Picture: THINKSTOCK
Picture: THINKSTOCK

Local pharmaceutical companies are gearing up to bid for a supplementary HIV/AIDS drug tender, which includes a large supply contract for a key drug previously awarded mostly to importers.

The new contract also has cost implications for the health department, which says it will have to find an additional R223m to fund an extra 45.1-million packs of the three-in-one pill combining tenofovir, emtricitabine and efavirenz, known as TEE.

The government’s R18.3bn three-year HIV/AIDS drug tender is a key aspect of managing the country’s HIV epidemic, the world’s worst: an estimated 7.9-million people are living with HIV/AIDS and 4.4-million patients are on treatment, according to figures released at the ninth SA AIDS conference in Durban in July.

While margins on HIV/AIDS drugs are thinner than on most other medicines supplied to the state, the sheer volumes required help pharmaceutical companies achieve economy of scale in their factories.

The health department’s Anban Pillay said the new tender was necessary because the National Treasury had underestimated the volume of TEE required when it called for bids for the main contract, awarded in February. The government is committed to funding the ARV treatment programme, and the Treasury will find the money to do so, he said.

TEE is used by the majority of state patients on first-line therapy. The government has begun shifting eligible patients to a cheaper and more effective alternative containing dolutegravir, lamivudine and tenofovir, known as TLD, but the transition has so far been slow, partly due to safety concerns about use of the drug during pregnancy. New data on the safety of dolutegravir is expected to be announced during the 10th International AIDS Society conference on HIV science, under way in Mexico City this week.

The government had opted to open up the supply contract for TEE, rather than simply asking existing suppliers to provide more packs, because such a high volume is required, said Pillay. “We will be out of stock if we don’t,” he said.

The original TEE tender was for 28-million packs and saw the supply contract split between importers Mylan (27%), Innovata (25%), Macleods (23%)  and Cipla Medpro (23%), which manufacturers locally. “Theoretically we could get a price reduction in TEE if there is more competition,” said Pillay.

Aspen Pharmacare’s head of strategic trade, Stavros Nicolaou, welcomed the health department’s call for bids for the supplementary tender, announced earlier in July, saying the company planned to bid for a share of the contract. An estimated 3.5-million state patients are taking TEE, at least 60% of whom are women of child-bearing age, he said.

But Cipla Medpro CEO Paul Miller expressed concerns about the new tender, saying it was unnecessary as suppliers could have readily provided more TEE to the state.

“We were approached by the health department to provide increased volumes. All the current suppliers gave a commitment to do that, but the government decided to impose a supplementary tender,” he said. “We are not convinced a supplementary tender would yield a better price point for the government.” 

Local drugmaker Adcock Ingram said it would bid for the TEE tender, as it still has spare capacity at its factory in Wadeville.

“We plan to bid for the supplementary tender and believe it is a positive development. The switch or use of DLT is at a very early stage and we would therefore still have significant capacity to locally manufacture TEE until such time as our award of DLT translates into real additional volume for our factory in Wadeville,” said Ashley Pearce, MD of the company’s prescription division.

kahnt@businesslive.co.za