Kazakhstan’s public drug procurement system is at the centre of a deepening political and financial dispute after the Supreme Audit Chamber presented parliament with findings of widespread irregularities spanning two years of audits, prompting an extraordinary legal threat from the Health Ministry and calls from lawmakers for systemic overhaul.
SAC Chairman Alikhan Smailov, a former prime minister, told parliament that auditors examining the system in 2023 and 2024 identified financial losses of KZT 741 million (approximately $1.4 million), inefficient use of KZT 32 billion ($62.7 million), and lost profit amounting to KZT 58 billion ($113 million). In total, 134 cases have been referred for administrative proceedings and five passed to law enforcement agencies.
Expired Drugs, Inflated Prices and Suspect Gloves
Among the most serious findings were more than 67,000 instances of expired medications being dispensed to patients — rendering them unusable and producing direct budgetary losses. Auditors also found price discrepancies of up to 600 percent for 15 of the most expensive drugs when public-sector procurement prices were compared with retail market equivalents. Smailov suggested that medicines designated for free outpatient care were being illicitly written off and then sold through commercial pharmacies.
Delivery failures compounded the problem. Quarterly rather than monthly shipments created chronic shortages, forcing patients to purchase medications out of pocket despite being entitled to receive them free of charge.
One case drew particular scrutiny: a private supplier delivered 62 million medical gloves in 2024 for KZT 8 billion ($15.6 million). Auditors noted that the batch’s specifications matched those of products imported from Thailand during the same period, raising the possibility that imported goods were resold as domestically produced items.
The SAC also questioned the logic of long-term procurement contracts held by state-run distributor SK Pharmacy with domestic manufacturers, some running for up to ten years. Over the past five years, total purchases under such contracts rose from KZT 69 billion to KZT 112 billion (roughly $135 million to $220 million). Yet the number of unique domestically produced drugs fell from 968 to 507 over the same period, suggesting the growth in spending reflects a shift toward basic medical devices rather than genuine localisation of pharmaceutical manufacturing.
Ministry Pushes Back — Unprecedented Legal Challenge Looms
Deputy Health Minister Ardak Amangeldiev has not accepted the findings quietly. Speaking at a parliamentary session, he said the evidence underpinning many of the audit’s conclusions was insufficient and announced that the ministry had filed a pre-trial claim against the SAC. “If we cannot reach an understanding, there will be a court case,” Amangeldiev said. “As a state body, we have a constitutional right to defend our honor and dignity and to provide evidence on all points.”
The threat is without precedent: no government agency in Kazakhstan has previously challenged an SAC audit in court. The standoff places two arms of the state in direct institutional conflict at a moment when the audit’s materials are already in the hands of law enforcement.
Several members of the Mazhilis, the lower house of parliament, have sided with the chamber’s conclusions. Deputy Askhat Aimagambetov pointed to over-complicated and costly drug registration procedures as a structural cause of shortages of affordable essential medicines. He cited the absence of oral penicillin from the Kazakhstani market as a concrete example: its low price deters companies from registering or importing it, leaving doctors with no option but to prescribe costlier antibiotics.
Aimagambetov also criticised SK Pharmacy for sourcing up to 60 percent of its drugs through local distributors rather than directly from manufacturers, a practice he said inflates procurement costs unnecessarily. He has called for logistics reforms, direct purchasing arrangements, and restrictions on long-term contracts to companies that can demonstrate genuine domestic production. He has separately proposed Tax Code amendments that would exempt certain essential medicines from VAT and reduce the overall tax burden on healthcare institutions.
The combination of audit findings, law enforcement referrals, a ministerial legal challenge and parliamentary pressure marks an unusually public rupture within Kazakhstan’s health governance architecture — one whose resolution, whether in court or through legislative reform, is likely to reshape how the country buys and distributes medicines for years to come.
