How Better ARV Prices Were Won

South Africa's two-year contract with suppliers of antiretroviral therapy for its treatment program has halved drug costs, saving an estimated $685 million. While the government chose to stay with the same suppliers, increased competition from generic drug makers and a more aggressive government push for cheaper ARV prices helped extract the savings.

Before it put out a request for bids, the government worked with the Clinton Health Access Initiative (CHAI) to establish targeted, internationally competitive price ranges for the ARVs. Competing firms had to detail their costs, from active ingredients to drug formulation to shipping.

"It's a very difficult figure for companies to release - it's like their best-kept secret," said Brenda Waning, coordinator of market dynamics for
UNITAID, an international drug purchasing agency. South Africa could use the price breakdowns submitted by bidders to compare and judge their validity, she noted.

Under the new contract, a 300 mg tablet of tenofovir will cost less than $8 per month per patient, down from about $23 previously. The agreement also allows for mid-contract price adjustments, so a baseline price itemization will help in evaluating such proposals, said Vishal Brijlal, CHAI's South Africa country director.

With more than 1 million residents taking ARVs, South Africa represents about 20 percent of the global ARV market. It also funds about 60 percent of its treatment program.

The agreement was generally praised domestically, though advocates criticized the lack of transparency in scoring bidders. "We don't know how points were worked out . competitors can't tell whether or not the tender was correctly awarded," said Jonathan Berger, senior researcher for the South African rights organization Section 27. Section 27 and Treatment Action Campaign are urging that future contract proposals detail how points are awarded.

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