New tender must leave space to manoeuvre.
At the end of 2009, appoximately 920 000 of the more than 1.7 million South Africans who will eventually need antiretroviral (ARV) drugs—only 56% of those with advanced disease—had access to HIV treatment.
One of the biggest barriers to achieving South Africa’s ambitious goals to expand the world’s largest national HIV treatment programme is its inability to procure ARVs at internationally competitive prices.
Aaron Motsoaledi, the health minister, has publicly committed South Africa to getting ARVs at internationally competitive prices, but the complex role of local pharmaceutical companies has made it difficult to resist what he has called ‘some sort of blackmail”.
In 1998 the worldwide struggle for access to life-saving HIV/Aids medicines came to a head when the South African Pharmaceutical Manufacturers’ Association, with 40 mostly multinational manufacturers and their local subsidiaries, brought a suit against the South African government.
The industry alleged that recent changes to the Medicines and Related Substances Control Amendment Act violated the Constitution and the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property.
To improve access to essential medicines, the new legislation included provisions to substitute originator drugs with generics after patent expiry, transparent pricing for all medicines and the parallel importation of patented medicines from other countries. Activists mounted a massive campaign in response to the lawsuit and the threat to access to medicines that it represented.
From the inventor of one of the first ARVs at Yale University to 4 000 people in the slums of Nairobi, activists collected more than 250 000 signatures from more than 130 countries to petition the industry to drop the court case. On the eve of the first court hearings activists interrupted an industry press conference to hand over the signatures to the group’s chief executive. The case was unconditionally dropped two days later.
The first generic ARVs to arrive in South Africa came from Brazil in January 2002, where governmentrun pharmaceutical companies had been critical to achieving universal access to ARVs. By importing medicines from Brazil, activists and patients shed light on the fact that quality generic versions of the drugs were available for 80% less than was being charged in South Africa and protested that the lives of patients in Khayelitsha were more important than the patent rights of drug companies.
While activists and patients were taking legal risks to enable access to generic ARVs in South Africa, Aspen was listed on the Johannesburg Stock Exchange and positioned itself to become a major supplier of generic ARVs to the government. This ambition was realised when Aspen won most of the first national ARV tender in 2005.
In contrast to Brazil and Thailand, South Africa decided to buy ARVs exclusively from private and primarily local companies. Aspen assured its market share by signing ‘voluntary” licences with multinational companies to produce generic versions of their medicines.
These agreements helped pharmaceutical companies to improve their public image but also kept prices high because they limited generic competition and because local companies agreed to buy pharmaceutical ingredients from international suppliers. The initial deal led to prices significantly above international levels while undermining the growth of a competitive generic industry.
As a result, civil society lodged a complaint with South Africa’s Competition Commission, which ultimately forced multinational companies to improve the terms of their agreements with local companies and to grant similar agreements to other companies.
In many ways activists have enabled the local ARV industry that emerged in South Africa. Aspen Stavudine, the first ARV drug manufactured in Africa by Aspen Pharmacare in 2004, is still considered one of the company’s milestones. This would not have been possible without international pressure on the patent owner, Bristol-Myers-Squibb. These agreements favoured short-term access to some ARVs at the long-term expense of an internationally competitive marketplace in South Africa.
The private agreements of local manufacturers have contributed to minimally competitive national HIV tenders and continued legal and regulatory barriers that limit South Africa’s ability to obtain fixed-dose combinations readily available elsewhere in the region. There are also no generic options for some of the newer formulations and better medicines that now appear in South Africa’s new HIV treatment guidelines.
Instead of pursuing cheaper local production or the importation of quality ARVs for the public sector, the department of trade and industry has allowed the local ARV producers to become a de facto cartel. South Africa’s coming national HIV tender is a historic opportunity to improve access to HIV treatment at a time of growing financial and political commitment to health.
Prioritising the registration of newer products and combinations by the Medicines Control Council, incorporating flexibility in the new tender to allow South Africa to benefit more quickly from global price reductions and rethinking industrial policies that have hindered competition are all options available to the government and have important implications for patients.
Obtaining the lowest possible price for medicines is not the only important factor in awarding a tender of this size, but the restrictions imposed by local pharmaceutical companies’ agreements should not put a stranglehold on the lives of patients or limit Motsoaledi’s ability to follow through on his commitment to improve access to HIV treatment in South Africa.
Matt Price is the access and innovation officer at Médecins Sans Frontières South Africa