20 January 2011 | Nick Martindale
Aid agencies have welcomed news of the South African government’s procurement of antiretroviral (ARV) drugs for use in the fight against Aids.
Michel Sidibé, executive director of UNAIDS, who had previously warned that prices were around 30 per cent higher than average international rates, said: “This is a significant breakthrough for South Africa’s response to the epidemic.
“More people are finding out their status as testing is scaled up which is resulting in more people coming forward to access treatment. These price reductions are essential to ensuring that all people in need have timely access to the lifesaving medication.”
The new deal, signed in December, succeeded in a cost reduction of 53 per cent and generated savings of R4.7 billion (US$690 million) following a competitive tender.
In a joint statement, the South African-based organisations Treatment Action Campaign and public interest legal body Section27 said: “This is in stark contrast to the previous tender, which resulted in South Africa paying significantly more than necessary for ARV medicines.
“South Africa will now be paying – on average – about R115 (US$17) per patient per month for the standard triple combination of tenofovir, lamivudine and efavirenz. Under the previous tender, the country committed to pay about R110 for efavirenz alone; just a few rand less for only one drug.”
But the two bodies also expressed concern over the failure to include a mechanism within the contract to reduce prices further should input costs decline and a lack of transparency over how points were allocated to successful bidders.
Health minister Dr Aaron Motsoaledi admitted the government’s previous contracts had not represented value for money.
“The high prices paid by South Africa were despite the fact that South Africa has the largest ARV programme in the world,” he said. “This just did not make sense to us. We must be able to benefit from economies of scale.”
He attributed the “massive reductions in price” to a variety of factors, including ensuring there were an adequate number of products registered with the MCC, encouraging all potential suppliers – including those from overseas – to participate, and publishing a reference price list based on international rates.
Suppliers were also required to provide a breakdown of their own costs, he added, and any changes would be monitored during the lifecycle of the contract.
The deal with 10 organisations runs from now until December 2012, with reductions in unit cost ranging from 4 per cent to 81 per cent.