperson for Pharimexco claimed, last week, that the firm planned to pay that money out to a Filipino drug supplier, Mambo Overseas Limited, by the end of 2010 as part of a deferred payment plan.

Objections from the ministry

Aside from the companies themselves, the inspectors charged that the Ministry of Health overestimated the need for the anti-viral drugs and failed to properly oversee the purchasing process a claim the agency has virulently denied.

Ex-Health Minister Tran Thi Trung Chien has fired back that her agency did exactly what it was asked to do.

In July 2005, the World Health Organization (WHO) recommended that every country establish a stockpile of enough drugs for a fifth of its population, in order to prepare for a possible Avian flu pandemic. The United Nations body anticipated that the H1N5 pandemic would peak in spring of 2006 setting off an international rush to stockpile antiviral drug Oseltamivir.

"At that time the drug was very much in demand and the supply was very short," Dr. Jean-Marc Olivé, the WHO representative for Vietnam, told Thanh Nien Weekly over the phone. "Just focus on the price... you have to understand the government wanted to secure some stock of the drug."

Despite the fact that Vietnam recorded just 91 cases of the virus from 2003-2005, the Ministry of Health commissioned a stockpile fit for two million victims.

Chien claims that the nation paid a fair price for the capsules and raw materials at a time when drug companies around the world were turning down orders.

The Vietnamese firms claim that, in the end, they provided drugs to the ministry at $1.75 per capsule "” a fair market price at the time "” and met the timetable set by government officials.

Ong Van Dung, general director of Stada Vietnam [one of three manufacturers charged with accepting illicit payments], said that government inspectors based their findings on information provided by an industry competitor "” Roche Chemical Establishments Ltd.

Last week, representatives from the company said they had agreed to supply Vietnam with raw materials at a much cheaper price than was finally paid. Roche's offer was turned down, Chien said, because they couldn't meet the government's timetable.

Dung calculates that Roche stood to earn $12.3 million from the deal they lost to the Indian suppliers. There is no way "they'll be happy with us," Dung said.

A representative from Roche denied that the company "had initiated any inquiries."

In the meantime, several health officials expressed concern regarding the call for a police investigation into the case.

"If this case is criminalized, it will wear down the Ministry of Health's leaders' will to act," ministerial secretary Nguyen Xuan Truong told reporters from dpa. "No one will dare to make decisions in critical situations."

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