Vaccine Scam : Sabotaging the vaccine production in India’s public sector by Health Ministry and WHO

Report – 1

May 10, 2008 – ‘The Pioneer’

Health Minister Anbumani Ramadoss linked vaccine scam

A Chennai-based private company, owned by a close associate of Union Health Minister Anbumani Ramadoss, was granted a Rs 14-crore bank loan for starting production of vaccines just two weeks before the Health Ministry banned vaccine production by three Central public sector undertakings (PSUs). Ramadoss ordered the closure of vaccine production by three PSUs citing a June 2007 WHO report, which claimed that these units were using redundant technology. BCG Vaccine Lab (Chennai), Pasteur Institute (Coonoor) and Central Research Institute of Kasauli were asked to close down production on January 22. Incidentally, the private company — Green Signal Bio Pharma — received Rs 14 crore as loan from Union Bank of India, Chennai, for starting production of vaccines on December 27, 2007. As bank guarantee, the private company hypothecated its vials and other products, for which it had entered into a supply contract with BCG Vaccine Lab, Chennai, a PSU under Health Ministry. This shows that the PSU facilitatedprocurementofthe loanforaprivatecompetitor. It is well known in Tamil Nadu’s political circles that Ramadoss and the Green Signal Bio Pharma owners are close. The company’s chairman and managing director, P Sundaraparipooranan, is a politician-turned-businessman. The company was registered in November 2005 but it decided to get into vaccine production only in December 2007, when Ramadoss banned the three Central PSUs. Before Sundaraparipoornan’s meteoric rise, he was a small-time office bearer in the PMK. A couple of scandals earned him good moolah, some limelight and close ties with the PMK’s powers-that-be. He had faced charges of irregularity in supplying equipment to the Madurai Meenakshi Medical College and getting no-objection certificate (NOC) for educational institutes in Tamil Nadu. Sundaraparipoornan is a close associate of Ramadoss and his brother-in-law MK Vishnuprasad, a Congress MLA. Dr N Elangeshwaran, the then director of two vaccine-making PSUs — BCG Vaccine Laboratory, Chennai, and Pasteur Research Institute, Coonoor — executed Ramadoss’ wish to shut down vaccine production at these undertakings. His wife E Shanti is a major share holder in Vatsan Bio Pharma, which is also co-owned by Sundaraparipoornan and his wife. This company, formed in January 2006, is also a relatively new entrant invaccine-makingindustry.Elangeswaran, currently working as senior specialist (microbiology) in Central Government Health Services, Chennai, is also facing a CBI investigation into his alleged role in recruitment process. The Pioneer’s investigation also establishes Elangeswaran’s role in setting up the private vaccine factory of Green Signal Bio Pharma while serving as the head of the two vaccine-making PSUs. The Pioneer has copies of e-mails through which Green signal Bio Pharma consulted him about installing equipment and deciding the factory’s layout. Trade unions leaders and several others who protested against Ramadoss’ decision to ban vaccine production by the PSUs allege that the Health Minister deliberately ignored the WHO’s offer for assistance to upgrade the technology at the PSUs. These three PSUs were producing 90% of the total vaccines in the country.

Wrong dose: Union Health Ministry lets Green Signal Bio Pharma, a Chennai-based private firm, receive Rs 14 crore as loan from Union Bank of India, Chennai, for starting production of vaccines on December 27, 2007

Three PSUs — BCG Vaccine Lab (Chennai), Pasteur Institute (Coonoor) and CRI (Kasauli) told to close down production on January 22

Cosy relations between Ramadoss and Green Signal Bio Pharma owners an open secret in TN political circles. The company was registered in November 2005, but decided to get into vaccine production only in December 2007

TU leaders, who opposed Ramadoss’ decision to ban vaccine production, allege that the Health Minister purposefully ignored WHO offer for assistance to upgrade technology there. The PSUs were producing 90% of the nation’s total vaccine output

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Report – 2

May 21, 2008 – ‘The Pioneer’

Health Minister gifts Rs.3.25 cr to associate’s company for a simple seed

In yet another instance of the glaring nexus between the Union Health Ministry and private vaccine-producing companies, a Public Sector Undertaking (PSU) paid an astronomical amount to a politically-connected private company for measles seeds, primary raw material for vaccines, and entered into a lopsided profit-sharing agreement which benefited the latter.

Interestingly, the Pasteur Institute of Coonoor — which purchased measles seeds from Green Signal Bio Pharma for Rs 3.25 crore on November 27, 2006 — has produced only rabies vaccine for over 100 years. The Health Ministry sanctioned it Rs 17.80 crore for branching out in measles vaccine production only after it entered into the deal with Green Signal Bio Pharma. The nexus became clear when the Health Ministry directed the PSU to stop producing the rabies vaccine and allowed it to carry on trial tests for the measles vaccine.

Several aspects of the deal are bizarre and clearly show that rules were thrown to the wind to help the private company. For example, the PSU paid Rs 3.25 crore to Green signal Bio Pharma for measles seeds, whereas the latter bought BCG seeds from BCG Vaccine Lab (Chennai), another Central PSU, for just Rs 1.05 lakh on September 26, 2006. This agreement was also signed by Dr Elangeshwaran, the man who was also director of the Pasteur Institute when it signed the controversial deal with Green Signal Bio Pharma.

It is obvious that the deals were heavily tilted in favour of the private company, owned by Sundaraparipoornan, known in the political circles of Tamil Nadu as a close associate of Union Health Minister Anbumani Ramadoss.At the time when Pasteur Institute bought the seeds from Green Signal Bio Pharma, Hyderabad-based Indian Immunological Limited, another PSU, was providing the same seeds for negligible cost to even private companies to boost up quality vaccine production. Also, Green Signal Bio Pharma is neither an accredited supplier not producer of measles seeds. And this is not all! There was more serious violation of rules, which was even discussed at the highest level in the Health Ministry and bypassed.

Documents available with The Pioneer show that Dr Elangeshwaran, the PSU director, had authority to sanction only up to Rs 50 lakh of purchases. Naturally, the finance division of the Health Ministry objected to his order for buying measles seeds from Green Signal Bio Pharma. But the objection was overruled at the highest level in the Ministry, sources said.In another piece of damning evidence which clearly shows that the entire deal was executed to help the private company, it was decided that the PSU would produce measles vaccines from the seed and give away 70 per cent of the profit to Green Signal Bio Pharma.

The agreement was signed on November 27, 2007, and soon after Sundaraparipoornan withdrew Rs 2.5 crore. Though the Health Ministry’s finance division recommended that the amount be recovered from Green Signal Bio Pharma, no action was taken. “Who is Sundaraparipoornan to supply measles seed? He is not an accredited vendor or manufacturer. No proof of purchase or source of origin of measles seed was supplied by him.

Till date it is not confirmed that the supply was a genuine measles vaccine,” said a scientist with the Pasteur Institute on phone from Coonoor. “His factory has not yet started producing any vaccine. So he must be asked to explain his source of supply. Also, no WHO directions were applied by the apostles of WHO in the Health Ministry,” the scientist added.Some other scientists pointed out several instances of free supply of measles seed to several private manufactures by the PSUs producing the measles vaccine.

In a Press conference on May 13, Health Secretary Naresh Dayal also justified free supply of vaccine seeds by the PSUs to private manufactures.The million-dollar question is why did the PSU go for such costly purchase and a lopsided agreement when seeds were available virtually for free from another PSU.

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Report – 3

May 30, 2008 – “The Pioneer”

After Rs.3.25 cr for measles seeds, Health Minister’s associate to earn Rs.143 cr

Behind the Union Health Ministry’s decision to close down vaccine production by three public sector undertakings (PSUs) and purchase of measles seeds by one of them from a private company at a highly inflated cost was a well-planned conspiracy to help a politically connected small-time entrepreneur.The Green Signal Bio Pharma (GSBP) Limited, a Chennai-based private company, is set to walk away with Rs 143 crore over the next three years in a “joint venture” with Pasteur Institute of India, Coonoor.

The PSU bought measles seeds from GSBP at a staggering Rs 3.25 crore and further agreed to give 70 per cent of the profit from vaccine manufacturing to the private company.Investigation by The Pioneer has shown that the “joint venture” was forged to squarely benefit the private company, which is owned by Sundaraparipoornan, a close associate of Union Health Minister Anbumani Ramadoss.

The measles seed, a raw material for vaccine production, was available free of cost at the Indian Immunologicals (Hyderabad), another PSU. “We could have easily provided the measles seed to Pasteur Institute at bare minimum cost as it is a fellow PSU,” said an official working with Indian Immunologicals.”The other option before the Government was to source the measles seed from Serum Institute, Pune, the existing private measles vaccine producer,” he said. “

As the Serum Institute had received several seeds from PSUs free of cost with the concurrence of the Health Ministry, the Government could have negotiated for either free supply or persuaded them to charge nominal cost for the seed,” the official said, adding, “We can’t understand the role of Sundaraparipoornan. What is his credibility in supplying seeds, a critical part in vaccine production?”The GSBP had in September 2006 bought BCG seeds from BCG Vaccine Lab, a Chennai-based PSU, for just Rs 1.05 lakh. “It is baffling that a private company buys vaccine seeds for Rs 1.05 lakh and sells another vaccine seed for Rs 3.25 crore. Also, don’t forget that both the PSUs were headed by Elangeshwaran,” said the official.

Elangeshwaran had told The Pioneer that he was “arm-twisted” by senior officials in the Health Ministry to enter into the dubious deals.The official said that if the seeds were not available with any recognised Indian manufacturer, the Government should have consult WHO for a list of the accredited international suppliers. The source of measles seeds is Zagreb, the capital of Croatia. Sources said that Sundaraparipoornan has not supplied any proof of supply or source of origin of the measles seed that he sold to Pasteur Institute.

Scientists are not ruling out theft from Government laboratories. The deal was signed on November 27, 2006, in utter violation of Government rules. The Pasteur Institute floated no tender and agreed to the one-sided terms as dictated by Sundaraparipoornan. The institute first proposed a 60:40 profit sharing formula, but revised it to 70:30 on GSBP’s insistence.Later, in a proposal to the Health Ministry (No. A 50011/156/2007-PIIC) on December 27, 2007,

Elangeshwaran sought Rs 17.80 crore for starting measles vaccine production and projected Rs 205 crore in profit over the next three years. The breakup is as follows: For 2008-09 — Rs 17.3 crore; 2009-10 — Rs 62.40 crore; 2010-11 — Rs 62.48 crore; and 2011-12 — Rs 62.55 crore.Seventy per cent of Rs 205 crore is estimated at Rs 143 crore, the staggering amount Sundaraparipoornan is set to make for providing measles seeds to the PSU.

That the deal between GSBP and Pasteur institute was totally illegal became clear when the integrated finance division of the Health Ministry pointed out that any proposal for new activity or scheme can be taken up by an autonomous body (like Pasteur Institute) only after it was approved, in particular, by the Planning Commission and related allocation made in the Budget.

“As per rules, such projects/proposals are required to be approved by the competent authority – ie Secretary (Health and FW)/standing finance committee/ expenditure finance committee – depending upon the amount of expenditure invested for a planned period,” said the note (F.No V.11012/7/2005-CC&V) of the integrated finance division.

“Under these circumstances, the decision taken at the level of Director, PII, Coonoor, to initiate action for production of measles and rubella vaccines and purchase of seeds for the purpose appears to be premature. He is not competent to take such action,” the note added. It also pointed out that Elangeshwaran had the authority to sanction deals only up to Rs 50 lakh, and recommended recovery of the Rs 2.5 crore which Sundaraparipoornan had withdrawn just two days after the deal was signed.Interestingly, since its inception in 1907, PII Coonoor was engaged only in the production of rabies vaccines for which it had earned a global reputation.

But while the Ministry directed it to close down rabies vaccine production on January 15, 2008, it simultaneously gave it the go-ahead for measles vaccine manufacturing, which would benefit the private company. The Ministry also ordered the closure of vaccine production by other two PSUs — BCG Vaccine Lab, Chennai, and Central Research Institute, Kasauli.

The Pioneer faxed a questionnaire to Union Health Secretary Naresh Dayal (who is ex-officio chairman of PII, Coonoor), Dr Elangeshwaran and Sundaraparipoornan to seek their response to the above-mentioned controversial aspects of the deal. But even after two days, the Health Secretary and Elangeshwaran have not responded. Sundaraparipoornan has sent a reply through his advocate, refusing to answer any of the questions and threatening to start legal proceedings for reporting the issue.

Chain of events:

Nov 27, 2006: The Pasteur Institute of India (PII) purchases measles seeds for a whopping Rs 3.25 crore from Green Signal Bio Pharma (GSBP). The PSU agrees to give back 70 per cent of the profit from measles vaccine production over three years to the private company. Its chairman, Sundaraparipoornan, withdraws Rs 2.5 crore within two days of signing the deal

Dec 27, 2007: The Health Ministry receives a proposal asking for Rs 17.8 crore to start measles vaccine production and projects Rs 205-crore profit over the next three years. Of this, Rs 143 crore would go to the private company

Jan 15, 2008: The Health Ministry directs PII to stop rabies vaccine production. But measles vaccine production, which benefits the private player, not stalled

Violation of norms/rules:

No tender was floated for purchasing measles seeds.

Indian Immunologicals, a Hyderabad-based PSU which could have provided the seed either for free or at minimum cost, is not approached.

Integrated finance division of Health Ministry finds irregularities in the deal, but no follow-up action taken. It says the new project should have been approved by Planning Commission with prior budgetary allocationDespite the objections, clinic trials on at PII, Coonoor.

The Pasteur Institute director authorised to sanction expenditure up to Rs 50 lakh only, but signs Rs 3.25-crore dealsWhile signing the deal with PII, Sundaraparipoornan doesn’t provide details of either proof of supply or source of origin of the measles seed

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Report – 4

June 7, 2008 – “The Pioneer’

Health Minister blinks, orders vaccine probe Sweetheart deal with associate’s firm set to be scrapped

A sustained campaign by The Pioneer against the vaccine scam has finally stirred Union Health Minister Anbumani Ramadoss into action. The dubious joint venture for measles vaccine production between a Central Public Sector Undertaking (PSU) and a private company will now be investigated. Simultaneously, a committee will go into the possibility of restarting vaccine production by the PSUs who were asked in January to shut shop by the Health Ministry.

Well-placed sources in the Health Ministry said that Ramadoss held a detailed discussion with his senior officials late on Thursday and ordered an investigation into the “irregularities” in the controversial deal between Pasteur Institute of India (Coonoor), a PSU, and Green Signal Bio Pharma (GSBP).The Pioneer was the first paper to report that the PSU had purchased measles seeds from Green Signal Bio Pharma for an astronomical Rs 3.25 crore when these were available virtually for free from Indian Immunologicals Ltd, Hyderabad, another PSU engaged in measles vaccine production.

The one-sided deal also granted 70 per cent of the projected profit of Rs 205 crore earned from the joint venture to the private company for three years. Sources said Ramadoss asked the Ministry officials to keep the controversial deal in abeyance till the investigation is completed.

The Health Minister also constituted a three-member committee, headed by the Drugs Controller General of India, to explore the possibility of restarting vaccine production at the three Public Sector Undertakings (PSUs) who were directed in January to close production. The committee has been asked to submit the report before July 15.

The Minister has come under tremendous political pressure to revoke the directive banning vaccine production by the PSUs after allegations surfaced that he was playing into the hands of private vaccine manufacturers and international suppliers. The CPI(M) central committee had passed a resolution that the PSUs be revived. Its general secretary Prakash Karat, Politburo member Brinda Karat and Madurai MP P Mohan had asked Ramadoss to take urgent steps for restarting vaccine production by the three PSUs. The BJP had sought the Prime Minister’s intervention in the matter while Tamil Nadu Chief Minister Karuananidhi and Himachal Pradesh Chief Minister Prem Kumar Dhumal had also asked Ramadoss to lift the ban on the PSUs and enable them to manufacture vaccines.

Sources also said that the meeting discussed the revelation of irregularities, asreported in The Pioneer, and that there was a realisation that the deal must be scrapped to prevent the matter from going to the court. “The deal will be scrapped as and when the investigation report is submitted,” said an official.Green Signal Bio Pharma is owned by P Sundaraparipoornan, who is considered a close associate of the Union Health Minister in the political circles of Tamil Nadu.

How and why the PSU decided to purchase the measles seed, a critical part in vaccine manufacture, from GSBP — which is neither an accredited vendor nor producer of measles vaccine — is still a mystery? The private company did not produce any proof of origin or source of supply for the measles seed it delivered to Pasteur Institute.

The controversial deal was signed on November 27, 2006, and the private company withdrew Rs 2.5 crore within the next two days. Though the integrated finance division of the Health Ministry noticed and objected to the irregularities in July 2007, the Ministry never took any action. The finance division pointed out that the director of the Pasteur Institute was not competent to enter into the agreement as he had no power to sign any contract worth above Rs 50 lakh.

The division also recommended that the amount be recovered from Green Signal Bio Pharma, but the Ministry chose to take no follow-up action.The Pasteur Institute has been engaged in the production of rabies vaccine for more than 100 years. As measles vaccine production is a new project, it needs the approval of the Planning Commission besides budgetary provisions. But these norms were not followed and the finance division’s findings were also ignored.

Dr Elangeshwaran, the then director of the PSU who signed the controversial deal, had told The Pioneer that he had been “arm-twisted” by top officials of the Health Ministry into helping private companies. He also said that immense pressure was put on him by the Health Ministry to close down vaccine production at the PSUs, a move that would benefit only the private companies.

The Pioneer investigation also revealed that the Ministry received a proposal from Dr Elangeshwaran on December 27, 2007, seeking Rs 17.8 crore to start the measles vaccine project which envisages a Rs 205-crore profit in three years. Within two weeks, the Ministry ordered that all vaccine production by the three PSUs — Pasteur Institute of India in Coonoor, BCG Vaccine Lab in Chennai and Central Research Institute in Kasauli — be suspended.

The only exception was made in the case of measles vaccine production, which benefited the private company. This came as a major shock as these PSUs were the main source of vaccine production for expanded immunisation programme in India. They used to meet 70 per cent of the nation’s vaccine needs. The Pasteur Institute was manufacturing rabies vaccine for more than 100 years now.

Sequence of events :

November 27, 2006 : Pasteur Institute buys measles seed from Green Signal Bio Pharma for an astronomical Rs 3.25 crore. The company is neither an accredited vendor nor a producer of measles vaccine Measles seeds were available for free from Indian Immunologicals Ltd, Hyderabad, another PSU The PSU agrees to give 70% of the profit earned on measles vaccine production to Green Signal Bio Pharma for three years The firm withdraws Rs 2.5 cr within two days of signing the dealPSU director was not competent to sign deal above Rs 50 lakh

Planning Commission approval was not obtained for the project, nor was any budgetary allocation made

July 2007 : Integrated finance division reports to the Health Ministry on the illegal actions. Recommends that the Rs 2.5 crore be recovered from the private company

December 27, 2007 : The PSU director sends a project proposal to the Health Ministry for sanctioning Rs 17.8 crore for starting measles vaccine production. Projected profit for three years is Rs 205 crore, which ensures Rs 143 crore (70%) for the private company

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