Integrated Regional Information Networks - December 17, 2004

PORT ELIZABETH (PLUSNEWS) - The high-tech compression machine at Aspen Pharmacare's new facility in Port Elizabeth, South Africa, spits out Nevirapine tablets at a rate of 150,000 an hour. Pharmacists clad in surgical masks and hairnets fiddle with controls and take regular samples to ensure the tablets are consistent in size and hardness, but mostly there is little for them to do but stand back and watch.

Across the road, Aspen's older facility struggles to produce the same quantity of tablets in a day. This is only the third batch of antiretroviral (ARV) drugs to come out of the new facility, but eventually all ARV drugs made by Aspen will be manufactured here. Over the next 18 months the company will almost double its capacity.

"We can manufacture the full requirements of the continent," said Aspen's senior executive for strategic trade development, Stavros Nicolaou. "But we're not going to get 100 percent of that business."

As the only company currently manufacturing anti-AIDS drugs in South Africa, and one of the few countries on the continent with the size and capacity to sustain local ARV production, it seems likely that Aspen is set to seize a significant portion of "that business".

Procuring affordable supplies of ARVs is central to the increasingly pressing question of how cash-strapped African governments will sustain their HIV/AIDS treatment programmes. But there is no consensus on whether manufacturing the drugs locally is the answer.

NATIONAL PRIDE

Developing countries have had the right to produce generic drugs to fight health crises since 2001, but most African countries lack the infrastructure or market size to support such enterprises. Although the prices of ARVs have plunged with the introduction of generics, the vast majority are still manufactured elsewhere.

"Every little country wants to manufacture ARVs," said South African coordinator for the World Health Organisation's (WHO) Drug Action Programme, Martin Auton. "A lot of it's national pride - but you have to make sure it's economically viable, and not just producing for the sake of producing."

To be economically viable, smaller countries need to be able to market their drugs beyond their own borders but, before another country will consider buying them, they want an assurance of quality. At the moment, South Africa is the only country on the continent with a trusted regulatory body, like the Medicines Control Council, that can give that assurance.

In the absence of local regulatory authorities, WHO has stepped in to provide a stringent quality assessment of its own, and passing WHO's prequalification scheme is now a requirement for countries seeking funding for local drug manufacture from the Geneva-based Global Fund.

WHO is also developing an assessment to help countries determine whether a local drug-making venture is likely to succeed financially. Auton suspects that few of the smaller countries would make the grade unless they formed alliances that could guarantee them sizeable markets. WHO is in the process of researching this option.

The real key to keeping drug prices down, though, said Auton, was to create competition in the marketplace, and that might mean a combination of locally manufactured and imported drugs would be the best solution for government-sponsored ARV programmes. Using multiple suppliers would also help guarantee an uninterrupted supply of the life-prolonging medicines.

"You don't want to be dependent on one supplier, who then holds you ransom down the line," he explained.

"If it's a question of saving lives, you can't just rely on local production," agreed Jonathan Berger of the AIDS Law Project in South Africa. "Given that there aren't enough local producers, they have to compete with importers."

South Africa's health department has yet to announce which companies will supply ARV drugs for its national treatment programme, but chief director of pharmaceutical planning and policy, Dr Humphrey Zokufa, confirmed that the tender would be divided between several suppliers.

At the same time, he made no secret of the government's preference for local manufacturers and its long-term goal of reversing South Africa's reliance on importing drugs, particularly ARVs.

"If we're importing ARVs, and the manufacturer is experiencing an increased demand in their country, they'll be looking at supplying their local populations before us," Zokufa said.

That Aspen will win several of the bids in the tender was virtually assured even before its purchase in March of Fine Chemicals, a Cape Town-based facility that manufactures raw materials for pharmaceuticals. Currently, Aspen still imports the active ingredients of ARV drugs, but the plan is eventually to manufacture those ingredients at Fine Chemicals to secure their supply and further reduce the end cost of the drugs.

HOW MUCH PROFIT?

Dr Marta Darder, coordinator of the Medecins Sans Frontieres Access to Essential Medicines Campaign in South Africa, was wary of government's dependence on the private sector to supply its treatment programme. She would prefer a situation like that in Thailand and Brazil, where government-owned facilities are successfully supplying those countries' treatment programmes with affordable ARVs.

"It's fine to make a profit; it's about what is the margin of profit," Darder said. She was satisfied that Aspen was supplying the public sector with ARV drugs on a "cost-recovery" basis but, at more than three times the subsidised rate, regarded the cost of their drugs to the private sector as prohibitively high.

"Generic companies are just like other companies," Auton pointed out. "They get the maximum price they can charge."

Until recently, Aspen was the only company in South Africa in possession of "voluntary licenses" to make generic versions of ARV drugs developed by drug multinationals Bristol-Myers Squibb, GlaxoSmithKline and Boehringer Ingelheim. But, following a complaint lodged by the Treatment Action Campaign, and several other groups and individuals, that Glaxo and Boehringer were charging excessively high prices, the Competition Commission required the companies to release licenses to other local companies.

According to Andy Gray, a senior lecturer with the department of therapeutics and medicines management at the Nelson R Mandela School of Medicine, there were a number of good quality plants in South Africa that could move into ARV production with the right technology. Gray said he knew of at least two that were looking into the possibility, but noted that if the goal was to keep prices down by encouraging competition, more could be done by the government to provide such companies with financial incentives.

Nicolaou insisted that Aspen was happy to compete with other suppliers and that it took its "socio-economic responsibility to the continent" seriously. Besides the "humanitarian aspect," he said, providing ARVs as cheaply as possible was about securing future markets for the company.

"If economies collapse due to the HIV/AIDS epidemic, then governments can't buy your products," he explained.

After a two-year wait, Aspen completed registration of its six adult and two paediatric ARV products with the Medicines Control Council in September and, according to Nicolaou's estimates, was already supplying about 60 percent of the local public sector demand and about a third of the total number of South Africans on ARVs.

So far they are only supplying a local market, but their licensing agreements allow them to export the drugs throughout sub-Saharan Africa. Since winning a contract from the Clinton Foundation in October to supply several other African countries, Aspen has been in the process of getting a WHO assessment and, with a view to supplying drugs to programmes in the region funded by the US President's Emergency Plan for AIDS Relief, the company recently invited the Federal Drug Administration to inspect its gleaming new facility.

The British regulatory authority, the Medicines and Healthcare products Regulatory Agency, will visit the plant in January.

As long as the outlook for sub-Saharan Africa's HIV/AIDS epidemic remains gloomy, a bright future for Aspen Pharmacare seems assured.

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