South Africa pays less for ARV drugs

15 December 2010

South Africa’s HIV/Aids treatment programme has been given a shot in the arm, with increased competition and economies of scale enabling the government to procure R4.28-billion worth of antiretroviral drugs at less than half the cost of previous tenders.

The drugs will support the implementation of HIV/Aids treatment in the country for the next two years, effective from 1 January 2011 to 31 December 2012.

“Early this year in my health budget speech I mentioned that the prices that South Africa pays for ARVs are significantly higher than all other countries,” Health Minister Aaron Motsoaledi said in a statement this week. “The high price paid by South Africa was despite the fact that South Africa has the largest ARV programme in the world.”

Economies of scale

Motsoaledi said the high prices had made no sense, as South Africa was the largest purchaser of ARVs in the world and should thus benefit from low prices through economies of scale.

The decrease in the price of various drugs ranged from 4% to 81%, resulting in a 53% reduction in the cost of the total tender, and translating to a saving of about R4.7-billion – meaning the state could now afford to treat twice as many people as previously budgeted for.

The selected suppliers include Aspen Pharma (with a 40.6% share of the tender), Sonke Pharmaceuticals (21.9%), Medpro (10.1%), Abbott Laboratories (9.8%), Cipla Medpro (5.1%), Strides Arcolab (4.2%), Adcock Ingram (4%), Aurobindo Pharma (3.1%), Specpharm (0.9%) and Merck Sharpe & Dohme (0.2%).

“It is notable that these tender price reductions have been achieved through the same suppliers that are contracted in the current tender,” Motsoaledi said. “There are several reasons for this, including greater efficiency in active pharmaceutical ingredient production, increased competition and a tender system that attempts to achieve the lowest possible price.”

Central procurement authority

To ensure efficiency and cost-effectiveness in procurement, the last meeting of the National Health Council (NHC) of Minister and MECs approved the establishment of a Central Procurement Authority.

This authority will implement measures that improve the availability and supply of medicines, achieve the lowest possible procurement prices, and ensure that suppliers are paid on time.

“Given the clear evidence of the success of this approach to procurement, the Department of Health will be replicating this approach through a Central Procurement Authority,” Motsoaledi said. “The authority will focus on procurement of ARVs, TB drugs, vaccines and drugs for the treatment of diseases related to maternal and child health.”

SAinfo reporter

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