Copyright © 2021

The work of Euromaidan Press is supported by the International Renaissance Foundation

When referencing our materials, please include an active hyperlink to the Euromaidan Press material and a maximum 500-character extract of the story. To reprint anything longer, written permission must be acquired from [email protected].

Privacy and Cookie Policies.

Ukraine’s Ministry of Health: diagnosis of chronic corruption

Article by: Semyon Gluzman
Translated by: Katja Assoian
Edited by: Alya Shandra

October 23, 2014

Over the past 15 years the Ministry of Health, with assistance of competent employees of Security Service of Ukraine (SBU) responsible for combating corruption, set up an effective system of embezzlement of budget funds allocated for medicine.

“We met by accident. He is a friend of the family of my friends. One day he called me and came. And he told me everything. Tragic fate. He is an officer. He finds it disgusting, but he cannot step out. It is not easy to leave this world.

He brought me this text. He said: “I trust only you. My friend was killed in Luhansk. He was dreaming of another Ukraine. And Ukraine today is not like in his dreams. I wrote it in memory of my dead friend. Am I afraid? Yes, I am. If they find out, they will kill me here in Kiev. But I have no choice. I cannot keep silence any more. Publish it!”

And here I am publishing it.

Semyon Gluzman, doctor.”

Two topics are particularly popular today: reform of all sectors of our state and the fight against corruption. Reform of the medical sector, which has always pursued only one goal, namely the redistribution of the budget, deserves a separate discussion. The fight against corruption in the medical field during almost all years of independent Ukraine also had its specifics, leading to consequences that are obvious for many people today, in particular, to death of patients due to lack of medicines.

Over the past 15 years the Ministry of Health, with assistance of competent employees of the Security Service of Ukraine (SBU) responsible for combating corruption, set up an effective system of embezzlement of budget funds allocated for medicine in the field of pediatric and adult oncology, multiple sclerosis, HIV/AIDS, hepatitis, hemophilia, etc. Criminal schemes are being implemented by the illegal registration/re-registration of medicines, medical products, by preparation of ToRs and public procurement tenders.

The current situation in the sphere of public procurement of medicines and medical devices (implants, heart valves, stents, and so on) has its own specifics compared with previous periods.

Since the beginning of the year till October, 14 the medical institutions of Ukraine received medical products for 92 million UAH. This amounts for 4.3% of the total procurement plan for 2014 (Ukrainian government planned to buy medicines and medical products for 2 billion 160.4 million UAH). At the same time, the market for public procurement is still dominated by the same companies, related to persons from medical sector – Petro Bahriy, Andriy Lirnyk, Maksym Berehovyi (former employee of SBU, department of counterintelligence protection of the state economy; until 2003 he was responsible for operational support of the public procurements of the Ministry of Health), Borys Litovskyi, Olena Mironova, as well as by a bit smaller players.

Given the fact that only two months are left till the end of the year, there is a risk that the Cabinet of Ministers will not allocate funds at all if no tenders will be organized. If the public procurement tenders do not take place, the most vulnerable populations, including children with cancer and hemophilia patients will not receive their medication.

Influence groups held a closed meeting at which it was decided to stop arguing this year and to share existing health programs among each other.

Why were the public procurement tenders not held under the Minister Oleh Musiy? According to the Minister, the responsibility lies on his first Deputy Ruslan Saliutyn, who is also the Head of the Tender Committee of the Ministry of Health. This is not quite true. Because we know: since Musiy took up his post he personally conducted negotiations about the organization of tenders with Bahriy. From 2007 to 2009, he successfully “collaborated” with the Minister Vasily Knyazevych and also Musiy was the head of the public council under the Ministry of Health.

Actually the tenders were not conducted on a number of subjective and objective reasons. The first ones refer to the influence of the medical groups that worked with the previous government (Kiev companies “Alba Ukraine” and “Vector-Pharm”, Donetsk company “Fra-M” and others). In the spring-summer 2014 separatists repeatedly robbed the company “Fra-M”, today it has almost ceased to exist. A well-known generics company “Actavis” which produces medications used in the treatment of cancer, terminated a contract with “Fra-M” and left only contracts with those companies which are controlled by Petro Bahriy and Maksym Berehovyi. Because of the inconsistent policy of the Minister Musiy influence groups failed to reach final agreement on the redistribution of spheres of influence regarding different public health programmes, financed from the state budget.

The objective reasons refer primarily to the instability on the foreign exchange market. In order to reduce the risks all groups jointly started to lobby resolution authorizing 100 % advance payment under contracts for the supply of medicines. They already succeeded in lobbying the 90 % pre-payment. The final goal of medical clans is to agree on a quota of delivery of pharmaceutical products purchased with state budget funds, within 180 days after 100% prepayment. This is an unprecedented situation, because previously the delivery of medicines was done within a month. Now it is so that if prepayment is done today, medications could be delivered only in March-April.

Will the tenders still be held this year? Most likely, yes. As far as we know, Petro Bahriy declared that all technical issues with the government had been solved.

Unfortunately, public organizations, whether from ignorance, or deliberately are participating in the corruption schemes. One example: for the past 15 years one of these organizations involved in TB control, lobbied at all levels of government, the interests of the structures associated with the name of Bahriy.

So, in the pharmaceutical industry there are several major centers of influence, in particular, those of Borys Litovskyi and Petro Bahriy. Perhaps nobody knows more than Boris Litovsky, Viktor Chumak and Olga Baul about business involving registration of non-existent copies of the most famous in Ukraine pharmaceutical products produced by global pharmaceutical giants, from year to year purchased by the state from the state budget funds. These medical programs are in the areas of children’s and adult oncology, viral hepatitis, HIV/AIDS, hemophilia, etc.

Today Mr. Litovskyi has a problem: it is necessary to conduct a re-registration of medicines. The current leadership of the state enterprise “State expert centre of the Ministry of Health of Ukraine (SEC)” will not carry out this re-registration. In this regard, a whole operation is developed in order to replace the current leadership of SEC.

But Petro Bahriy is not satisfied with such developments. In May 2014 he facilitated the appointment of his people to senior positions in the State service which is in charge of medicines and medical products. These were the Head of the service Mykhailo Pasichnyk and his First Deputy Olena Alekseyeva, the daughter of the former head of the SEC, Ms. Sharikyna. Prior to joining the State service Alekseeva was director of the Association of Producers of Medicines of Ukraine, which until 2011 was called the Association of pharmaceutical producers of Ukraine (re-registration has occurred due to the conflict between the main founders: Filya Zhebrowsa (the owner of the plant “Farmak”) and Hlib Zagory (owner of the plant “Darnitsa”). However, according to the trustful sources of information, significantly more weight than Bahriy himself has today a “grey cardinal” Michail Kuchirka (co-founder of the company “Hansa”).

Who is helping to replace the disloyal leadership of the State Expert Center? What is the role of the law enforcement bodies in this situation, as a result of which the regions are missing vital medicines, which were planned to acquire from the state budget funds? After all, the situation with the lack of medicines can be classified as a threat to national security of Ukraine. What is the role of the SBU, and, in particular, of its directorate for combating corruption and organized crime? In 2009 a SBU officer (Department K), assistant (former advisor) to the Minister of Health of Ukraine Dmytro Demyanenko was appointed to combat corruption in the healthcare system of Ukraine.

Demianenko entered the security service (Department K) in 2005; previously he had worked in the Administration of the President of Ukraine. The unit at which he had worked, was supervised by the Deputy Head of the President’s Administration in the time of Leonid Kuchma – Valeriy Khoroshkovskyi.

During 2006-2008 the leadership of the directorate for combating corruption and organized crime repeatedly raised the question about the discharge of that officer. The current head of the SBU in the Odesa region Serhiy Batrakov raised the issue of dismissal of Demyanenko in connection with the professional impropriety.
In early 2009 Demyanenko was appointed SBU-officer at the Ministry of Health of Ukraine. According to some reports, it was done with the assistance of the former Deputy of Department K of SBU. Demyanenko remained at his post under all Ministers of Health since 2009. Over the years 2009-2014 Demianenko was included in almost all working groups of the Ministry of Health, which carried out procurement of medicines, medical equipment and medical products.

After Raisa Bohatyriova was appointed Minister of Health in 2012, Demianenko has strengthened his position. However, in 2013, the Chairman of the Security Service Alexander Yakimenko dismissed the unsinkable officer. As far as it is known, for lobbying the interests of certain firms.

However, Demianenko remains adviser of Bohatyriova and is safely watching the conflict of interests between pharmaceutical clans around medicines of the group “M-invest”. Moreover, he managed to remain the only adviser of Bohatyriova under the Minister Musiy.

Incredible luck, and not the last one. Coincidentally, within a day after the stakeholders met with the Chairman of the SBU Valentin Nalyvaichenko, Demianenko was re-employed as an SBU-officer at the Ministry of Health of Ukraine without consulting the supervising Deputy Vladyslav Bukhariov! Rhetorical question: where did the Ministry look? Why is such “indispensable” advisor to the Minister needed?

If the right people are part of the management of the SEC, the re-registeration of more than 150 so-called medicines of, to put it mildly, questionable quality will be conducted. This means that these products can easily be purchased with budget funds for health programs such as “Oncology”, “AIDS”, “Hepatitis C”, “Multiple sclerosis” in 2014 and in 2015. And no Minister, even the most decent one, will be able to oppose this scheme.

It is very bad when medicines of well-known brands are being purchased at prices far above market value. But it will be even worse if the Ukrainians receive drugs of doubtful quality, safety and efficiency, including those that are no longer used anywhere in the world.

P. S. On October 17, the acting Minister of Health Vasily Lazorishinets dismissed Elena Nagornaya from the post of General Director of the State Expert Center. Nicolai Vostrikov (athlete and massage therapist, under Bogatyreva he was managing very substantial funds of the Expert Center) is appointed acting director. Igor Shkrobanets, a former Director of the Department of Health and Protection of the Population of Chernivtsi regional state administration (2012-2014), member of the Party of Regions was appointed Deputy Director. None of them, neither the athlete nor a doctor, are pharmacists. We expect return of Osadchenko and Nikolaeva (as far as we know, the godfather of her twins was Vasily Lazorishinets), who were dismissed in 2013; they will be responsible for clinical trials and registration/re-registration of medicines.

The editors are ready to give the floor to the persons mentioned in Semyon Gluzman’s article.

Translated by: Katja Assoian
Edited by: Alya Shandra
You could close this page. Or you could join our community and help us produce more materials like this.  We keep our reporting open and accessible to everyone because we believe in the power of free information. This is why our small, cost-effective team depends on the support of readers like you to bring deliver timely news, quality analysis, and on-the-ground reports about Russia's war against Ukraine and Ukraine's struggle to build a democratic society. A little bit goes a long way: for as little as the cost of one cup of coffee a month, you can help build bridges between Ukraine and the rest of the world, plus become a co-creator and vote for topics we should cover next. Become a patron or see other ways to support. Become a Patron!
Related Posts