Australia withdraws funding from Papua New Guinea over corruption and fake drug concerns
Previously, Australia's aid agency chose the supplier and distributor for the medicines, but this year that process was handled by PNG.
In June, the PNG government removed a crucial quality-control criteria and later awarded the contract to local company linked to a Chinese supplier of sub-quality drugs.
Doctors say the distribution of ineffective medicine in a country rife with TB, malaria, pneumonia and gastro will cost lives.
Three years ago, a corruption scandal within Papua New Guinea's health system left hospitals running out of drugs and prompted the PNG government to ask for Australia's help in stocking health centres.
For two years, the International Dispensary Association supplied medical kits to almost 3,000 health facilities across the country.
Dr Glen Mola, treasurer of the Medical Society of PNG, has told Radio Australia's Pacific Beat the IDA did a good job getting the medicine to health clinics in remote parts of PNG.
"The person who contracted to distribute the medicine didn't get paid unless they could take a digital photograph of the medicine arriving at the actual health facility at a time and a date that was verified by the health facility OIC," Dr Mola said.
But the arrangement was always going to be temporary and this year the PNG government took responsibility for procuring the 2014 supply of medical kits.
Australia agreed to keep funding the program, on the condition the tender process was transparent and the companies had certain accreditation, including an internationally-recognised standard ISO 9001.
The accreditation ISO 9001 is an accreditation for Quality Management Systems which, in terms of a pharmaceutical's, helps ensure the drugs are safe and effective.
Six companies submitted tenders, but only two had the crucial ISO 9001 - International Dispensary Association and MissionPharma/City Pharmacy Limited.
On June 6, an official at the Ministry for Health told a meeting of bidders that the ISO 9001 standard was no longer required.
The company that won the tender - Borneo Pacific - does not have the ISO 9001 accreditation but they do have a history in Papua New Guinea.
"Borneo Pacific are a company that have been in PNG for a couple of decades and they have a reputation. And many of us are very concerned because of past performance," Dr Mola said.
Borneo Pacific is the largest supplier of drugs from the North China Pharmaceutical Group.
A survey of antibiotics in PNG in 2011, published in the Journal of Pharmaceutical Sciences, found all four samples provided by North China Pharmaceutical Group were sub-standard, with one probably being a counterfeit drug.
Borneo Pacific bid of $31 million (71 million kina) was $9 million more than the bid from International Dispensary Association, which successfully delivered the kits for the past two years.
DFAT pulls funding
Concerns about the tender process have been reported in recent weeks and Australia has reviewed its role in the health centre kits distribution program.
"The Australian Government committed to fund the distribution of medical kits in PNG," said a spokesperson from Australia's Department of Foreign Affairs and Trade (DFAT).
"This [funding] was conditional on the Government of PNG purchasing the kits from a pharmaceutical's firm which met international drug quality standards, through a fair, transparent international tender process.
"Unfortunately, these conditions were not met and the Australian Government will not fund the distribution of the medical kits resulting from this tender process."
The ABC understands the PNG government has set aside money in next year's budget to pay Borneo Pacific for the medical kits.
The tender for distributing the medical kits is expected in early 2014 and the drugs are expected to arrive in May-June.
Warnings decision could lead to deaths
Dr Mola from the Medical Society of PNG says the distribution of quality drugs in these medical kits is a matter of life or death.
"If the health workers don't receive the medicine they need to treat the patients, well then the patients die!" he said.
"It's not like in Australia or perhaps in other countries where the patient can go just to a different facility or go to see a different doctor or something.
"When you're in a rural or remote area of Papua New Guinea, your health centre is the only health facility for your community - there's no alternative."
Australia's decision to walk away from the deal is another blow to the credibility of PNG's claims to be improving governance and public services.
The ABC's efforts to contact the Health Minister were unsuccessful and there has been no response to a request for comment from the Prime Minister's office.
However a previous statement responding to concerns from the Medical Association of PNG defended the tender process.
"The National Department of Health has a moral and legal responsibility to ensure that quality medicines are brought into the country for our people," wrote acting secretary Dr Paison Dakulala.
"As the gatekeeper for these medicines, we cannot and will not compromise this very important responsibility," he said.
"Papua New Guineans must be assured that the Department will test these medicines ... [and] when medicines do not meet our requirements, these medicines will be sent back and will be replaced, or contracts will be terminated."
ABC
