How Ukraine’s Reformers Beat the Pharma Mafia

Small victory in Ukraine’s generally disappointing battle against corruption.

Need to execute a few corrupt politicians. Just one or two. The others will get the message. They are, first and foremost, cowards.

A little over a month after US Vice President Joe Biden told Ukrainian legislators that graft was eating Ukraine “like a cancer,” an order from Ukraine’s cabinet of ministers struck a decisive blow against pharmaceutical corruption. This order outsources the purchasing of numerous medicines for seriously ill Ukrainians from the Ministry of Health to respected international organizations including UNICEF, the United Nations Development Program (UNDP), and Crown Agents.

The saga of drug procurement nicely illustrates both the resistance reformers face, as well as the creative methods they have used to overcome entrenched interests. According to Olga Stefanyshyna, executive director of the NGO Patients of Ukraine, the Ministry of Health was previously in charge of a $250 million budget for purchasing medicine—$100 million of which was allegedly stolen by corrupt officials.

As a 2013 report from the Anti-Corruption Action Center (AnTAC) demonstrates, corrupt actors have employed a variety of creative strategies to enrich themselves. In one scheme, a small number of companies and government officials arranged staged tenders with the winner determined in advance. In another, several companies controlled by one owner “compete” in the tenders. Using this technique, the Bahriy Group won over $12 million in state contracts to supply HIV and tuberculosis drugs at inflated prices to the Ministry of Health in 2013.

Oleksandra Ustinova, an AnTAC board member, said reformers faced enormous challenges combatting Ukraine’s “pharmaceutical mafia” and corrupt Ministry of Health officials. “Even when we closed one corrupt hole within the Ministry, corrupt officials would come up with another one. Given the amounts of money at stake, AnTAC and our allies realized we needed to find a way to bypass the Ministry entirely.”

A few years ago, Ustinova and her colleagues discovered the Dutch IDA Foundation which oversees drug procurement for other countries, “so even before the Maidan, we dreamt of bringing a third party into the market and IDA provided an ideal model. After the Revolution, this became the number one priority.”

After a month of lobbying, AnTAC and Patients of Ukraine succeeded in forcing a bill through parliament stripping drug procurement responsibilities from the Ministry of Health on March 19, 2015. It wasn’t easy. According to Ustinova, the Ministry and its allies registered seven alternative bills in parliament hoping to confuse lawmakers and stymie reforms, requiring Ustinova and parliamentary allies to work overtime to ensure the right law was passed.

As is frequently the case in Ukraine, however, the law’s passage was just the first step in the reform effort. “Despite the passage of the law, the Ministry of Health ignored it. They were supposed to develop and approve the procedural regulations and begin communications with international organizations to implement the law. Instead, they sat on their hands and did nothing,” Stefanyshyna said in a January 18 interview.