Statement by Aspen on the reported Tenofovir (TDF) public sector supply shortages

31/05/12:

Statement by Aspen on the reported Tenofovir (TDF) public sector supply shortages

Johannesburg: Since March this year there have been sporadic reports of Tenofovir (TDF) supply shortages in certain provinces and hospitals where patients are receiving ARV treatment. These reports seem to have manifested again this week and some allegations have emerged that the contracted TDF suppliers are in part responsible for these shortages. Aspen, as the Southern Hemisphere’s largest Pharmaceutical Manufacturer and the leading supplier of ARV’s to both the SA private and public sector can in no way condone these shortages, even if it is to a small group of patients and accordingly the company wishes to publicly clarify the following:

• At a press briefing earlier today Minister of Health, Dr Aaron Motsoaledi confirmed that the National Department of Health (NDOH) had checked all 10 depots nationally and all 10 have TDF.

• Aspen has the state contract to supply 70% of the required state volume for TDF for a two year period, commencing on 1 January 2011 and ending on 31 December 2012. It is required to deliver within 6 weeks of confirmation of received orders.

• Initial offtakes for TDF during the first year of the tender contract were extremely low, with monthly orders placed on Aspen averaging around 250 000 monthly treatment packs. This was largely because donor fund procured TDF product displaced much of the tender volumes.

• This donor fund procured inventory ran out by December 2011 and it became necessary for the current suppliers to respond, by immediately scaling up production.

• The transition from donor stock to state procured TDF was not a smooth transition, with some provinces and institutions underforecasting demand and/or placing orders either erratically or only once stock levels had dwindled significantly. Consequently, some institutions remained well stocked, whilst others ran into problems.

• Despite this, For example, NDOH’s forecast for 70% of the volume over the past 3 months from March to May 2012 required Aspen to supply 668 000 packs per month or 2 million packs for this period. Over this 3 month period, Aspen has supplied 2,4 million packs, exceeding its contractual requirement by more than 400 000 packs. This averages out to approximately 860 000 packs per month. Aspen has been advised by the NDOH that it is needed to over-supply on its contractual commitment because the supplier required to supply the other 30% of the TDF tender is unable to do so. Aspen has accordingly stepped in and is manufacturing in excess of its contractual requirements. By way of example, Aspen has supplied 1,140 million treatment packs for the month of May to the NDOH, exceeding by 350 000 packs its monthly contractual requirement.

• As this crisis began to unfold, Aspen acting in consultation with the NDOH, has been able to step up both its raw material imports and allocation of manufacturing capacity to meet this increased demand. It has been able to do so with requisite flexibility and in a short space of time.

• Given the current situation, Aspen will continue to commit the required capacity from now until the end of the tender period, to ensure that it not only meets its own tender volume obligations, but it is able to step in and supply the quantities that other suppliers are unable to.

• Aspen views supply security and the maintenance of the integrity of the South African Public ARV programme as a National imperative. It also views its commitment to supply timeously and according to its committed quantities with equal importance. To this end, Aspen has an excellent track record in the manufacture, supply and delivery of ARV’s to the SA Government. This is not the first time Aspen has had to step in to supply where importers who had won the contract for other ARVs have been unable to supply in the current contract period. This has been the case, for example, where Aspen has had to take over supply for Stavudine 30mg and Lamivudine 150mg in the current two year contract period. Aspen has thus continued to supply on its own commitments, in addition to that where other suppliers have been unable to supply.

In conclusion, Aspen is able to confirm that it is presently meeting both its contractual terms and supply volumes for TDF that it is required to in terms of the current ARV tender. The Company can also confirm that it presently has no backorder for TDF, meaning that all remaining orders in the system are within the 6 week delivery period. The company will supply around 1,1 million packs in June 2012, which will again exceed monthly NDOH forecast by 400 000 units.