How shady deals at Kemsa fuelled US, Kenya HIV drugs row

Deep-rooted corruption and lack of transparency may have cost the Kenya Medical Suppliers Authority a contract with the US Agency for International Development (USAid), denying more than 1.5 million HIV patients life-saving drugs.

United States Secretary of State Antony Blinken, at a round-table with Kenyan and Nigerian journalists on the sidelines of virtual bilateral talks with President Uhuru Kenyatta, said the US is concerned about corruption at Kemsa, the institution responsible for distribution of drugs to public facilities.

“We have had an issue with Kemsa, and as you know very well, concerns in particular about corruption that I know the government is working to reform. We have an obligation to our own taxpayers when we’re spending their money, to do it in a way that is accountable and fully transparent,” Mr Blinken said.

The stalemate between USAid and Kemsa over a tax row in relation to a consignment of anti-retroviral drugs has escalated to President Kenyatta’s office, with the two countries now seeking a solution.

Mr Blinken added: “What we talked about today was making sure that as Kemsa was being reformed, nothing fell through the cracks, that we had the ability together to make sure that our assistance continued uninterrupted, so that people in need of what we’re providing didn’t go without it. And I think that we’re going to work very closely together to make sure that happened.”

Asked how the US and the Kenyan government are handling the Kemsa issue to ensure it is addressed amicably, he said as an American he is proud of the long-term partnership the US has had with Kenya and with other countries.

He cited the war on HIV/Aids and other potentially debilitating or deadly diseases such as malaria or tuberculosis as examples of areas where the two countries have successfully collaborated over the years.

“I’m extremely proud of the PEPFAR programme, something that President Bush initiated many years ago. I think it’s hard to think of any initiatives that have done more to save lives, but not just save lives, but also make sure that people could then carry on productive lives that contributed significantly to their families, their communities, their countries.  And this has been a longstanding partnership, and it’s one that I reaffirmed our commitment to today in my conversation,” he said.

Since September 2015, the USAid and Kemsa have had a five-year contract for procurement, warehousing and distribution of donations to Kenya.

The contract apparently ended on September 25, 2020 but had earlier on been extended to December 24, 2020.

Prior to a review to determine whether to extend the contract or not, the USAid requested Kemsa to provide a closeout plan.

According to an insider at the Ministry of Health who sought anonymity, Kemsa did not respond to the donors as per the stipulated timelines.

With the response not forthcoming, the USAid limited the terms of the contract to only warehousing and distribution and excluding procurement.

The extension was further revised to April 23, 2021, to allow room for further consultations.

The extension has since lapsed and the donor did not reinstate the procurement bit in the contract.

Instead, the donor engaged a third party – a privately owned American firm, Chemonics – to be procuring and importing drugs on behalf of USAid.

The US is not keen on working with Kemsa and has since indicated that unless the system is restructured, then they have no option but to engage the services of a third party.

There are also allegations that drugs being donated to the country by USAid find their way into the private chemists.

USAid is also conducting investigations to find out whether its staff have been colluding with Kemsa to sell drugs donated to Kenya to some private pharmacies in the country.

During a Senate Health Committee meeting held on Friday attended by Health Cabinet Secretary Mutahi Kagwe, the legislators raised integrity issues on the agency, claiming that most pharmacies in the counties are selling USAid-labelled drugs to Kenyans at bloated prices.

 “We have some serious issues to work on if we will continue to depend on donors for assistance. In Kisumu, some chemists are selling donated drugs. Who is giving them the drugs?” posed Dr James Nyikal, the MP for Seme Constituency in Kisumu County.

Mr Kagwe told the senators that lack of trust by USAid in the Kemsa management was the main cause of the stalemate.

The Ministry of Health and the donors have since formed a committee to look into issues surrounding the agency, though it might take a while before a solution is arrived at since the CS indicated his efforts to restructure the agency were being delayed by prosecution agencies.

“Right now there is very little I can do, the agencies are still doing their work and no one has been prosecuted. We are hoping that very soon we are going to see a change in the whole system. We want to see individuals being prosecuted. We need to move with speed,” he said.

However, the donors have insisted that before everything is put in order, they will use the third party and not Kemsa. This has since caused tension between the two entities, with the government insisting it will not sign a contract with the said third party.

Mr Kagwe said the ministry is not going to sign any contract with an organisation they know nothing about to bring drugs into the country, unless the donor does that and takes care of the tax issues.

 “We do not want to work with that private company, as it has several accusations from other countries. Should the donors continue engaging them, then it has to be their issue and the Kenyan government is not going to be part of their deals,” Mr Kagwe said.

This leaves the fate of future donations in limbo, as there is likely to be a stalemate on who should pay taxes every time the consignments are brought.

This will definitely have a negative impact on the lives of 1.5 million Kenyans who depend on the drugs.

Mr Kagwe had earlier indicated the tiff with the donors had been resolved and drugs released to the counties.

However, USAid confirmed to the Nation they had not resolved any issue with the government.

 “It is important to clarify the medications referred to in parliamentary testimony are actually from another donor – Global Fund – and not from USAID. As the largest contributor to the Global Fund, the United States is proud that we can once again help the people of Kenya. The donation from the American people through USAID of medications and medical supplies that were stuck at Mombasa port remain in USAID’s possession until our deliberations conclude,” the US embassy spokesperson told the Nation.

Stuck at the port, as per the documents, are 258,954 packs of Tenofovir, Lamivudine Dolutegravir (TLD).

The consignment arrived on January 18, after an application for import permits and approval of import declaration form were submitted on December 16, 2020 and resubmitted on January 5, 2021 by the appointed agent.

Before the stalemate, the donor was expected to list government agencies (Kemsa) and ministries (Ministry of Health) as consignees in order to qualify for duty and tax waivers. This means the consignment would have been sent to the Kenyan government, says the Pharmacy and Poisons Board.

Any importations through private firms do not qualify for special exemptions and are subject to the normal clearance procedure, which involves inspection at the port by the Kenya Bureau of Standards (Kebs) and imposition of taxes, including the railway development levy (RDL).