Achieving Low Antiretroviral Costs through National Tendering
The success of South Africa's recent ARV tender in reducing costs through competitive national tendering and strategic pricing. Insights on procurement milestones, pricing negotiations, and key highlights from the tender award."
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Achieving Low Antiretroviral (ARV) Costs through Competitive National Achieving Low Antiretroviral (ARV) Costs through Competitive National Tendering and Strategic Reference Pricing: Results from the Republic of Tendering and Strategic Reference Pricing: Results from the Republic of South Africa s Recently Awarded ARV Tender (RT71 South Africa s Recently Awarded ARV Tender (RT71- -2019) 2019) Herbert Musariri Herbert Musariri (on behalf of Republic of South Africa National Department of Health) Share your thoughts on this presentation with #IAS2019 #IAS2019 Share your thoughts on this presentation with
Background of South Africas Treatment Program Background of South Africa s Treatment Program 4.1M Virally suppressed (VL <1,000 copies/mL) 4.7M On antiretroviral treatment (ART) 7.5M People living with HIV (PLHIV) 62% 62% 88% 88% South Africa represents the largest HIV treatment program in the world South Africa represents the largest HIV treatment program in the world Sources: Sources: Thembisa Model Version 4.2 : https://www.thembisa.org/,accessed July 2019; District Health Information System (DHIS): https://za.dhis.dhmis.org, accessed July 2019; figures are for May 2019; National Health Laboratory Services (NHLS)
National Timeline Preparing for ARV Tender National Timeline Preparing for ARV Tender (RT71 (RT71- -2019) 2019) Key National Tender Milestones Forecasting and Quantification Forecasting and Quantification (May July 2018) Tender Advertised Tender Advertised (August 2018) Reference Price List Special Conditions of Contract explicitly indicate that submitted prices must not exceed reference prices Price Negotiations The State reserves the right to negotiate with the bidders prior to award and with the successful bidder(s) post award Tender Award Announced Tender Award Announced (Feb 2019)
Key Highlights from RT71 Key Highlights from RT71- -2019 Tender Award: TLD 2019 Tender Award: TLD R 87 R 87 TLD Delivery Price (ZAR) TLD Quantity Awarded (pack in millions, rounded) Supplier Weighted average delivery price per pack for TLD awarded in RT71-2019 Macleods R 75.13 20.0M 147M 147M Mylan R 78.78 18.8M Hetero R 83.70 17.8M Estimated quantity required (in packs) of TLD during the 3 year tender period 8 8 Cipla R 86.50 20.3M Aurobindo R 87.28 16.9M Sonke R 89.68 18.9M Pharmacare R 95.21 17.5M Suppliers awarded TLD volumes (with 3 being local), promoting supply security Adcock Ingram R 98.61 16.8M
Utilizing Reference Pricing To Achieve Cost Savings Utilizing Reference Pricing To Achieve Cost Savings The global reference pricing for TLD helped inform the advertised ceiling prices. In the end, through its large volumes, South Africa was able to achieve a significant price reduction South Africa was able to achieve a significant price reduction from the global benchmark pricing agreement for TLD TLD Pricing Agreement TLD Pricing Agreement September 2017 September 2017 US$75 US$75 Average cost per patient per year for generic TLD At the 2017 United Nations General Assembly, the governments of South Africa and Kenya together with many partners, including CHAI, BMGF, and Unitaid, announced a new pricing agreement for TLD with Aurobindo and Mylan ~$75 PPPY* -13% ~$65 PPPY* 2017 Global Pricing Agreement RSA 2019 Tender Award Notes: Notes: *Prices shown reflect EXW (i.e., no freight); RSA s prices estimated by removing 15% VAT and ~7% mark-up for delivery (DDP); Assumed SA Rand to USD RoE of 14.20; given 28 pack size for nearly all award volumes, assuming 13 packs needed for year-long treatment; PPPY = per patient per year
South Africas Cost for Preferred Adult 1 South Africa s Cost for Preferred Adult 1st st- -Line (1L) ARV Regimens Has Decreased Significantly Over Time Regimens Has Decreased Significantly Over Time Line (1L) ARV Annual Delivery Cost for Highest Volume Adult 1L Regimens Per Awarded Tender Annual Delivery Cost for Highest Volume Adult 1L Regimens Per Awarded Tender $300 Price reductions could result in ARV procurement cost savings of roughly 43% corresponding to R4.6 Billion ( ($326 Million) over the 3 year tender cycle. Annual Cost of Treatment -68% $247 $250 R4.6 Billion $200 $141 $150 $116 $100 $79 Savings estimated as the difference in total value of the current and immediate past tender based on items awarded in both tenders. $50 $- TDF/3TC/EFV (2011-2012) TDF/FTC/EFV (2013-2014) TDF/FTC/EFV (2015-2019) TDF/3TC/DTG (2019-2022) Notes: Notes: Cost calculations based on delivery prices which include 15% VAT and ~7% mark-up for delivery (DDP) ); Assumed SA Rand to USD RoE at time of tender award; given 28 pack size for nearly all award volumes, assuming 13 packs needed for year-long treatment. Pack sizes were 30-day prior to 2013.
South Africas Ability to Decrease Cost of Treatment Has Enabled the South Africa s Ability to Decrease Cost of Treatment Has Enabled the Country to Minimize Cost of Scaling Country to Minimize Cost of Scaling- -Up Treatment for All Up Treatment for All Adult 1L ART Program: Patient Estimates and Cost Adult 1L ART Program: Patient Estimates and Cost $400 6.0 $364M Adult 1L Treatment ($M) $338M Annual Delivery Cost of $332M $350 $313M Adult 1L Patients on 5.0 4.53M The steady decrease in cost has allowed South Africa to Africa to quadruple the quadruple the number of adult 1 number of adult 1st st line patients patients since 2011, with a marginal impact on ARV marginal impact on ARV drug budget drug budget. $300 Treatment (M) South 4.0 $250 2.91M $200 3.0 line 2.35M $150 2.0 1.27M $100 1.0 $50 $- - 2011 2013 2015 2019 Notes: Notes:
TLD Rollout & Implementation Plan TLD Rollout & Implementation Plan Monitoring TLD uptake: Ongoing Guidelines Finalized: May 2019 TLD Introduction: September 2019 Training: July-September 2019
Lessons Learnt from Tendering and Award RT71 Lessons Learnt from Tendering and Award RT71- -2019 2019 Widening the pool of potential suppliers, ensures a competitive tender process, which thereby ensures best prices and facilitates supply security Global cooperation is key for setting benchmark prices for countries to leverage. Utilizing global reference prices and establishing ceiling prices in tendering advertisements can help drive down costs Public posting of awarded prices and volumes is helpful in enabling other countries to reference during their own tendering negotiations
