Doubts about state drugs firm producing cheaper medicine

2011-07-23 16:23

Setting up a state-owned pharmaceutical company to provide antiretroviral drugs (ARVs) could work as long as it did not become another “employment agency for political appointees and comrades”.

Reacting to the announcement by the ANC national executive committee (NEC) that Cabinet should look into establishing such a company, health economist Professor Alex van den Heever said its success would depend on how it was implemented.

“Upfront in such a proposal should be a good governance structure that follows public interest principles and motivation. It is not unusual or wrong to have a company that focuses on local needs.

“But there are concerns with good governance and the politicising of state enterprises in South Africa,” he said.

The establishment of such a company was in line with a resolution taken at the ANC’s 2007 Polokwane conference that the government should establish a pharmaceutical company – something that was done by countries such as China, Cuba and Brazil.

ANC secretary-general Gwede Mantashe said there was a dramatic rise in the number of people who had voluntary HIV tests.

“The number of people who are accessing treatment has also increased dramatically,” he said, adding that such a company would help contain medicine price rises.

It was not clear yet how the company would be constituted or run, as the NEC still wanted Cabinet to look into the feasibility of such a company.

Pharmaceutical stakeholders questioned the governing party’s motives, since South Africa had a well-developed pharmaceutical industry and government could secure medicines locally and internationally at low prices.

“One has to ask whether this is the best allocation of taxpayers’ money, given the scarce resources available to government,” said Vicki St Quintin, head of the Pharmaceutical Industry Association of SA.

“South Africa is already producing its own ARVs and the state has a very competitive tendering process to keep the costs of ARVs low.”

It would have been another scenario if South Africa didn’t already have its own pharmaceutical industry, she said.

“Government would have to consider that it is extremely expensive to build a plant from scratch. If the state manufactures its own product it is stuck with it, even if new and better products for treatment become available.

“They would then have to buy what they make, which reduces flexibility.

“Conflict will arise in ARV tendering processes as the state will give preference to its own product. It can also take up to four years to register a product with the Medicines Control Council.

“Importantly, pressure is being put on pharmaceutical companies worldwide by big philanthropic groups such as the Clinton Foundation to keep down prices of large volumes of ARVs,” she said.

State ARV tenders already required two suppliers for every product, including generic medicines.

One of the areas that needed intervention was that of active pharmaceutical ingredients, the raw materials imported to manufacture medicines.

South Africa imported most of its active pharmaceutical ingredients from companies in the East, which played a major role in pushing up drug prices.

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