The National Department of Health has come under legal fire from the SA subsidiary of Indian generic pharmaceutical manufacturer Hetero, which alleges that the department’s latest HIV drugs tender unlawfully excluded it from the key contracts to supply the daily three-in-one pill used by most patients.
Business Day reports that Hetero SA has now launched an urgent High Court application to suspend implementation of these contracts and interdict the 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.
In question are the department’s awards to eight companies to supply monthly and three-monthly packs of tablets combining tenofovir, lamivudine and dolutegravir (TLD): it has asked the court 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 are effective from 1 December, and successful bidders have already ramped up production or stocked up on imports to enable them to fulfil orders from provincial Health Departments.
SA, with its massive HIV population, buys about a fifth of the world’s antiretroviral medicines. According to Treasury figures, at least 5.6m HIV patients were on treatment as of end-September.
Hetero is the world’s biggest supplier of ARVs, 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 DG, and Emcure, MacLeods, Innovata, Barrs, Viatris, Aurobindo, Pharma Dynamics and Aspen Pharmacare as respondents.
In its papers, it said after the tender had been awarded, it was told by the Health department 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 was not given a chance to state its case, it said, and the department was 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 added.
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 intends to oppose Hetero SA’s application and has declined to comment further.
Pharma Dynamics and MacLeods are also opposing the matter. Pharma Dynamics said 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 2m 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 said.
In papers, MacLeods said 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 said.
See more from MedicalBrief archives:
SA companies lose out on ARV drugs tender
Government delays erode savings made on new HIV-drug tender
SA’s ARV deal delivers cutting-edge Tx at a fraction of world price
Government shuns local vaccine-maker and switches to imports