Transformemos Honduras -SALUD-

On 13 April 2010, at a meeting of the Council of Ministers, President Porfirio Lobo Sosa declared a state of emergency in the public health system. The emergency was due to a shortage of medicine, specifically in the national stock of basic drugs which is made up of 420 types of medicine. The emergency declaration was effected after a petition by the Secretary of Health, Doctor Arturo Bendaña Pinel.

As well as declaring a state of emergency, the Council of Ministers authorized the direct purchase of an order of drugs for 200,000.000 Lempiras (more than $10 million). Decree number PCM 012 – 2010 was created outlining the procedure to be followed in the purchase.

The social movement Transformemos Honduras ("Let's Transform Honduras" in English) has been following the process. On 28th April 2010, TH requested that Secretary Bendaña allow the organization to participate in the process as social auditors. Secretary Bendaña never replied.

In response, today we are publicly announcing a series of irregularities that have occurred in the purchase of these medicines. The process which is followed to purchase medicine should be transparent, and these irregularities conflict directly with this principle.

The Emergency Purchase was not necessary

1. In January 2010, Secretary of Health Dr. Arturo Bendaña Pinel received a report from the Interinstitutional Commission for the Purchase of Medicine ("CIM"). The report detailed all the information necessary to carry out the bidding process in early 2010.

In addition, Dr. Bendaña was a member of the health sector government transition commission. At meetings with prominent authorities he was provided with detailed information on the Department of Health and medicine in general. Dr. Bendaña was, therefore, well aware of the situation.

Miguel Angel Dominguez, the executive director of the CNA stated: "The basis for the bidding process for the purchase of medicine was established in December 2009. The following question therefore arises: why was this process not implemented, carried out on time and carried out in accordance with the law? In April an emergency decree was passed for the purchase of medicine, this purchase could have been effected at an earlier date using the correct tender process."

2. Dr. Bendaña Pinel took control of the Department of Health on 29 January 2009. During his first weeks in office he devoted time to visiting the most overcrowded hospitals. Among others, Bendaña visited "Mario Catarino Rivas Hospital" and "Hospital Escuela (Teaching Hospital, where medical students do their residencies)".

As well as hospital visits, Dr. Bendana was provided with information by the previous administration. These facts demonstrate that from the first days of his appointment, Dr Bendana was well aware of the national level of medicine supplies.

To see the article published in the National Honduran press click on the link below:
Ver artículo publicado en www.laprensa.hn
Clic aquí si no puedes ver el artículo -PDF- 423kb.

3. It is customary for the Secretary of Health to receive a weekly report on national medical stocks. According to former Health Secretary Dr. Palou this is one of the most important reports for a Health Minister:
I requested a weekly national medical report. That said, if there was any further information I required, I would simply call someone and ask. Listen

The Health Secretary was aware of the problem from day one. Despite this he did not initiate the bidding process nor did he convene any commission. Instead he waited more than 100 and then requested that the president call a state of emergency of the health system.

Dr. Palou believes that this failure to initiate the purchase at a much earlier date was unjustifiable.

There is no excuse for waiting so long to start the purchase process; it is one of the first things he should have done. The Department of Health cannot function without medicine, it is indispensable. He has no excuse, there is no way he can justify this. Listen

Minister of Health Arturo Bendaña has informed government officials of the serious situation affecting public hospitals in Honduras. Of 430 basic medicines, there are only 110 in stock. This puts at risk the lives of patients suffering from chronic illnesses such as high blood pressure, diabetes, cancer, kidney disease and HIV.

4. Dr Mario Zelaya, Director of the Honduran Institute for Social Security (a public-private health system exclusively for those employed in the formal sector) ("IHSS") took charge 20 days after Health Secretary Arturo Bendaña. Despite this disadvantage, the IHSS managed to make a purchase by way of bidding following the established regulations.

The general public was informed on 13 April 2010 in the Gazette (The Gazette is the official newspaper of the Honduran Government; laws and decrees officially come into force when they are published on it).
This further demonstrates that an emergency purchase was not necessary.

As demonstrated above, there was no justification for an emergency purchase. Bendaña had full prior knowledge of the situation. Claiming he had insufficent time, he decided to request an emergency purchase.

The Law of Government Contracting (ley de contratación del estado) states that direct contracting should be used in response to calamities endangering the lives of patients attending public hospitals and State health centres.

Moreover, state regulations relating to the Law of Contract are clear and define in precise terms what constitutes a national emergency:

Article 7 (definitions) Part (g) Emergencies - situations which require immediate and urgent attention caused by natural disasters such as floods, earthquakes, or other similar events. In addition, epidemics, wars, internal strife or other situations of public calamity or any other exceptional or unexpected situation which substantially affects the timely and efficient provision of public services or the fulfilling of needs relating to DEFENCE OR PUBLIC ORDER, CAUSING THE APPLICATION OF THE SPECIAL PROCEDURE OUTLINED IN ARTICLE 09 OF STATE CONTRACT LAW.

Many catastrophic natural disasters have taken place in Honduras. Examples include hurricane Mitch, hurricane Gilberto, the cholera epidemic and the current dengue epidemic. In these cases, the governments of the day did not declare a state of emergency / state of disaster allowing for the direct purchase of medicine. In the first few months of 2010 no abnormal situation arose which legally justified the "emergency" purchase.

The Law of Government Contracting is very clear: an emergency purchase may only be justified by a natural disaster, war, etc. Health Secretary Bendaña used this pretext to avoid a public bidding process in accordance with the law.

The Health Secretary fulfilled neither his own promises nor those made by the President

1. On 10 February 2010 Bendaña publicly stated that his administration would not resort to emergency purchases as had happened in the past. Acquisitions would follow the normal bidding process monitored by civil society.

"The process of purchasing medicine [in Honduras] has been tarnished. We will use bidding monitored and led by commissions to change this. We don't want to make urgent purchases; instead we will follow the bidding guidelines."

2. On that same date (10 February) the Minister promised to form a commission to guarantee the transparency of all medicine purchases. To this day this has not been done.

"The Secretary of Health assured us that he would form a commission made up of civil society members, the Church, the Anticorruption Commission and all the bodies necessary to ensure the transparency of the process"

3. On Tuesday 23 February 2010, at a meeting of the Council of Ministers, the President declared that 2010 would be "the year of transparency". This information was publicized throughout the media and on the government's website. To that end an executive decree was issued.

4. On 14 April, Secretary of Finance William Chong Wong gave the country some very encouraging news. He informed the media that Honduras would receive a reimbursement of 40% of the 200,000,000 Lempiras spent on the purchase of medicine (80,000,000 Lempiras), if the process was carried out transparently.

"If this purchase of medicine is carried out with absolute transparency the World Bank will return to 40% of the Money invested to the government"

5. On the same day as the Finance Minister's announcement, Bendaña stated in la Prensa (a National newspaper) that he would reinstate the Interinstitutional Commission for the Purchase of Medicine ("CIM"). According to Bendaña, this would safeguard the transparency of the process ensuring it was "the purest possible". The CIM commenced operations in 2006. Its members include representatives of the Catholic Church, the Anti Corruption Board ("CNA"), the Association of Doctors, FONAC and the AIDS Forum.

6.On 27 April 2010, members of Transformemos Honduras met with the Secretary of Health and requested that they be allowed to participate in the social audit of the purchase process. The Secretary of Health accepted but asked that the request be made formally in writing. A letter containing the request was sent on 28 April (one day after the meeting), and this was followed up by a phone call. The Minister never replied.

Despite the many promises of transparency and the economic incentive offered by the World Bank, the Minister of Health failed to demonstrate a commitment to transparency. He failed to convene the CIM and did not allow Transformemos Honduras to audit the process.

The emergency decree gives the CIM the important task of guaranteeing the transparency of the purchase of medicine. In the emergency decree (Artículo 4. Decreto PCM 012 – 2010) it is established "that in order to guarantee the transparency of the process of immediate supply of medicine, the CIM's period of service will be extended. The CIM is the commission which is responsible for guiding, supervising, controlling and verifying the acquisition process for medicine carried out by the Health Minister through the procedures established in the Law of Government Contracting relating to health.

The decree clearly stipulates that the CIM must supervise the whole purchase process. Miguel Ángel Domínguez, the Ececutive Director of the CNA explains that:"the CIM operated from 2007 until 2009 and good lessons were learnt in transparency including a saving in the contracting of medicine of more than 100 million Lempiras. The lessons learnt were duly shared with the Secretary of Health."

Nevertheless, on 4 May (45 days after the approval of the emergency purchase under the supervision of the CIM), the Health Secretary, in a meeting with members of the movement TRANSFORMEMOS HONDURAS claimed that the CIM did not exist. This was despite the fact that the emergency purchase decree contained instructions to convene the CIM on 14 April.

Miguel Ángel Domínguez, Executive Dierctor of the CNA:
"they call us today and say that tomorrow they are opening the letter containing the results of the bidding process. We said we have no knowledge of anything you are doing, we are not informed therefore as a commission we cannot support positions which are not in accordance with the principles according to which we operate".

Doctor Xiomara Bu, coordinator and representative of the National AIDS Forum said the following:
We learned what was happening on the 12 May, but the National AIDS Forum had not received an invitiation. We found out about it through a phone call which we made to the representative of FONA Mr Luis Lardizabal…It was thanks to him that we found out about a meeting regarding the purchase.

On Wednesday 18th May, at the CIM offices, located in an area called Colonia 21 de Octubre, the bids of the participating pharmaceutical companies were received in the presence of representatives of the Medical College and the National AIDS Forum. These organisations were present not because they were convened by the health authorities, but because they found out about the event through third parties. As a result they partook merely as observers without any responsibility in the process. At one point they demanded that the health authorities tell them why they were not convened, informed of this process, or sent any written information on the process.

Dr. Xiomara Bú, said the following:
Mr Moises Torres Lopez (administrative manager of the Secretary of Health) promised to deliver the documentation. Yaneth Flores and Gilberto Granados were told about the commitment made by Mr Lopez to send the documents on time. 55 days have passed. I have checked my emails, the post and even my spam email folder for anything at all. I can with absolute certainty say that after 55 days of waiting I have still not received any documentation.

Despite President Lobo's mandate and the Council of Ministers, to this day the CIM has not been formally convened nor has any agreement been reached with the Health Minister to supervise the process. As we will outline below, not one member of the CIM supports the process.

Article 4 of the decree (Decree PCM 012 – 2010) states that "the Health Secretary will be obliged to publish on the website HONDUCOMPRAS, the list of basic medicines which are acquired by direct purchase as outlined in this decree. Equally, he must make publicly known, through electronic means, the different offers received by the offerors in accordance with the Law of Government Contracting.

On 14 July, (90 days after) HONDUCOMPRAS was checked to verify whether the emergency purchase medicines were published, as required by Article 4 of the decree. No article relating to the purchase had been published. Since the 14 April no medicines have been published on the webpage of the ONCAE (Oficina Normativa de Contratacion y Adquisiciones del Estado – office for promoting efficiency and transparency in government purchases). Dr. Bendaña has not complied with any of these obligations.

Furthermore, the website HONDUCOMPRAS has been in a bad state for 40 days and it is not known whether this is on purpose. Whenever there are purchases or bids it is in such a bad condition that the authorities of the Institute of Access to Public Information have highlighted this situation and they have given the authorities until the 25 Julio to repair the page.

Kalton Bruhl, Legal Assessor of the Institute of Public Access to Information
Remember that the law of transparency is an obligation and a necessity which arises out of the Interamerican Convention against Corruption and from the Conventions of the United Nations Anti-corruption Organization. These establish the obligation of member institutions or states to publish all financial activities, especially those related to purchases or bidding In this sense failure to make this information public represents a breach of both internal legislation in terms of the law and international treaties.

On 13 April 2010, decree number PCM 012 – 2010 was created in which guidelines regulating direct purchases authorized by said decree were given. In Article 7 of the decree it states that "this executive decree is executed immediately and must be published in the official publication the Gazette."

Inspite of this presidential order, the decree was not published until 14 May (32 days after) even though other decrees were published immediately.

The emergency decree for the purchase of medicine included various extremely important points to ensure transparency, even though it was an emergency purchase. Unfortunately none of the requirements were complied with.

The failure to publish in the Gazette and the lack of participation on the part of the CIM did not impede the progress of the process
It is important to note that decree PCM 012-2010 was passed on 13 April 2010 and stated that it be executed immediately. Despite this, it was published in the Gazette on the 14 May, 32 days later.

According to the Health Secretary's diary, the direct purchase process was initiated on Monday 17 May with the receipt of offers. This is 3 days after publication of the decree. For this purchase 32 pharmaceutical companies were called, but on this occasion only 24 of these companies made offers. The presentation of offers took place in the central medicine storage facility situated in the 21st October neighborhood.

If the decree was published on 14 May, how is it possible that the pharmaceutical companies prepared all the offer information in only three days? A further question arises from this: Did the health authorities deliver the documentation relating to the purchase process to the pharmaceutical companies before the decree was passed?

Civil Society cannot endorse a process which lacks transparency
1. Dr. Xiomara Bú says the following: "The Forum was not officially invited and we are not going to go in after the event and legitimize the process [that we weren't involved in from the start]. It's our position, in accordance with our dedication to transparency and ethical principles, that this was not correct.

2. The CNA as a commission cannot support positions which are not in accordance with the principles according to which we operate.

3. The Association of Doctors of Honduras will not guarantee the process because we have not been there from the start of the process.

Laws which were broken:
1. Inter-American Convention Against Corruption of which Honduras is a member.
2. UN Convention against Corruption: the participation of Civil Society by means of the CIM was avoided. In addition, the direct purchase was not carried out in accordance with the decree which was created for that exact purpose.
3. The Health Minister, as a public officer, must comply strictly with the Consitiution of the Republic. In this case, this means complying with the decree which ordered the participation of the CIM, and publishing information in the Gazette. Unfortunately these requirements were not complied with.
4. The Law of Transparency and Access to Public Information: The Health Minister, by not publishing the acquisition of the medicines on HONDUCOMPRAS, violated the right of the public to access this information.
5. The Association of Doctors: Direct contracting in the purchase of medicine did not happen as a result of an emergency but as a result of negligence on the part of the Health Minister as he did not carry out the tender process in sufficient time.
6. Emergency Decree for the purchase of medicine (PCM 012 – 2010): The Minister did not comply with the stipulations of this decree; a violation of his duties as Minister.
7. Established Law of the Superior Accounts Tribunal:

Decisions, as well as implementation, must be planned and implemented using systems of transparency in the contracting and acquisition of goods and services. This must be carried out under the principles of legality, publicity, equality, efficiency and economics. In this case the CIM did not endorse the process, taking away the transparency which this contract should have been characterized by.

In a selection of 22 medicines, the Minister of Health paid almost 18 million Lempiras instead of the 7.8 million which he should have paid according to average world prices (World Health Organization ("WHO")). Purchasing these 22 medicines alone, the Honduran people paid 10 million Lempiras more than they should have.

For example, the medicine ETINILESTRADIOL + LEVONORGESTREL 0.03mg + 0.15mg Ciclo— The Minister of Health bought this drug from the pharmaceutical company Astropharma for 3,718,000 Lempiras. If he had bought these for the world average price (according to the WHO) he would have paid 2,414,000 Lempiras. 1,3000,000 less on only one medicine.

Another example was the purchase of CRYSTALLINE PENCILIN 10,000.000 UI FC from pharmaceutical company Grupo G y G for a price of 1,488,240 Lempiras. If he had bought these for the world average price (according to the WHO) he would have paid 85,180 Lempiras – 6% of the total paid.

One final example: HIDROCORTISONA SUCCINATO O FOSFATO 100 mg was bought from pharmaceutical company American Distribution for a total of 1,872,00 Lempiras. If the medicine had been bought at the world average price (according to the WHO) they would have cost 943,099 Lempiras. He paid more than double the price.

It also seems very strange that although 24 companies were competing and the drugs were all basic types, in other worlds quite common, for more than half of the medicines (232 out of 405) only one company made an offer and that company won the contract. This does not seem like a competitive bidding process. They did not publish in the adjudication how many more companies made offers nor what their offers were. Was there some kind of deal between the companies and the Health Minister so that each one knew which they would make an offer for?

As previously stated, on the 14 April the Minister of Finance William Chong Wong announced some encouraging news: "If the purchase of medicine is carried out with absolute transparency the World Bank will return 40% of the Money invested to the government" Dinero muy necesitado por el gobierno de Honduras con tantas crisis de salud, incluyendo la epidemia del dengue.

This is money much needed by the Honduran government with so many health crises, for example the Dengue epidemic.
In spite of this, the process was far from being transparent and as a result it is likely that Honduras will lose the money offered by the World Bank – 80 million Lempiras ($4 million). Obviously we cannot afford to lose 80 million Lempiras. A sum which would have been ours if the Health Minister had simply adhered to Honduras' own laws.

In Honduras, the Health Sector is the sector which receives most support from donations. For the year 2010, the Finance Secretary estimates that the sector will receive 170,000,000 Lempiras (almost $85 million). The World Bank, the Interamerican Development Bank ("IDB") and the governments of the United States, Spain and Germany among others, support health programs in coordination with the Minister of Health.

As donations come from the taxes of people in friendly countries, we would hope that all possible efforts would be made to be transparent and to be careful with every last cent. But we have already seen that this has not been the case. The Health Secretary has been negligent and his actions indicate that he has given little thought to the health and wellbeing of the Honduran people.

This cannot continue. We cannot allow our government to continue to squander and steal funds donated by other countries.

Final Result 3: Indirect effects on the Dengue epidemic

Up to October 2009, 132 cases of hemorrhagic dengue were recorded. Up to 8 August 2010, 43 Hondurans were confirmed dead after contracting dengue. The country has lost thousands of Lempiras on medicine, medical expenses and months of work lost. This is in addition to the cost and suffering of the 39,618 classic dengue patients.

Most agree that the Secretary of Health is not the only person responsible for this epidemic. In the coming days TRANSFORMEMOS HONDURAS will be presenting a report in which we will, however, make it known that the Minister bears a great deal of responsibility. The WHO have already warned the Minister after noting "an increase in cases of 297%, compared to the number in the same period of the year before."

Bendaña could have begun to prepare for the epidemic in early February. Preventative measures (e.g. fumigation and delivery of pesticide) were only initiated after the crisis had begun.

Transformemos Honduras has just found out that a further bidding process for medicine has just begun - PUBLIC BIDDING No. 021-2010-SS. This time it's not worth 200 million Lempiras ($10million) but 500 million Lempiras ($25million).

President Lobo announced that this year would be the year of transparency. On 10 February 2010 Bendaña promised that he would ensure the transparency of all purchases by "forming a Commission made up of members of Civil Society, the Church, the Anticorruption Commission and all the necessary bodies to make the process transparent". Once again Bendaña has failed to convene the CIM or any member of Civil Society to audit the process and guarantee its transparency.

Transformemos Honduras states the following:

In response to these failures, the members of Transformemos Honduras request the following:

2. Of the Attorney General, the Magistrates of the Supreme Tribunal of Accounts and the National Anticorruption Council:

To the general public – if you agree with our approach, join our petition by adding your name and email address to our website (CLICK HERE), and sharing it with your family and friends. We will be presenting our petition, as a sign of support, to the above mentioned authorities, in the coming days.


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