HEALTH AND FAMILY WELFARE DEPARTMENT Unfruitful expenditure Rs. 16.77 crores on the revival of Anti Snake Venom Serum manufacturing unit

Launching a project to revive Anti Snake Venom Serum manufacturing, without a comprehensive technical and financial feasibility study and ensuring the source of funding, resulted in an unfruitful expenditure of Rs 16.77 crore.

Snakebite is an acute life-threatening medical emergency. It is a preventable public health hazard often faced by the rural population. Tamil Nadu reported 63,236 snakebite cases and 241 deaths during the period 2014-18. Timely
treatment with Anti snake venom serum1 (ASVS) is the medical option for preventing casualty.

King Institute of Preventive Medicine and Research, Chennai (KIPMR), established in the year 1899, is a medical research institute functioning under the Directorate of Medical Education (DME). It is the only Tamil Nadu government institution for manufacturing ASVS. The Department of Anti Toxin (DAT) of KIPMR had been manufacturing ASVS since 1982 and supplying them to various government hospitals and private firms. KIPMR was having the licence to manufacture the vaccines till December 2000. Thereafter, the license was not renewed due to the amendment of Good Manufacturing Practices (GMP) norms. The Central Drugs Standard Control Organisation (CDSCO), after inspecting the DAT of KIPMR in 2001, 2004 and 2006, found that the manufacturing unit was not compliant with the GMP norms, as specified under Part I and Part I-A of Schedule M of the Drugs and Cosmetic Act, 1940. CDSCO recommended (December 2006) the construction of a new facility if KIPMR intended to renew its license and continue vaccine manufacture. Following this, KIPMR submitted proposals to DME in March 2007, June 2008 and June 2009 for modification to the existing facility, to become GMP compliant.

In February 2010, DME submitted the final proposal of KIPMR to the Government of Tamil Nadu (GoTN) for modification/up-gradation of DAT building, as proposed by a cGMP (current GMP) consultant, at a cost of
` 4.71 crores. The Public Works Department (PWD) authorities, however, after inspecting the site, suggested (June 2011) construction of a new building instead of modification of the existing DAT building, as it was of a load-bearing type, wherein alterations were difficult. Accordingly, PWD prepared (March 2012/February 2014) rough cost estimates and plan for construction of a new building to house the ASVS production facility, complying with cGMP norms, and modification of old DAT building which was proposed to be used as a Quality control and Quality assurance block. Further, DME proposed (June 2012) the revival of ASVS production in two phases – Phase I for construction of buildings and Phase II, called ‘production phase’, for other requirements such as the purchase of equipment, horses, medicines and chemicals, etc., which was also accepted (November 2013) by GoTN. On completion of this project, KIPMR was envisaged to become a centre of excellence with the state the art facility in compliance with cGMP and WHO guidelines, with an initial target to manufacture two lakh vials of ASVS per year, to meet the annual requirement of ASVS in Tamil Nadu.

Phase I (Construction of buildings)
GoTN sanctioned an aggregate sum of 17.35 crore2 in December 2012 and December 2014 for construction of a new cGMP compliant building and improvement/renovation of the old DAT building so as to revive ASVS production. The work commenced in August 2013 and the civil part of the buildings, completed at a cost of 16.77 crore3
, were handed over to KIPMR in June 2017 and inaugurated by the Chief Minister on 05 August 2016.

Phase II (Production phase)
Audit found that while proposing to revive ASVS manufacturing in 2010, DME and KIPMR did not have a clear project report incorporating technical and financial feasibility study. Therefore, the project proposal was getting
revised repeatedly as given in Table 3.1.

After prolonged deliberations and back and forth communication between GoTN, DME and KIPMR, in May 2014, it was decided that the Phase II proposal be forwarded to the Government of India (GoI) for sanction of funds under National Health Mission (NHM). Accordingly, KIPMR engaged (October 2015) a consultant to prepare a Detailed Project Report (DPR) for

Phase II. The Mission Director, State Health Society – Tamil Nadu (MD SHSTN) forwarded (December 2015) the DPR and the revised Phase II proposals to GoI for sanction of 56.28 crore4 . GoI, however, returned (January 2016) the proposal stating that financial support was not available for manufacturing units under NHM. The Health Secretary, GoTN, however, directed (May 2018) that the project should be resubmitted to GoI as a special scheme with funding from GoI and GoTN in the ratio of 60:40. DME and KIPMR did not follow up this suggestion. Simultaneously, KIPMR also attempted funding by Tamil Nadu Medical Services Corporation Limited (TNMSC), Tamil Nadu Health Systems Reforms Project and Tamil Nadu Innovation Initiatives. None of these agencies came forward for funding this project. The Health Secretary, during a review meeting in April 2019, instructed KIPMR to redo the project to minimise the cost in consultation with MD, TNMSC and submit revised proposal.

The MD, TNMSC, while observing that the project was financially unviable, stated (October 2019) that the recurring cost projected in Phase II was equal to the amount spent by TNMSC on purchase of ASVS every year from private manufacturers and suggested considering Public Private Partnership mode for implementing the project. DME and KIPMR did not follow up on this suggestion. Audit observed that DME and KIPMR, while submitting the proposal for reviving ASVS manufacturing, failed to comprehensively assess the feasibility of the project. Audit also found that the requirement of ASVS by government medical institutions were met by TNMSC through private suppliers. During 2016-19,

TNMSC procured an annual average of 1.70 lakh vials of ASVS at an average price of 308.59 per 10 ml vial. Other than the Central Research Institute, Kasauli, which is under GoI, there were five private manufacturers in India for manufacturing ASVS. As could be seen from the remarks of MD, TNMSC, there was no shortage of impending scarcity for ASVS. DME, while justifying the need for this project, incorrectly calculated (December 2010) that the cost of production would be only 23.90 per vial. Audit, however, found that the cost of production worked out by DME was inaccurate as it did not include the salaries, overheads, depreciation cost of plant and machinery, interest on capital investment etc. Thus, the Audit observed that GoTN launched the project without a detailed technical and financial feasibility study, and without ascertaining the eligibility of GoI assistance for this project. Further, GoTN did not provide the required funds for the project which resulted in non-revival of the manufacture of ASVS at KIPMR and an unfruitful expenditure of 16.77 crores on construction of new buildings and modification of the existing building.