Walking The Tight Rope Of Tuberculosis Treatment

revealing suppliers with multiple identities

With TB infections on the rise in South Africa, there is one perturbing mystery of government’s approach to the runaway cost of TB treatments.

In Brief

  • TB infections are on the rise in South Africa, with drug-resistant strains especially worrying
  • Government has been vocal on prevention and treatment, but its budget allocation for TB drugs is dismal at 3% of the R29-billion pharmaceutical spend
  • 10 companies won bids in 2013 (Contract No. HP01-2013TB) to supply R989 922 428.79 worth treatment drugs
  • We explored details of TB drugs suppliers and found some with multiple identities. The contracts lapse on July 31, 2015 

In research circles the TB guys refer to themselves as ‘poor cousins’ of their HIV counterparts. There is a dearth of investment in research and treatment of tuberculosis compared to HIV, yet the link between the two killer diseases is well established.

In South Africa where co-infection of TB and HIV is common, researchers say the diseases seem to make each other worse - TB often gets harder to cure and HIV progresses quicker. For the country to have achieved international recognition for its HIV treatment program, it took highly targeted policies and financial muscle. On Tuberculosis (the leading natural cause of death in the country), the government has been very vocal regarding prevention and treatment. But going by the Department of Health’s latest drugs procurement data, it would appear there are gaps in implementation of TB treatment programmes.

In April the department published a R29 billion master drugs procurement catalogue. Of the R29bn, a mere 3% (R989.9 million) will be spent on TB drugs. Yet statistics by various experts all point to rising TB infection rate and particularly the scary strain that is drug-resistant. Latest available figures of active cases range from 312,380 to 500,000.

According to Médecins Sans Frontières (Doctors Without Borders), about 15,000 new cases of Multiple Drug-Resistant TB (MDR-TB) are diagnosed in South Africa every year; the second highest number in the world after India. WHO reported 26,023 laboratory confirmed cases of MDR-TB for 2013.

MDR-TB is outrageously expensive to treat and is caused by incomplete treatment regimes mainly due to poor health systems and complacency by patients and health caregivers. Incomplete treatments means the bacteria that causes the disease – mycobacterium tuberculosis – gets a chance to mutate and become resistant.

The top-ten leading causes of natural deaths in South Africa for the year 2013. Source: Statistics SA, 2014

Treatment of TB takes six to eighteen months. The quantity of drugs ordered by the health department would hardly be sufficient for the hundreds of thousands of patients. Consequently, many of the recorded active TB cases might progress to MDR-TB resulting to more financial burden to the public.

We are informed that treatment and management of TB is much more than the supply of drugs. For instance, there are costs for enabling monitoring of patients by social workers to ensure treatment regimes are followed, and good nutrition and hygiene is observed.

The so-called first-line treatment (regimen for initial treatment) comprises Isoniazid, Pyrazinamide, Rifampicin, Ethambutol and Streptomycin. Except Streptomycin, these drugs are on the department’s procurement list.

Leading the companies contracted to supply R989 922 428-79 worth of TB drugs under Contract HP01-2013TB is Sanofi-Aventis South Africa (Pty) Ltd. Supplier Code V2160, with R734.5m (74% of the entire TB drugs procurement contract) is the local subsidiary of a French multinational.

Multiple Identity Disorder - MID

On the second slot, with R67.2m, is Supplier Code VVZ69, Sandoz South Africa (Pty) Ltd, a company that operates as a subsidiary of Sandoz International GmnH. Also representing the Swiss multinational in the country is Supplier Code VBVW2, Novartis South Africa (Pty) Ltd.

So, we have two suppliers linked to one multinational and purportedly competing to supply pharmaceutical products to the same client – Department of Health. The Companies and Intellectual Property Commission revealed some common features. The two entities share a director (Christopher David Snook) and an auditing firm (PricewaterhouseCoopers).

39 year-old Snook provided his Basel, Switzerland address for both companies. His listed business addresses however vary, but just slightly - Novartis International AG’s Swiss Post Box (PostFach) for one entity and Novartis International AG’s Campus address in Basel, Switzerland for the other.

Distribution of the TB procurement contract

On the third spot with a R55.8m contract is Equity Pharmaceuticals (Pty) Ltd. Supplier Code V1QZ3 lists its directors as Jaco Roos and Johannes Willemse of Gauteng.

Fourth with R54.2m is the local subsidiary of Indian based Dr. Reddy’s Laboratories. Supplier Code V1A08 does not have local directors. Dr. Reddy’s four India-based directors are Saumen Chakraborty, Satish Reddy Kallam, Venkata Narasimham Mannam of Hyderabad, and Venkata Ramana Motupali of Secunderabad.

Pharmacare Limited, Aspen Holding’s trading outfit is in fifth position with a R30.2m deal.

Another MID

Sixth is Ranbaxy South Africa (Pty) Ltd, supplier Code VVZ04. Despite having created Sonke Pharmaceuticals (Pty) Ltd in a joint venture with Community Investment Holdings, Ranbaxy appears to be maintaining separate supply contracts with the department of health. When does it suit Ranbaxy to act as an independent entity and not a JV?

Indian company Biotech Laboratories (Pty) Ltd (Supplier Code VUV35) clinched a R16.2m deal. Based in Randjespark , the company lists its directors as: Stewart Graham Barker of Fourways, Shadrack Kosea Mapetla of Kyalami, Ranthoyakgale Simon Morule of Pretoria, and Mumbai-based Jay Bharat Mehta, Nirav Shirish Mody, Pranabh Dinesh Mody and Pradeep Kumar Singh.

The four directors with Mumbai addresses are linked to Mumbai-based J. B. Chemicals & Pharmaceuticals whose headquarters is at Neelam Centre.

With a R6.8m contract for TB drugs is Supplier Code V1A10, Austell Laboratories (Pty) Ltd. Registered in 2000, Austell lists its directors as Suhail Abdool Gani of Johannesburg and Ahmed Vaid of Mayfair. Besides supplying drugs to public health facilities, Austell donates medication to needy communities and sponsors ten medical students annually. That, we would say, is offering holistic medical care to the public.

Ninth is Supplier Code V4728, Be-Tabs Pharmaceuticals (Pty) Ltd with R1.74m contract. Though appearing to be independent, records we found show Be-Tabs Pharmaceuticals was acquired by Ranbaxy (Supplier Code VVZ04) in 2007.

Is it legal for Ranbaxy to submit multiple bids for the same contract using different identities? It would have been hard to miss the fact that the contact persons for the ‘two’ suppliers were the same Alta Joynt and Marilyn Kwonglee.

Though our team has found no evidence of collusion in the bid processes, the perception that the same entity submits bids under different umbrellas cannot be wished away.

Supplier Code V03R0, Pharma Dynamics (Pty) Ltd. with a contract valued at R953,189 completes the TB drugs supplier list. With registered offices at Westlake, Cape Town, the company lists its directors as Vinod Dhawan, Alok Kumar Ghosh and Kamal Kishore Sharma all of Mumbai, India, Sofia Mumtaz of Pune, India, Paul Stephen Anley of Hout Bay, Thomas Johannes Scott, of Tokai, and John Anthony Taylor of Fresnay.

CLICK HERE for complete supplier list.