Treasury blamed for high prices

2010-12-19 11:57

The National Treasury’s weak procurement processes are to blame for South Africa massively overpaying for antiretroviral drugs (ARVs).

Health minister Aaron Motsoaledi announced this week that the country had managed to reduce the price of ARVs by a massive 53.1% – effectively making a ­saving of R4.7?billion – when the new tender for ARVs was recently awarded.

More than one million South Africans are on ARV treatment and a further 500 000 will have been added by March next year.

This year the treasury invited ­international suppliers to bid, researched global ­prices for ARVs and ­determined the cost of producing the drugs to ­compare prices.

The head of health economics at the health ­department, Dr Anban Pillay, said: “Pharmaceutical companies are for profit. There are very few suppliers in the country; they know each ­other, so it was easy for them to take advantage (of the weaknesses).”

The new tender, worth R4.28 billion, was awarded to 10 companies for two years.

If the country was still paying the old prices, R8.8 billion would have been spent.

Treasury spokesperson Jabulani Sikhakhane said no data was available to enable government to make informed decisions when awarding ARV tenders.

Therefore a “detailed” study was done comparing prices paid by South Africa and other countries.

“This benchmarking study pointed to the reduction of prices for active pharmaceutical ingredients (APIs) ­globally, especially the two commonly used products, Tenofovir and Efivarens, whose prices dropped the most in this tender,” Sikhakhane added.

Aspen Pharmacare, which won the lion’s share of the tender (40.6%), attributed the high ARV prices to imported APIs and red tape at the Medicines ­Control Council (MCC).

Aspen spokesperson Stavros Nicolaou said that drug producers who wanted to change to a cheaper API and introduce generic medicines were delayed by the MCC’s two-year approval processes.

“Therefore, with this tender, generic medicines for some of the higher-priced originator ARV medicines were registered and producers were able to source APIs at significantly reduced prices,” Nicolaou said.

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