State Saves Billions on New ARV Tender. 15/12/10

New ARV tenders to 10 suppliers at a price that will save the state R4.7 billion

Business Report

Government complaints about the prices charged for antiretroviral (ARV) drugs did not fall on deaf ears as the Health Department yesterday awarded new ARV tenders to 10 suppliers at a price that will save the state R4.7 billion and allow it to treat twice the number of ARV patients.

The R4.2bn tender for the next two years has seen a price reduction of 53.1 percent.

Health Minister Aaron Motsoaledi said yesterday that the percentage decrease in the cost of each item ranged from 4 percent to 81 percent.

“If we had to treat the same number of patients using the previous tender prices, it would have cost the state in excess of R8.8bn. This saving of R4.7bn allows the state to treat double the amount of patients,” Motsoaledi said.

He said the department was able to achieve the price reduction by ensuring there were adequate products registered with the Medicines Control Council (MCC). The department also encouraged potential suppliers to participate, published a reference price list based on international transactional prices, asked suppliers to provide a breakdown of their cost components and monitored price changes through the life cycle of the tender.

The tender was awarded to Abbott (9.8 percent), Adcock Ingram (4 percent), Aurobindo (3.1 percent) Cipla Medpro South Africa (5.1 percent), Medpro Pharmaceuticals (10.1 percent), MSD (0.2 percent), Aspen Pharmacare (40.6 percent), Sonke Pharmaceuticals (21.9 percent), Specpharm (0.9 percent) and Strides (4.2 percent).

The volume of the tender is 116.9 million units of tablets, capsules and liquid preparations and the contract will be effective next month.

Earlier this year, the DA and the Department of Health both raised concerns about the price of some of the drugs.

Motsoaledi said it had been discovered that in some cases, the local companies were overcharging the state 60 percent on some of the drugs. He said the drugs would be purchased from any source, provided they secured the lowest prices.

There are at least 1 million people in the country on ARVs. Since World Aids Day on December 1, the department has tested 4.8 million people. Of these 905 000 were HIV positive.

Aspen Pharmacare, which again won the biggest slice of the contract, said the results were a further testament to its cost competitiveness against both local and international suppliers.

Senior executive Stavros Nicolaou said Aspen was able to reduce its price significantly by sourcing active pharmaceutical ingredients (APIs) aggressively. “We have always said that the API price is the key because 70 percent to 80 percent of the price is API.We registered multiple suppliers with the MCC and used both existing and new suppliers.”

Cipla Medpro SA chief executive Jerome Smith said he was pleased with the outcome of the tender in all respects.

“I am happy, the whole team is happy because it is exactly what we can supply, we are not over-extending ourselves. It is more than what we got the last time and it will be nice volumes for our Durban factory.”

Adcock Ingram chief executive Jonathan Louw said the firm was “very disappointed with the outcome of the tender process”. Bloomberg reported that the firm’s share price fell the most in seven months after the news that it had secured only R166.5 million of the tender compared with R663m in the previous tender.

Its share price fell 4.3 percent yesterday to close at R58.99.