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How Afrocentric ‘captured’ state-funded medical aid schemes

Afrocentric chief executive Ahmed Banderker. Picture: File

Afrocentric chief executive Ahmed Banderker. Picture: File

Published Jun 27, 2022


Pretoria - Healthcare giant Afrocentric Group has allegedly captured the government-funded medical aid schemes through officials who gave its subsidiaries unfettered powers to adjudicate and irregularly award multimillion tenders to their sister companies.

According to official documents, insiders and other industry sources, the alleged capture, which started with a R600 million multivitamins dodgy contract issued by the Government Employees Medical Aid Scheme (GEMS) in December last year, has now moved to the police medical aid scheme, Polmed.

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At the centre of the alleged capture are Afrocentric subsidiaries Activo Health, a pharmaceutical company, Medscheme, an operational and management services provider, Pharmacy Direct, which distributes medication, and Script Pharm.

The Pretoria News can today reveal that Activo Health was also irregularly awarded a R350m contract to supply multivitamins by Polmed in December, in violation of the scheme’s own procurement rules and regulations.

The contract was awarded for R310 per package over five months. Polmed also paid R40 per package in courier services. Polmed is a registered medical scheme for SAPS employees and has over 175 000 members. According to Polmed’s latest annual report, the medical aid provided health benefits to more than 500 000 members by 2021 and recorded contributions of over R10 billion in the 2018/2019 financial year.

The Pretoria News reported last month that GEMS had awarded its multivitamins contract to Activo Health through the quotation system, in breach of the scheme’s regulations and procurement policies. As it was the case with the GEMS contract, adjudicated by MedScheme, the Polmed tender was allegedly adjudicated by Script Pharm, another Afrocentric-owned company, on behalf of Polmed. It was awarded to Activo Health, while Pharmacy Direct scored the distribution part of the deal.

This has prompted the Black Pharmaceutical Industrial Association (BPIA) to lay a complaint with the Competition Commission against Afrocentric, Gems, Polmed and MedScheme.

In a letter dated May 31, 2022, and titled “Afrocentric capture of Gems and Polmed”, BPIA chairperson Kingsley Tloubatla asked the commission to probe the four entities for allegedly breaching the country’s competition laws. The Competition Commission acknowledged the complaint in a letter dated June 8.

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The BPIA further complained that Afrocentric had shut out competitors from all Gems and Polmed contracts. It alleged that the group benefited from irregular contracts and issued Polmed members with branded Vit-Co MAX multivitamins, sourced from Acvito through Script Pharm and distributed by Pharmacy Direct.

“On top of the decision to provide all members with multivitamins, clinical governance and pharmaceutical practices were completely ignored in supplying and distributing medicines. Government employees were potentially exposed clinically, as some vitamins are harmful in excessive use and in conjunction with other medication,” said Tloubatla in the letter.

The BPIA also claimed in the letter that the multivitamins had not been requested by members, pharmacists or doctors, which made the distribution irregular.

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“The multivitamins were, therefore, issued to members by an administration company and the medical scheme at their own prerogative. Employees' funds and government grant subsidies, therefore, were used for this unnecessary, unrequested and unproven healthcare intervention without a proper tender. Afrocentric is thereby the main beneficiary of the illegal intervention.”

The organisation requested the commission to probe why Polmed and GEMS flouted their own procurement rules and regulations for the benefit of Afrocentric.

“This had led to members' funds and government grant subsidies being used to indiscriminately fund the irregular supply of multivitamins. The actions have put all three parties in contravention of the Medical Schemes Act and put them into non-compliance with the Council for Medical Schemes accreditation criteria,” concluded the letter.

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Tloubatla further asked the commission to probe why Polmed renewed MedScheme’s contract even though it had said in its own annual report that the company had failed to perform.

Insiders and industry sources said, like the GEMS contract, the Polmed deal smacked of collusion and potential fraud.

The Progressive Health Forum (PHF), a body of doctors, has called for an investigation into Afrocentric’s Polmed contract. PHF chairperson Dr Aslam Dasoo, who previously called on law enforcement agencies to investigate the GEMS contract, saying it was a scheme to defraud the medical aid scheme, said the Council for Medical Schemes (CMS) should launch a full section 44 inquiry into the Polmed tender.

“We have it on good authority that the GEMS Board of Trustees and the management were warned by the professionals that the distribution of these vitamins was “unscientific” and outside the scheme rules registered with the Council for Medical Schemes. It appears to have ignored these warnings and proceeded regardless,” Dasoo said.

“From the published reports there appears to be no rationale, medically or in terms of the Medical Schemes Act and the scheme’s own rules, for the project. That would indicate that this may have been an attempt to improperly utilise member funds and the SA Police Services and, if warranted, the SIU, should investigate these allegations,” he added.

He accused the CMS of treating GEMS with kid-gloves, saying the section 43 inquiry launched against it was too lenient.

Afrocentric chief executive Ahmed Banderker failed to respond to questions sent via text and email on Monday. Efforts to reach Polmed principal Neo Khauoe proved fruitless. However, Polmed acknowledged the questions sent but did not respond. Afrocentric Group chairperson Dr Anna Mokgokong could not be reached for comment.

An industry source said Script Pharm, through the administrative and healthcare services provided by MedScheme, which amounted to R2bn, also did Polmed formulations and prescribed medical benefits.

“Through these formulations, Script Pharm prescribes the types of medicines that are manufactured by Activo, which is their sister company. Furthermore, the (Polmed) multivitamins were distributed by Pharmacy Direct, another Afrocentric distribution company. A similar thing happened in GEMS where MedScheme adjudicated a multivitamins tender to beneficiaries and the contract was awarded to sister company Activo.”

The source added that GEMS’ contracts for managed care, HIV management and maternity management were in the hands of the Afrocentric Group.

Meanwhile, the Independent Community Pharmacy Association (ICPA) has filed papers at the Constitutional Court challenging the legality of the Afrocentric Group contracts. ICPA is embroiled in a legal battle against Clicks.

“We are challenging the company structure of the Clicks group but the outcome will have an effect on the Afrocentric structure because they, too, own community pharmacies (Pharmacy Direct) and a manufacturing pharmacy (Activo Health), which we believe contravenes the Pharmacy Act, Section 22 read together with regulation 6 of the ownership regulations. Of course, the whole GEMS tender where MedScheme advised GEMS to use a multivitamin from its sister company in a multimillion-rand multivitamin programme for 1,1 million GEMS beneficiaries,” said ICPA chief executive Jackie Maimin.

Maimin added that Afrocentric also owned medicine distributor MMED Distribution.

The case is expected to be heard at the apex court on September 1.

Pretoria News