What the facts: All about Pharmally

Right to Know, Right Now! Coalition

Posted at Oct 14 2021 06:33 PM

THE ISSUES are legion, the numbers baffling, and the questions about how and why it all happened linger still. 

Pharmally Pharmaceutical Corporation has hogged the limelight, and the ire of the members of the Senate Committee on Accountability of Public Officers and Investigations (Blue Ribbon Committee) in 11 hearing days in the last eight weeks, or since August 16, 2021.

In case you missed it, here are all the facts about Pharmally, based on official data of the Philippine Government Policy Procurement Board (GPPB) and the Philippine Government Electronic Procurement Service (PhilGEPS):

HOW MUCH ARE PHARMALLY’s SUPPLY CONTRACTS WITH THE GOVERNMENT WORTH?

Pharmally bagged a total of P10.85 billion worth of contracts from three Government Agencies: the Procurement Service-Department of Budgment and Management (PS-DBM), Department of Health (DOH), and Department of Transportation-Philippine National Railways (DOTr-PNR).            

Their contracts are altogether worth P8.52 billion in 2020 and P2.33 billion more in 2021.

 These P10.85-billion contracts make up 16.64 percent or a considerable portion of the PhP65.19B billion total Bayanihan procurement funds disbursed as of September 8, 2021.                    

Pharmally registered with the Securities and Exchange Commission only in September 2019 with a paid-up capital of only P625,000. But seven months later, Pharmally topped the GPPB list of suppliers with the highest total contract by May 2020.     

In three months’ time, from April to June 2020, the total contract price awarded to Pharmally had reached P8.523 billion, a significant 1,263 percent more or about 13 times its paid-up capital.    

From May to July 2021, Pharmally secured PhP2.33 billion more in supply contracts from the government.

WHAT DO RECORDS TELL US ABOUT THE CONTRACTS THAT PHARMALLY GOT?

Government online portals announce and post the procurement requirements and contracts awarded, including the Notice of Award or NOAs and Purchase Orders or POs, supposedly to promote transparency. The major portals are:    

  • PhilGEPS - for procurement from regular funds                    
  • GPPB Online Portal - for procurement from Bayanihan funds     

The documents are publicly available at these links: 

  • The documents are publicly available at these links: 
    - GPPB Online Portal                 
    - PhilGEPS               
  • Based on the NOAs and POs, Pharmally was awarded a total of 15 contracts amounting to P10.85 billion.       
  • Of the total, PhP8.68-billion supply contracts are recorded in the GPPB Portal, and another P1.023 billion in PhilGEPS.                    
  • There are, however, four more duly signed NOAs and POs with combined value of P1.148 billion that have missing or gaps in records in both the PhilGEPS and GPPB portals.        
  • A compilation of the NOAs and POs are available here.

 Within a few days or weeks, the supply contracts awarded to Pharmally were signed and sealed by the contracting officials, clear evidence that these were rushed or negotiated on fact-track mode. Most of the 15 supply contracts that Pharmally got came one after the other, their NOAs and POs issued just a day or two apart. (See table on the right column for details on each of the items purchased from Pharmally, including date of award, quantity, unit cost, and total cost.)

Pharmally

             

The PhilGEPS Quarterly Reports as of September 8, 2021 – then available in Excel format – have been used as a reference for this R2RKN report. The upgraded version of the PhilGEPS Portal now features the same Reports as of September 15, 2021 in PDF format. This shift from Excel to PDF formats has made public scrutiny and data analysis difficult.    

Copies of the PhilGEPS Quarterly Reports from 2020 to 2021 and the Alternative Mode of Procurement Report (AMP Report) downloaded prior to the PhilGEPS website’s upgrade and shift to PDF format are available here

WHAT DID THE GOVERNMENT BUY FROM PHARMALLY FOR P10.85 BILLION?

The PhP10.85-billion contracts that the government awarded to Pharmally covered the purchase of over 17.53 million units of pandemic supplies.         

By value and volume, the biggest purchases included the 2.52 million units of PPEs (Personal Protective Equipment) worth PhP4.33 billion (or 39.87 percent of the total amount Pharmally got) and three types of test kits at worth PhP5.95 billion (54.82 percent combined).    

The next big purchases from Pharmally were surgical masks, MGIEasy kits, face shields, and surgical gowns altogether worth PhP574.8 million, or 5.3 percent of the total contracts Pharmally secured. (See table for details on each of the items purchased, including date of award, quantity, unit cost, and total cost.)    

Pharmally

WHO SIGNED THE CONTRACTS WITH PHARMALLY?

Copies of the NOAs and POs show that the contracts with Pharmally were mostly signed by the acting executive director (Lloyd Christopher Lao) and the accountant of PS-DBM, and representatives of Pharmally.

However, their signatures do not all appear on the Purchase Order dated May 8, 2020 for the single biggest contract charged under the Bayanihan to Heal as One laws (Bayanihan pandemic response fund): the PhP3.82 billion for the purchase of PPEs at PhP1,910 per unit.                    

A copy of the PhP3.82-billion contract with incomplete signatures can be found at the GPPB Portal.

Pharmally’s 2020 contracts with PS-DBM amounting to P8.5 billion were all signed by former Undersecretary Lao (then PS-DBM officer in charge). 

In addition, the P2.3 billion contracts that Pharmally got in 2021 were signed by Executive Director Jasonmer Uayan, after Lao resigned as PS-DBM OIC in June 2020.    

Copies of the two more awarded contracts recorded in PhilGEPS are not available so far, thus the data gaps in the total awarded contracts to Pharmally.    

Under the Government Procurement Reform Act, the award of contract is subject to compliance with certain conditions, including the issuance of the NOA and its receipt by the winning bidder. This must be accompanied by the actual execution and signing of the contract. 

Thus, even if the NOA was duly issued and received by the winning bidder, the latter must comply with all the requirements provided for under the procurement law for the contract to become legally enforceable.            

HOW MUCH COULD BE THE OVERPRICE IN GOODS SUPPLIED BY PHARMALLY?

The Senate Blue Ribbon Committee has flagged three items in the supplies from Pharmally that were found to be overpriced: surgical masks, PPEs, and testing kits.        

Using the prices supplied by other companies that also got NOAs during the same period, the overprice of Pharmally’s supplies could reach a total amount of P80.26 million. Sen. Franklin Drilon also presented the prices in a matrix at the Senate hearings.

In coming up with the estimate, the PPE bought at PhP1,910 per set was maintained, on the assumption that a global supply shortage at the time had pulled prices up.     

In its various supply contracts, though, Pharmally itself had offered different prices for its surgical masks. Its lowest price offer was P22.00 per piece, and its highest, P27.72 per piece. The other suppliers offered surgical masks from P13.50, P16, and P17.50 per piece.

Prices for BGI RT-PCRs were also maintained as they require further analysis to derive the overprice estimate. – Right to Know, Right Now! Coalition, 12 October 2021

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