Wall Street Journal U.S. investigators are leading a probe into the widespread theft and black-market resale of malaria drugs donated to Africa by the U.S. government. Organized theft is plaguing the multibillion-dollar aid
effort, according to people familiar with the investigation, raising questions about the supervision of donations in corruption-ridden nations. The theft is one of several challenges threatening to undermine years of progress in battling one of Africa's deadliest diseases, which kills about 600,000 annually.
Alongside other nations, the U.S. has spent billions of dollars on the effort in the past decade, the vast majority in sub-Saharan Africa. This spending on medicine and other malaria-fighting tools helped reduce malaria mortality rates in Africa by 33% between 2000 and 2010. Washington allocated close to $2.5 billion between 2006 and 2012 to the President's Malaria Initiative, or PMI, a program launched by George W. Bush in 2005 and led by the U.S. Agency for International Development, or USAID. Between 2002 and 2012, the U.S. also donated $7.3 billion to the Global Fund to Fight AIDS, Tuberculosis and Malaria—an initiative set up by the United Nations and Western governments that spends one-third of its budget on malaria control. Both programs spend a sizable part of their funds on distribution of Coartem, a malaria drug provided on a nonprofit basis by its manufacturer, Swiss pharmaceutical company Novartis.
Coartem is one of the most widely used malaria drugs in Africa, with cure rates exceeding 90% in many clinical trials. But the effort has been partly hijacked by organized networks that steal large quantities of donated malaria drugs and ship them from East to West Africa, where they end up for sale at street markets, according to people familiar with the U.S. investigation. Because Novartis sells its Coartem to donor groups on a non-profit basis, the drug isn't a big money-maker for the company, but the thefts undermine one of its flagship aid efforts. A Novartis spokesman declined to comment on any ongoing investigations but said the company "takes the matter of diversion very seriously as it weakens the ability of recipient countries to effectively control malaria." He added that the company investigates "every reported case of diversion" and "is actively collaborating with donors" to resolve this issue. Angola's health minister, Jose Van-Dunem, says that "maybe 15%" of donated malaria drugs are stolen annually. According to a person familiar with the U.S. investigation, more than 20% of donor-funded Coartem in Africa may be diverted each year—with a street value of about $60 million. In an interview, Mr. Van-Dunem said patients were buying malaria treatments at markets because they wanted to avoid queues and long trips to hospitals where they could get the medicine free.
The theft has potential consequences beyond the crime itself. Stolen drugs that are transported or stored in poor conditions could go bad and become ineffective without users knowing it, putting their treatment at risk. In the long run, the availability of degraded, ineffective Coartem also raises risks that the parasite causing malaria could genetically mutate and grow resistant to the drug, says Dr. Koen Vanormelingen, the representative of the United Nations Children's Fund in Angola. Data from Tanzania's Health ministry obtained by the local non-governmental organization Sikika showed that as of January, about 25% of public-health facilities in Tanzania had no Coartem. In public statements, health minister Hussein Mwinyi has spoken about shortages of the drug but hasn't provided details. The countries where the trafficking is taking place are considered among the most corrupt in the world. According to Transparency International, Congo, Angola and Tanzania respectively rank 160, 157 and 102 in a scale where the most corrupt country stands at 174.
Some experts argue that if effective drugs wind up in patients' hands, it doesn't matter how they got there. "If what's going on is that legitimate drugs are stolen from place A and moved to place B and then used, OK, from a criminal-justice point of view that's bad, but if people are using them, then who cares?" says Amir Attaran, a malaria expert and associate professor of law and medicine at University of Ottawa "That's not to say [donors] should be totally sanguine about this," he adds, noting the potential for price increases and damaged medication. The probe is being led by special agents of USAID's Office of Inspector General, or OIG, according to people familiar with the matter. Findings of misappropriation of the agency's donations can lead to prosecution by the U.S. Department of Justice or by local law-enforcement authorities in the countries where the alleged crime took place. The current investigation started in around June, after a preliminary probe.
In an email, the OIG said it "is aware of allegations that USAID-funded malaria drugs have been diverted from Tanzania and is engaging domestic and international partners in response." An official in Tanzania's presidential administration, who requested anonymity, said the country's law-enforcement officers "are working with USAID" on the probe. "Investigations are at an advanced level," the official said, adding: "Investigators have picked good leads and are closing in on most of the conspirators in this diversion racket." A spokesman for the Global Fund said a Joint Inter-Agency Task Force, which includes investigators from the Fund and the U.S.-funded PMI, "does not discuss ongoing operational activities due to considerations of operational security." Spot purchases by The Wall Street Journal, made with the knowledge of local authorities, confirm that theft is a problem with donated malaria medicines. In Angola earlier this year, the Journal bought dozens of packets of Coartem at street markets. An analysis of the drugs carried out by Novartis showed that the majority had originally been donated by PMI or the Global Fund and were intended for distribution inside Tanzania only.
Some other packets were found to be counterfeit. Only one sample out of the dozens bought by the Journal at Angolan markets was legitimate—neither fake nor stolen. Traffickers of the stolen drugs often transport them over land in trucks lacking air conditioning, jeopardizing the drug's efficacy in temperatures that can top 100 degrees Fahrenheit. Coartem shouldn't be exposed to temperatures higher than 30 degrees Celsius (86 degrees Fahrenheit). Malaria aid programs have been hit by theft before. PMI's country reports, posted on the website between 2010 and 2013, note widespread theft of donated malaria drugs in Malawi, Benin, Senegal and Angola. Diversion of U.S.-funded malaria drugs "found for sale in street markets in West Africa...appears to be well organized," PMI said in its annual report last year. Such diversion "involves drugs financed by the U.S. government as well as by other donors," it added.
The Global Fund also has grappled with the theft of large amounts of drugs it donates. In a 2012 report, the group said its investigators were "focusing on the theft and diversion of health product and medicines...in a number of locations in Africa and Asia." A 2010 investigation by Novartis that reported "systemic diversion of public-sector Coartem" in Africa helped ring the alarm bell for donors. The trafficking route the U.S. is currently scrutinizing starts in Tanzania. PMI and the Global Fund hire logistics firms to deliver Coartem to the airport in Dar es Salaam, Tanzania, where the drugs are supposed to be picked up and distributed inside the country by official distributors or the government-run health system. Instead, upon arrival, some of the drugs are stolen and redirected to West Africa via Congo, according to market-stall merchants who sell the black-market drugs in Angola, as well as African health officials and people familiar with the U.S. probe. According to the Novartis tracking data, some of the Coartem samples bought in Luanda, Angola, by the Journal were ordered in July 2012 by USAID contractor John Snow Inc., or JSI, for delivery to Dar es Salaam. They were destined for Tanzania's Medical Stores Department, or MDS, a state-run system of pharmaceutical warehouses. JSI isn't suspected of theft or improperly diverting the order. A spokeswoman for JSI said the firm doesn't comment on any "potential investigations," but takes "the diversion of medicines and other commodities very seriously." MDS didn't respond to requests for comment.
Other samples bought by the Journal in Luanda markets had been donated by the Global Fund and were meant for distribution inside Tanzania, according to the Novartis analysis. Alex Tashama, 39, a Luanda street seller of Coartem—also diverted from Tanzania, based on the serial numbers—said the drugs "enter fraudulently" into Angola, hidden in trucks under vegetables. Gilbert Saki, a 36-year-old Congolese peddler who was selling PMI-donated Coartem that belonged in Tanzania, based on the packages' serial numbers, said he bought them from wholesalers in Kinshasa, Congo. Smugglers transport the Coartem into Angola "at night to avoid inspection," he said, because they lack proper import documentation. Arriving for sale at Luanda's stalls, the packets sell for $2.50 to $5.00 apiece, more than double the price charged by wholesalers in Congo, the street sellers say. When distributed properly, the donated Coartem is free at public-health facilities, or, in some African countries, sold by authorized pharmacies at $5 a packet. U.S. investigators attempting to identify the people responsible for the theft in Tanzania are scrutinizing a local company suspected of engineering the diversion, according to people familiar with the probe. U.S. investigators also are tracking distributors of the stolen drugs in Congo.