A political and financial scandal is emerging in Kazakhstan following revelations from the Supreme Audit Chamber (SAC) concerning widespread violations in the country’s public drug procurement system.
Deputy Health Minister Ardak Amangeldiev has not ruled out legal action against the SAC after its findings were presented to parliament. SAC Chairman Alikhan Smailov, a former prime minister, said that some materials have already been referred to law enforcement, prompting several members of parliament to call for systemic reform.
Audit Uncovers Extensive Irregularities
Kazakhstan’s public drug procurement system was audited in both 2023 and 2024. According to Smailov, auditors identified the following violations:
- Financial losses totaling KZT 741 million (approximately $1.4 million);
- Inefficient use of KZT 32 billion ($62.7 million);
- Lost profit amounting to KZT 58 billion ($113 million).
In total, 134 cases have been referred for administrative proceedings, with five cases passed to law enforcement agencies.
Among the most alarming findings was the discovery of more than 67,000 cases involving expired medications being dispensed, rendering them unusable and resulting in budgetary losses. Auditors also identified extreme price discrepancies, up to 600%, for 15 of the most expensive drugs when comparing public sector prices with those in the retail market. Smailov suggested that medicines intended for free outpatient care were being illicitly written off and sold through commercial pharmacies.
Delays in medication deliveries were cited as a major cause of treatment disruptions. Quarterly instead of monthly shipments caused shortages, forcing patients to buy medications out-of-pocket.
One particularly troubling case involved a private supplier delivering 62 million medical gloves in 2024 for KZT 8 billion ($15.6 million). Auditors noted the batch’s specifications matched those of products imported from Thailand during the same period, suggesting they were resold as “domestically produced” goods.
The SAC also questioned the rationale behind long-term procurement contracts. State-run distributor SK Pharmacy has signed agreements with domestic manufacturers for up to 10 years. Over the past five years, total purchases under such contracts increased from KZT 69 billion to KZT 112 billion (approximately $135 million to $220 million). However, the number of unique domestically produced drugs dropped from 968 to 507, indicating a growing reliance on basic medical devices rather than genuinely localized pharmaceutical production.
Ministry of Health Pushes Back
The Ministry of Health has disputed several of the audit’s conclusions. Deputy Minister Amangeldiev told journalists that the evidence cited in many of the findings was insufficient. The ministry has filed a pre-trial claim against the SAC.
“We have verified that the evidence is insufficient for a number of facts. We have sent a pre-trial claim. If we cannot reach an understanding, there will be a court case. As a state body, we have a constitutional right to defend our honor and dignity and to provide evidence on all points,” Amangeldiev stated at a parliamentary session.
Parliamentary Voices Demand Reform
Notably, no government agency in Kazakhstan has ever challenged an SAC audit in court. Still, some members of the Mazhilis have supported the chamber’s conclusions and are calling for sweeping changes.
Deputy Askhat Aimagambetov pointed to over-complicated and expensive drug registration procedures as one reason for the shortage of affordable but essential medicines. He cited the lack of oral penicillin in the country, explaining that its low cost deters companies from registering or importing it, forcing doctors to prescribe more expensive antibiotics.
Aimagambetov also criticized SK Pharmacy for sourcing up to 60% of its drugs through local distributors rather than directly from manufacturers, inflating procurement costs. He advocated for logistics reforms, direct purchasing, and restricting long-term contracts to companies that truly localize production in Kazakhstan.
As previously reported by The Times of Central Asia, Aimagambetov has also proposed amendments to the Tax Code that would exempt certain essential medicines from VAT and reduce the overall tax burden on healthcare institutions.
