Government delays erode savings made on new HIV-drug tender

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The SA government has negotiated the world’s lowest price for a new HIV pill containing dolutegravir, but delays in awarding contracts to pharmaceutical companies have cost it almost R500m. According to a Business Day report, the tender was announced last week, and pushed the implementation date out from 1 April to 1 July.

The report says South Africa has the world’s biggest HIV/Aids epidemic and the Health Department’s plans to switch patients to a safer and cheaper dolutegravir-based regimen is a key part of its strategy for increasing the number of state patients from 4.2m to 6m by 2020-21. About 7.2m people were living with HIV in South Africa in 2017, according to UNAIDS.

The report says South Africa took the first step towards introducing dolutegravir when health minister Aaron Motsoaledi and international agencies reached a breakthrough agreement with drug manufacturers in 2017 that capped the price of a generic pill combining tenofovir, lamivudine and dolutegravir (TLD) at $75 per person per year for low and middle-income countries. The Treasury has negotiated lower prices with pharmaceutical companies bidding for a slice of the three-year TLD contract, along with lower-than-anticipated prices for some of the other drugs in the tender.

“Based on the tender prices, it is estimated that a saving of approximately R1.6bn will be realised,” said the health department’s Anban Pillay. The average price of the TLD combination was about R83 per person per month, compared to the reference price of R98.61 per patient per month, Pillay said in the report. He emphasised that it was difficult to provide a precise estimate of the anticipated savings because not all patients can be switched to the new drug.

Eligible patients will get TLD instead of a three-drug combination containing tenofovir, embtricitabine and efavirez (TEE). The new TEE price was also lower, at R92 per patient per month, compared to the current price of R126 per patient per month.

The report says while the savings are good news for provincial health departments struggling with severe budget constraints, there would have been even more money to go around if the tender had not been delayed. The three-month delay has meant forgoing potential savings of about R491m, according to Pillay.

The report says the rollout of dolutegravir has been repeatedly held up, first over safety concerns that threatened to scupper the registration of products with the SA Health Products Regulatory Authority, and then due to delays with the process run by the Treasury’s central procurement office.

 

In an unusual twist, the circular announcing the successful bidders contains several omissions, including the prices and volumes awarded to local drug manufacturers Adcock Ingram and Aspen Pharmacare for the three-drug cocktail containing dolutegravir, reports Business Day. This drug is the most expensive item on the tender, because of the volumes planned. The report says the circular says 147m packs are to be purchased over the three-year tender period.

The report says six companies have already been awarded shares of this contract – Macleods, Mylan, Hetero, Cipla Medpro, Aurobindo and Sonke – worth a collective R9.4bn. Their prices range from R75.13 per monthly pack (Macleods) to R89.68 per pack (Sonke), and their share of the volume ranges from 11% (Aurobindo) to 14% (Macleods and Cipla Medpro). This would leave Aspen and Adcock sharing the remaining 23%.
Contracts worth R13.66bn were awarded in the circular.

The report says other gaps in the tender include the volumes and prices for the suppliers of lamivudine, either as a stand-alone pill or in combination with zidovudine – it says the Treasury had not responded to questions at the time of going to press.

Adcock Ingram spokesperson Kavitha Kalicharan declined to comment on the outcome of the tender. “We still need to engage with (the) Treasury on finalisation of certain of Adcock Ingram’s allocations in order to understand the full extent of the award,” she said.

Aspen Pharmacare’s head of strategic trade Stavros Nicolaou said in the report that the the company expected to get about an eighth of the tender for the dolutegravir cocktail.
“Although not of significant economic value, due to its low margins, ARVs (antiretrovirals) are important from a job creation point of view,” he said.

“Aspen is also pleased that the government has applied some local preference, as South African companies source active pharmaceutical ingredients [API] at higher prices from competitor Indian ARV producers. API makes up around 70% of ARV costings,” he said.

Francois Venter, deputy executive director of the Wits Reproductive Health and HIV Institute, said in the report that he hoped there would be no further delays in awarding the tender as dolutegravir was an exciting step forward in treatment. “It has significant resistance and side-effect benefits,” he said.

Business Day report
Business Day report


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