The health department has left many of SA’s biggest local pharmaceutical manufacturers out in the cold with its latest R15.5bn Aids drug tender, prompting renewed calls for the government to strike a balance between its pursuit of cost savings and measures to support domestic producers.
President Cyril Ramaphosa has been at the forefront of the AU’s drive to increase Africa’s capacity to make its own vaccines and medicines, as the continent seeks to reduce its reliance on pharmaceutical imports and improve its capacity to respond to the next pandemic.
But the latest Aids drug tender, announced earlier this week, sees only Aspen Pharmacare maintaining a share of the core R12.6bn contract to supply the daily pill taken by most adults, which combines tenofovir, lamivudine and dolutegravir (TLD). Cipla and Sisonke, which won a share of the TLD contract in 2022, did not get a look-in, while Adcock Ingram failed in its bid for the second consecutive time.
“It’s really disappointing that they have just gone with the lowest possible pricing,” said Adcock Ingram’s prescription MD, Ashley Pearce.
As part of its routine tender process, the health department had asked Adcock Ingram if it could improve its initial bid price, but its final offer was still not low enough to win a share of the contract, Pearce said.
Cipla Africa CEO Paul Miller said the company’s TLD price had been only marginally higher than the last successful bidder. “It was disappointing to see that 1% would rule us out of being a participant when we have invested in local manufacturing for many years,” he said.
SA has the world’s biggest HIV treatment programme and provides free antiretroviral medication to more than 6-million people. It buys about a fifth of the world’s HIV medicines.
University of KwaZulu-Natal pharmacologist Andy Gray said that while some local manufacturers might have a legitimate case for promoting local production, there was no clarity on how this should be achieved.
“Merely relying on the health department paying a premium is unsustainable, especially given the pressures on the health budget. Other means have to be employed, such as tax breaks or other industrial incentives, which would allow for competitive pricing,” he said
The three-year tender for the Aids drug, which runs from December 1, splits the R7.25bn TLD contract for monthly packs between eight companies, and divides the R5.38bn TLD contract for three-month packs between seven firms. Aspen, Emcure, Innovata, Barrs, MacLeods, Viatris and Aurobindo won a share of both contracts, while Pharma Dynamics won a share of the monthly pack contract only.
Stavros Nicolaou, Aspen Pharmacare’s head of strategic trade, said the company was pleased to retain its contract for TLD but was disappointed to see so many local players excluded.
Health department spokesperson Foster Mohale said six of the seven companies that won a share of the three-month supply contract met the tender specifications for local manufacturing.
“While making sure patients have uninterrupted access to TLD is our immediate priority, government is equally committed to strengthening local pharmaceutical manufacturing,” he said. “Local manufacturers are included wherever possible, and their role is vital for building resilience, creating jobs and ensuring future security of supply.”
The department had saved more than R548m compared with the initial bid prices for supply contracts that involved multiple bidders, including reductions on the price of TLD, Mohale said.
Concern
Speaking on behalf of the trade association Pharmaceuticals Made in SA (Pharmisa), Nicolaou said the organisation had written to health minister Aaron Motsoaledi to express its concern about the lack of alignment between the department’s procurement practices and the government’s localisation objectives. Without better alignment between government departments, SA risked deindustrialising its pharmaceutical sector, Nicolaou said.
While short-term savings might be provided by companies that were not local manufacturers, in the long run supporting them at the expense of domestic producers would cost SA tax revenue and jobs, he added.
Mohale said: “Pharmisa recommended interventions such as take-off agreements tied to reference pricing, prioritisation of local producers in tenders and the development of a co-ordinated national strategy with health, the department of trade industry & competition, National Treasury and the department of science, technology & innovation.”
Motsoaledi had asked Ramaphosa to direct the ministers of the relevant departments to develop a coherent national plan to strengthen local manufacturing and secure SA’s medicine supply, he said.
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