New ARV tender taking shape

Government will start procuring drugs under the new tender from June and the Clinton Health Access Initiative (CHAI) is assisting the health department to design the tender which will in turn enable it to secure cheaper antiretroviral drugs for what is now the world’€™s largest HIV treatment programme.

Last month Mike Waters of the Democratic Alliance wrote to health minister Dr Aaron Motsoaledi asking him to source the drugs overseas if they were cheaper than the locally manufactured versions, however   the health department has for a long time been working behind the scenes to find ways to source cheaper ARVs.

Waters said the requirement in the previous tender that tendering companies be locally owned saw the government paying around 30% more that was needed. ‘€œThe government is helping the local pharmaceutical industry, but causing the deaths of people who cannot afford to pay for their treatment,’€ Waters said in a statement.

Vishal Brijlal of the Clinton initiative (formerly Clinton HIV/AIDS Initiative) said there was an urgent need to minimise and control the cost of ARVs and improve the efficiency and cost effectiveness of the laboratory services in South Africa.

Around 40% of the HIV/AIDS budget currently is spent on ARVs, according to Treasury.

‘€œIt is partially correct to say that South Africa pays too much for ARVs,’€ Brijlal told the Budget and Expenditure Monitoring Forum (BEMF) meeting.

As an example, the price of the active ingredients for efavirenz, one of the most widely prescribed ARVs in South Africa,     was high when the last tender closed in March 2008. By May 2008 it had dropped by 45 percent, but South Africa did not benefit from the reduction, said Brijlal.

‘€œI guess we need to ask the question whether the drug company had a moral obligation to sell the drug at the lower price,’€ said Brijlal. The previous tender only catered for price increases, not decreases when input costs dropped. However the new special conditions of the tender are expected to close this loophole.

He said that, when criticised, drug companies often state that governments were accessing the drugs at the lowest median international price. South Africa, as one the largest buyers in the world, should be accessing the lowest price, not the lowest median price, according to Brijlal.

He explained that CHAI was not in the business of buying drugs, but had agreements with 72 countries. These countries’€™ volumes are then pooled, giving CHAI a powerful platform to negotiate from. South Africa is currently not part of this pool.

CHAI gets each supplier to sign an agreement where it agrees to supply the drug in question at a price no higher than the negotiated ceiling price.

Brijlal said recent negotiations would see efavirenz drop by between 35 and 40 percent below the current tender price.

South Africa is changing its first line regimen from 1 April to tenofovir, 3TC and efavirenz. At current tender prices, this would cost the South African government around R4 000 per person per year. The CHAI initiative is able to negotiate a price of R2 200 per person per year. The current regimen of d4T, 3TC and efavirenz is costing the South African government R2 080 per person per year. CHAI is able to procure this combination at R1 300 per person per year (excluding VAT and freight charges).

The new guidelines are set to remove d4T (stavudine) as a first-line drug because of its debilitating side-effects including lipoatrophy, peripheral neuropathy and lactic acidocisis. However, sources said the minister may consider keeping those patients doing well on d4T to continue to receiving it.  

CHAI has achieved success by negotiating around the input costs (active pharmaceutical ingredients making up 70% of the drug’€™s cost) rather than the final formulations as well as assisting generic companies develop cheaper ways of producing active pharmaceutical ingredients.

CHAI also consider the costs of final formulations by negotiating the agreed-upon mark-up. Brijlal said that if the South African tender process was transparent, the new treatment guidelines combined with the high patient volume could not only be afforded, but savings could be made.

Brijlal urged clinicians and activists at the BEMF meeting to pay close attention to the business relationships between pharmaceutical manufacturers which may be preventing some drugs reaching South Africa.

He said lopinavir/ritonavir, which was urgently needed for adult and paediatric HIV, remained expensive and was not available in the required formulations. For children a heat stable version needs to be urgently registered as the health system currently relies on a solution which requires refrigeration.

Another critical drug is the fixed-dose combination (FDC) that combines tenofovir, 3TC and efavirenz into a single pill that is taken once daily.   This is also not yet available in South Africa and activists have questioned whether the business relationship between Aspen and Matrix prevented a much cheaper generic version of the drug from being marketed in South Africa.

‘€œIn accordance with the joint venture where Aspen purchases the active ingredients for the fixed dose combination from Matrix, the company has agreed not to sell ARVs in South Africa. This is a business relationship. It is critical for the ARV programme in SA that business relationships should not be a primary reason that prevents patients accessing high quality treatment in South Africa,’€ said a source. However, other companies are still allowed to bring this fixed dose combination to the South African market and indications are that Cipla has plans to do so.

Commenting on the matter Aspen CEO Stephen Saad said ‘€œyou cannot register the generic until the innovator has been registered – It is not registered.’€ Saad said their files were with the Medicines Control Council awaiting registration.

However an MCC source said Saad’€™s comments were only correct insofar as individual products were concerned. ‘€œIf the three separate innovator drugs (or any combinations of the three) are registered, which is indeed the case in South Africa, then the fixed-dose combination can be registered. This has happened before,’€ he said.

Turning to the matter of price fluctuations once the tender had been awarded, Saad said they were ‘€œsimply participants in a tender and not the maker of the rules’€.   He in terms of the tender they had to give a fixed rand price and that the risk on the active pharmaceutical ingredient cost movement was with the suppliers. This matter will be addressed in the new tender.

Dr Andrew Boulle of the University of Cape Town said the tender offered South Africa ‘€œsuch an opportunity to get it right, given our enormous purchasing power’€.

‘€œWe should not allow this tender to go ahead unless we get it right. We need to ensure we get the one pill once a day regimen packaged in adherence-promoting 28-day blister packs with the days of the week indicated. Well-prepared treatment literacy material should be included in the pill packets,’€ he said.

The Treatment Action Campaign said the upcoming tender must include special provisions that allow for companies to submit tender bids in respect of drugs such as the tenofovir/3TC/efavirenz fixed dose combinations that have not yet been registered in South Africa but have already been approved by stringent drug regulatory authorities such as the US Food and Drug Administration (FDA). They also called on the health department to must commit to procuring fixed-dose combinations where available and for the MCC to fast-track the registration of all crucial ARVs and combinations of ARVs so as to ensure a competitive tender.

 Dr Francois Venter, President of the HIV Clinicians Society said the tender needed to take into consideration the new HIV treatment guidelines which proposed new regimens.


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