On March 3rd, South Africa’s government awarded contracts to seven pharmaceutical companies to supply the country’s public health system with antiretroviral drugs over the next three years. The national antiretroviral drug treatment programme aims to provide antiretroviral drugs to 1.2 million people -- or about 25% of the country's HIV-positive population — by 2008. This £300 million tender should supply drug for 500,000 patients the programme aims to reach by 2007.
The announcement comes more than a year after the South African Health Ministry first asked companies to submit their bids to supply medicines for South Africa’s much delayed HIV treatment programme (click here for more background on this story).
Only limited details about the new contracts have been released to the public, which can be viewed at the South African Department of Health website.
The larger part of the deal is with Aspen Pharmacare, a South African generics company, which will supply the programme with eight out of the 15 required antiretroviral formulations. Only one other generic manufacturer was included in the tender, Cipla Medpro — the South African subsidiary of Indian generics giant, Cipla — which will produce a proportion of programme’s supply of d4T tablets.
The remainder of the drugs will be purchased from the brand name manufacturers —which is reflected in the price the government will pay.
According to reports in South Africa’s Business Day, the all-generic first-line treatment regimen, d4T/3TC and nevirapine, costs $200 per year, but if the regimen contains efavirenz (supplied by innovator company, Merck) instead of nevirapine, the cost increases to over $550 a year. If someone must be switched to the second-line treatment regimen of AZT/ddI and ritonavir-boosted lopinavir (Kaletra — made by Abbott), the cost jumps to $1100 per year.
Likewise, supplying antiretroviral treatment to children will also be expensive because all the children’s formulations are brand name products.
Another potential shortcoming of this tender is that the prices (per patient) are not fixed — and do not decline, as would be expected, as the scale of production increases to supply a growing number of patients. For example, Aspen’s prices will go up — by 6% — eighteen months into the tender.
Little competition
A lack of competition may have made price negotiations difficult — despite the fact that dozens of companies worldwide are producing antiretrovirals. But that doesn’t seem to matter in South Africa — which has taken great care not to take advantage of the flexibility in international trade and intellectual property rules (TRIPS) that permit low to middle income countries to import or produce of generic antiretrovirals.
Roughly a year ago, the Minister of Health had said that 40 pharmaceutical companies had expressed interest in supplying South Africa’s need. However, that list was then narrowed down to 8 firms that had antiretroviral products registered with South Africa’s Medicine’s Control Council early in 2004 — and international generics manufacturers complained that they were shut out of the process.
One of the eight short-listed companies, Thembalami (a South African joint venture between Ranbaxy of India and Adcock Ingram), voluntarily withdrew its proposal late last year when record keeping problems with its studies came to light that forced it to temporarily withdraw four of its products from the South African market. (These same problems lead to the temporary withdrawal of Ranbaxy products from the World Health Organization’s list of “prequalified” antiretrovirals, (for more, see this previously published report).
But even had Thembalami remained part of the tender, it could only have supplied generic nevirapine — because that was the only product it had registered in time to apply for the tender. After the tender application’s deadline, the company brought three other generics antiretrovirals to the South African market — and last July was granted a voluntary license from Merck to sell generic efavirenz as well.
Aspen and Cipla have received voluntary licenses to produce the generic products they will be supplying for the tender. However, the innovator pharmaceutical companies have shown great reluctance issuing other voluntary licenses — most were in response to a South African court order (as a result of a legal action by the Treatment Action Campaign and the AIDS Law Project (ALP)) and came too late to have an impact upon this tender.
Where TAC leads…
It is unclear how much, if any, flexibility South Africa’s government has to place orders for antiretroviral drugs from alternative suppliers over the next three years. But as with many of the other steps towards greater treatment access in South Africa, it may be up to the advocacy — and legal efforts — of TAC and the ALP.
In a letter on March 9 to the Department of Health official in charge of Pharmaceutical Policy and Planning, TAC states that “While there are certain aspects of the tender that are cause for concern, the TAC nevertheless believes that it will go a significant way towards ensuring that accredited public health facilities are able to access antiretroviral medicines on a sustainable basis.”
However, “despite the award of the tender, access to a sustainable supply of affordable antiretroviral medicines still remains under threat. This is largely because of the de facto monopoly held by [Merck] in respect of efavirenz, and the de jure monopoly held by Abbott Laboratories in respect of ritonavir and lopinavir/ritonavir.” TAC believes more pressure should be placed on Merck and Abbott to issue voluntary or compulsory licenses on efavirenz, ritonavir and lopinavir.
To support their case, TAC has documented recent shortages of efavirenz, and ritonavir in South Africa that have led to actual treatment interruptions for some patients — putting them at risk of developing antiretroviral resistance (see the TAC website). And in a letter to Abbott, Jonathan Berger of the ALP notes that “failure to meet the demand for a life-saving medicine constitutes the abuse of rights in a patent.”
And while lower prices may not be adequate justification for South Africa’s Health Department to purchase generic antiretrovirals outside the tender from other manufacturers, inability to meet the countries demand for treatment could be. But these efforts will only bear fruit if affordable generic alternatives to efavirenz, ritonavir and lopinavir become available.