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COA to come up with own study on Pharmally transactions

The Commission on Audit (COA) will come up with its own study on the P8.68-billion contract awarded to Pharmally Pharmaceutical Corporation by former Department of Budget and Management-Procurement Service (DBM-PS) head Christopher Lloyd Lao for the purchase of face masks and face shields.

During the House Committee on Appropriations hearing on the proposed 2022 budget of the COA on Friday, Cagayan de Oro 2nd District Rep. Rufus Rodriguez asked COA chairman Michael Aguinaldo if the state auditing agency has looked into the transactions of Pharmally.

“Beacause of the news that come out. Itong issues about that we’ve been seeing. The resident auditor has already taken note at tinitignan niya po rin ‘yon,” Aguinaldo said.

Rodriguez asked the COA chair if the House panel could expect a report on the transaction of Pharmally in the coming weeks “so that we will be enlightened as to the nature of these purchases of these pandemic required equipment.”

“We’ll ask the resident auditor to come out with his own study on the matter,” Aguinaldo said.

“Mahirap mag-commit ng exact period but I would say maybe a month would be a reasonable time,” he added.

Pharmally Pharmaceutical Corp. is under the spotlight after Senate Minority Leader Franklin Drilon grilled Lao for awarding an P8.68-billion contract for the procurement of face masks and face shields to the company that has a P625,000 paid-up capital. 

According to Drilon, the amount of contracts that Pharmally bagged was relatively high compared to the other companies that had secured the contracts for the procurement of personal protective equipment.

In 2019, Drilon said Pharmally’s income soared from zero to P284.9 million in 2020.

Pharmally’s assets “jumped” from P599,000 in 2019 to P284.9 million in 2020, he added.

The Commission on Audit (COA), in its 2020 audit report, said the PS-DBM ordered 113.95 million pieces of surgical masks and 1.32 million pieces of face shields in April and May 2020, a period when prices were “so high” because of high demand.

The masks were purchased from various suppliers for P13.50 to P27.72 per piece, while the face shields were bought for P120 each.

PS-DBM’s market surveys for the procurement were based on a DOH circular dated March 2020 that stated the suggested retail price (SRP) was P28 for face masks and P120 for face shields.

COA, however, said Regional Depot (RD) 11 received its share of the procured masks and shields “when the selling prices in the local market already dropped.”

Citing records he gathered, Drilon said Pharmally sold face masks at P27.72, while the same item was sold by other suppliers to PS-DBM at P13.5, P16, and P17.50 during the same period in 2020.

It likewise sold test kits at a price of P1,720 when the kits can be bought at P925.

The senator added that the firm sold the PPEs P1,910 each when the cost of the material in the market was at P945.

Inventory management

Aguinaldo, during the House panel hearing, said the main observation of the resident auditor in charge of PS-DBM was “there’s really a problem with inventory management kasi po ang nangyari a lot of these common use supplies were procured in April 2020 at a certain price range.”

“Kaya lang noong by September of 2020 medyo nagbagsakan ang presyo. The problem was they still have a lot of inventory in their warehouse na hindi nila na-dispose. Meanwhile, itong regional offices ng DOH ayaw na kumuha sa PS-DBM dahil mahal na,” the COA chief said.

The transaction with Pharmally forms part of the P42.4 billion worth of funds transferred by the Department of Health to the PS-DBM to procure face masks and face shields, which both agencies claim are common use supplies, thus a need for a memorandum of agreement was not necessary.

Aguinaldo said that it is a common practice for agencies to transfer funds to PS-DBM to procure certain items deemed as common use supplies.

“The observation is wala manlang documentation to support it. Of course, the defense of DOH hindi naman kailangan kasi common use supplies. But from the auditors’ point of view if the common use supplies are in stock then you don’t need a MOA but if they’re not yet in stock you are basically asking the PS-DBM to buy it for you. In which case dapat may kontrata kayo,” the COA chief said.

“Kasi how do you establish, ‘yung mga service requirements. How soon will it be delivered paano ‘yung inspection, etc. etc.,” he added.

Aguinaldo said the DOH is no longer contesting the need for a MOA and is already making the document for compliance with the COA’s observations. —NB, GMA News