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[e-drug] Massive reduction in ARV tender prices in South Africa

E-DRUG: Massive reduction in ARV tender prices in South Africa
[cross-posted from AFRONETS with thanks to Marianne for spotting; WB]

South African Minister of Health announces ARV tender for 2010-2012 -
Media briefing - 14 Tuesday 11am

Massive reduction in ARV prices
14 December 2010

Early this year in my Health Budget Speech I mentioned that the prices
that South Africa pays for ARVs are significantly higher than all other
countries. The high prices that I was concerned about had been confirmed
by our international development partners. In fact the Executive
Director of UNAIDS raised this issue during his speech at the World AIDS
Day event last year.

The high prices paid by South Africa was despite the fact that South
Africa has the largest ARV programme in the world. This just did not
make sense to us. We must be able to purchase ARVs at the lowest prices
as we are the largest purchasers of ARVs in the world and must benefit
from economies of scale. South Africa did not benefit from this. If we
continue doing what we have been doing the fiscus will be overwhelmed
because of our increased burden of disease.

Since the World AIDS Day we have tested 4,8 million South Africans for
HIV as part of our HCT campaign to test 15 million people by June 2011.
Of these people, 905 000 were found to be HIV positive, and in light of
these price reductions, we would be able to cope with the load.

As announced by the President on the World AIDS Day in 2009, we started
on 01 April 2010 to provide antiretroviral treatment to pregnant women
at CD4 count of 350 or less, to enhance maternal survival. ART is also
being provided to people-co-infected with TB and HIV at a CD4 count of
350 or less. All children born HIV positive are put on ARVs regardless
of their CD4 count. This will increase the amount budgeted for
significantly to reducing morbidity, disease progression and mortality
associated with TB and HIV and AIDS. It is my pleasure to announce the
massive reduction in the prices of antiretroviral drugs which has
resulted in the 53,1% reduction in the cost of the total tender which
translates to a R4,7 billion savings.

The percentage decrease in the cost of each item ranges from 4% to 81%
implies that South Africa can now afford to treat twice as many people
on ARVs compared to that which was previously budgeted.

If we had to treat the same number of patients using the previous tender
prices, it would have cost the state in excess of R8.8 billion. This
saving of 4.7 billion allows the state to treat double the amount of

We therefore welcome the award of the R4.280 billion tender for
procurement of antiretroviral drugs to support the implementation of HIV
and AIDS treatment in the country for the next two years effective from
01 January 2011 to 31st December 2012. We are delighted to note that for
all items, the tender price is substantially lower than it was in the
last tender. This kind of saving is what government must achieve in
other areas of procurement. This will ensure that tax payer*s money is
used in a manner that provides value for money.

In terms of the prices of the key antiretrovirals used in the management
of HIV/AIDS the price differences are significant, the table below
illustrates the price differences for the key products:
DRUG                    2008 Price  2010 Price  % Price reduction
EFAVIRENZ 600mg tablets R107.07     R39.22      63%
LAMIVUDINE 150mg tablet R29.77      R18.22      39%
NEVIRAPINE 200mg tablet R31.53      R22.99      27%
TENOFOVIR 300mg tablet  R155.60     R54.82      65%

We attribute the massive reductions in price to the extraordinary
measures that we employed in this tender to ensure that we get the best
possible prices. These measures include the following:
*       Ensuring that there are an adequate number of products
registered with the MCC
*       Encourage all potential suppliers including international
suppliers to participate
*       Publication of a reference price list based on international
transactional prices
*       Suppliers were required to provide a breakdown of their cost
*       Monitoring of price changes through the life cycle of the tender

The awards vary from 0.2% to 40.6% of the total value, spread over ten
The tender awards were distributed as follows:
Bidder      Total value (%)
Abbott       9.8%
Adcock       4.0%
Aurobindo    3.1%
Cipla Medpro 5.1%
Medpro       10.1%
MSD          0.2%
Pharmacare   40.6%
Sonke        21.9%
Specpharm    0.9%
Strides      4.2%

This significant achievement was possible because of the partnership and
cooperation National Treasury and the Department of Health enjoyed and
the understanding of these issues by the Minister of Finance. National
Treasury engaged an external auditor to oversee the evaluation process
so that there was adherence to all procurement procedures and

The provincial health departments, SAMHS and Correctional Services were
invited to participate in the evaluation of the tender. I would like to
thank all bidders for their positive response to this tender which has
allowed South Africa to get one the world*s best prices for ARVs. It is
notable that these tender price reductions have been achieved through
the same suppliers that are contracted in the current tender. There are
several reasons for this, including greater efficiency in Active
Pharmaceutical Ingredient (API) production, increased competition and a
tender system that attempts to achieve the lowest possible price.

Given the clear evidence of the success of this approach to procurement,
the Department of Health will be replicating this approach through a
Central Procurement Authority. The Authority will focus on procurement
of ARVs, TB drugs, vaccines and drugs for the treatment of diseases
related to maternal and child health.  To ensure efficiency and
cost-effectiveness in procurement, the last meeting of the National
Health Council (NHC) of Minister and MECs approved the establishment of
a Central Procurement Authority.

This Authority will ensure amongst others that:
*       Medicines are procured at the best possible prices,
*       There is an adequate supply of medicines to facility through an
appropriate monitoring system
*       Payment for medicines is made timeously to manufacturers The
authority will initially focus on medicines for priority health
condition such as HIV and AIDS, TB and conditions related maternal and
child health.

South Africa
DATE - 14 December 2010

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