Even as the Andhra Pradesh government boasts of Hyderabad as the Healthcare Capital of India, a massive scandal involving the government hospitals has been detected by the Lok Ayukta. The government pays more than twice the amount for medicines and drugs that it purchases for its hospitals when compared to other states and ESIC hospitals.

The scam, running into several crores of rupees, was unearthed by the Lok Ayukta, while examining the purchase of drugs for government hospitals by the Andhra Pradesh Health, Medical and Housing Infrastructure Corporation.

Ampicillin injection, 50 mg, is sold to the state government for Rs 6.95 per vial, whereas it is sold to the Tamil Nadu government for Rs 3.15 and to the ESIC hospitals for Rs 3.42 per vial. The state purchases Amoxycillin capsules (250 mg) at Rs 160 per strip of 10 capsules, while Tamil Nadu gets it for just Rs 72, ESIC for Rs 79 and Kerala Government for Rs 69. The state pays Rs 255 for a strip of Erythromycin tablets of 250 mg and Tamil Nadu Rs 154.

According to information close to the Lok Ayukta, it had advised the government to show greater transparency in the procurement of medicines for its hospitals by inviting tenders through newspapers. The rate contract should be awarded to the supplier who quoted the lowest price.

The government purchases antibiotics from public sector units like IDPL Chennai, Hindustan Antibiotics, Karnataka Pharmaceuticals, Goa Antibiotics Ltd, UP Drugs and Pharmaceuticals and Bengal Antibiotics. While quoting the rates, they appointed agents for the state who formed a syndicate and quoted higher rates, sometimes as high as 300 per cent.

Lok Ayukta has advised the government to accept the lowest price quoted by a company for the rate contract for 2003-05. It has also advised the government for an undertaking from the suppliers that it would recover the difference in the price of the medicines if it was subsequently found that the company had supplied the same drugs to others at a lower price.