GHC1.2bn NHIS debt chokes pharmaceutical sector

Suppliers of pharmaceutical products are appealing to the National Health Insurance Authority (NHIA) to settle the long overdue claims of various NHIS accredited hospitals, so that they can in turn pay for supplies received from pharmaceutical companies.

Accredited hospitals are reported to be indebted to the pharmaceutical products suppliers to the tune of about GH?1.2billion since January 2017.

According to David Klutse, the Managing Director of Intravenous Infusions (IIL) – manufacturer and supplier of pharmaceutical products – his company is ready to cooperate with government to address the issue of NHIA arrears which is threatening the survival of his company, as well as fake imported rigid Intravenous therapy (IV) bottles.

“NHIA does not owe us as a company directly, but the hospital that we supply uses the product for patients and then claims on behalf of those patients – which is the NHIA; the challenge we currently face is that NHIA seems to be paying on a monthly basis to the facilities, but at the start of 2017 companies the NHIA owed altogether was in the region of about GH?2billion. That bulk quantum was never cleared at any point in time,” he told journalists when his company took its turn at the Ghana Stock Exchange Facts Behind the Figures forum in Accra.

He explained that government keeps paying, but the original debt of GH?1.2billion has not been paid off; however, new ones have come to replace what was there since January 2017.

“This is the loop that must be broken. We want to expand but we are sometimes constrained by the working capital challenges; government has made a significant effort but there is still a backlog that has to be paid.”

Another issue of concern for IIL and the sector is the influx of rigid bottles, hence the company is also appealing for government through the Ministry of Health and Food and Drugs Authority to help restrict some of the rigid bottles.

He also confirmed that the company has received US$4.2m from government as part of the stimulus package support, and that it is in the process of talking to the bank about accessing it.

However, he explained that “a bill was passed through parliament about 1D1F of entities who get exemptions of duties and other things when they import equipment into the country, but nothing was said about the stimulus package, so we are in a no-go area; we don’t know what is happening and we need clarity on it, because if I am going to import equipment worth US$4m and I don’t know whether I am paying duty or not, it is a significant factor in my decision-making”.

The company has also projected to increase its turnover to GH?24m from GH?20.2m for this year, the Managing Director of IIL, Mr. Klutse has revealed.

According to him, the sale of small volume injections (SVI) is expected to contribute 18 percent from 15 percent.

The company also intends to introduce six new products in the next 18 months.

Mr. Ekow Afedzi, the Deputy MD for Ghana Stock Exchange, urged government to promote local businesses in order to employ more people – explaining that this is the only way to grow the economy.

IIL went public through an initial Public Offer in 2015 on the Ghana Alternative Market (GAX), which raised GH?6.8m.

The main business activity is production and distribution of intravenous infusions for therapeutic purposes. It distributes its products locally and within the West African region.

IIL raised additional equity capital of GH?3.2m through a private placement in April 2019.