The SA subsidiary of Indian generic pharmaceutical manufacturer Hetero has launched a legal attack on the health department’s latest HIV drugs tender, alleging it was unlawfully excluded from the key contracts to supply the daily three-in-one pill used by most patients.
Hetero SA has launched an urgent high court application to suspend implementation of these contracts and interdict the health department from ordering supplies from any of the successful bidders, pending the outcome of its application to have the contracts reviewed and set aside, and have the tender re-evaluated.
It is contesting the health department’s awards to eight companies to supply monthly and three-monthly packs of tablets combining tenofovir, lamivudine and dolutegravir (TLD) and has asked the high court in Pretoria to order the department to stick with its current suppliers.
The stakes are high as these are the biggest contracts within the R15.5bn tender and any disruption to supplies puts patients at risk of developing resistance to the drugs.
The new supply contracts take effect on 1 December, and successful bidders have already ramped up production or stocked up on imports in order to be able to fulfil orders from provincial health departments.
The stakes are high as these are the biggest contracts within the R15.5bn tender and any disruption to supplies puts patients at risk of developing resistance to the drugs.
SA has the world’s biggest HIV population, with an estimated 8-million people living with the disease, and buys about a fifth of the world’s antiretroviral medicines. A total 5.6-million HIV patients were on treatment at end-September, according to Treasury figures.
Hetero is the world’s biggest supplier of antiretroviral medicines, and its local subsidiary, Hetero SA, is a long-standing supplier of generics to the state.
It is one of several companies that previously won a share of the contracts to supply TLD, but was left out of the latest three-year tender, announced in August.
The R7.25bn TLD contract for monthly packs was split between eight companies, while the R5.38bn TLD contract for three-month packs was split 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.
The award was criticised at the time by some of SA’s biggest local pharmaceutical manufacturers, which said insufficient weight had been given to domestic production.
Now Hetero SA is taking aim at the health department and the eight companies that won a share of the tender to supply monthly packs of TLD pills.
It has cited the health minister, the health director-general, and pharmaceutical companies Emcure, MacLeods, Innovata, Barrs, Viatris, Aurobindo, Pharma Dynamics and Aspen Pharmacare as respondents.
In its papers, it says it was informed by the health department after the tender had been awarded that it had been disqualified for suspected price collusion with another bidder, Q-Sol, and the matter had been referred to the competition authorities for further investigation.
It says it was not given a chance to state its case, and that the health department is mistaken.
Exclusion from the contract will result in significant revenue losses, and the department’s unjustified allegations of collusive conduct have the potential to cause such reputational damage that it may jeopardise Hetero SA’s prospects in future tenders, it says.
Hetero SA’s bid price was cheaper than all but one of the successful bidders, and the government would have saved about R86m if it had not been excluded from the tender, it says.
Hetero did not respond to Business Day’s requests for comment.
The health department indicated it will oppose Hetero SA’s application. It declined to comment further.
Pharma Dynamics and MacLeods are also opposing the matter. Pharma Dynamics says in papers that suspending implementation of the new tender would have “disastrous implications” for patients, leading to supply shortages and interruptions.
The tender specifications required it to keep 2-million doses on hand, and as it does not manufacture in SA it ordered the pills from India and received the completed, packaged product.
Purchase orders have already been placed and cannot be cancelled, stock cannot be stored indefinitely, and any delay to the tender would have significant commercial implications, it says.
MacLeods says in its papers that an interim interdict suspending the new tender would be costly for the government and the successful bidders.
The new tender prices are lower than those previously negotiated by the health department, and the companies that won a share of the latest tender have already incurred significant expenses.
Previously successful bidders who no longer have contracts would not necessarily be able to step in at short notice, it says.
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