Australia has withdrawn funding for a $A38 million programme that supplies medicine to health centres in Papua New Guinea because of concerns about the way PNG awards contracts.
Previously the Department of Foreign Affairs and Trade chose the supplier and distributer for the medicines, but this year that process was handled by PNG.
In June, the government there removed ISO 9001 accreditation, an international quality-control criteria, and later awarded the contract to Borneo Pacific, a company that doctors say supplies sub-quality drugs from China.
Not only that, but the ABC reports the new contract is 71 million kina ($A9 million) more than the previous one.
Efforts by the ABC to contact the Minister of Health were unsuccessful and there was no response to a request for comment from the Prime Minister's office.
However, a previous statement issued in response to concerns from the Medical Association of PNG, defended the tender process.