The controversy over the health department’s latest Aids drug tender has reignited a debate the state seems unable to resolve: should it award multibillion-rand contracts to the lowest bidders or bite the bullet and pay a premium to support local pharmaceutical manufacturers?
The issue blew up spectacularly three years ago when the health department shunned state-backed vaccine manufacturer Biovac’s locally made pneumonia shots in favour of much cheaper imports from India. The move stunned Biovac and its partner Pfizer who had invested heavily in developing the capacity to make the jabs in Cape Town, and forced Biovac to lay off staff. While the decision saved the health department a lot of money while its budget was under severe strain, it left other government departments deeply unhappy.
Bolstering local pharmaceutical manufacturing capacity is not only a key tenet of South Africa’s industrial policy but has also been vigorously promoted by President Cyril Ramaphosa since the height of the coronavirus pandemic.
Many of us would happily let grim memories of the pandemic fade away, but it is worth remembering that Africa’s lack of vaccine manufacturing capacity left its population at the back of the queue when shots were in desperately short supply. By the time South Africa began offering jabs to the elderly in May 2021, many high-income countries had already vaccinated almost two-thirds of their populations.
South Africa paid for those delays in lives. This was why Ramaphosa became a champion for vaccine sovereignty and the AU set a target of locally producing 60% of the continent’s vaccine requirements by 2040.
Bolstering local pharmaceutical manufacturing capacity is not only a key tenet of South Africa’s industrial policy but has also been vigorously promoted by President Cyril Ramaphosa since the height of the coronavirus pandemic.
The health department is now under fire over its R15.5bn Aids drug tender, awarded last August. It is being taken to court by the local subsidiaries of multinational pharmaceutical manufacturers Hetero and Cipla, who allege they were unfairly excluded from the core contracts to supply the daily three-in-one pill taken by most of the country’s HIV patients. And it is under scrutiny from parliament, with MPs demanding to know why officials awarded contracts to two local companies in dire financial straits — one of which had no previous experience supplying Aids drugs — at the expense of well-established local manufacturers such as Adcock Ingram.
Barrs and Innovata went into business rescue just days after the tender commenced on December 1, raising questions about the rigour of the due diligence conducted by the department.
It seems little has changed since the Biovac brouhaha. The health minister frankly told parliament last week that his job is to save as many lives as possible and if that means buying cheaper imports instead of costlier drugs made in South Africa, so be it.
His position is understandable, since every cent counts when the public health system is stretched to breaking point. But it is also short-sighted. Losing out on these contracts is no small thing: local generic Aids drug manufacturers cannot match the prices offered by India’s giants and have no ready alternative if the health department ditches them from one tender to the next.
Repeatedly shunning local companies undermines South Africa’s limited domestic manufacturing capacity and the uncertainty about tenders discourages firms from investing in new facilities. That does nothing to help grow the local pharmaceutical manufacturing and reduce the pharmaceutical trade deficit.
It is time for the government to stop mortgaging our future. Reducing reliance on imported medicines is not protectionism; it is a vital aspect of growing the economy and safeguarding our health security.
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