Cape Town — Generic drug maker Aspen Pharmacare, the biggest beneficiary of the government's multibillion-rand AIDS drug tender, says the system is not working and pharmaceutical companies should partner directly with the state instead.

Under the terms of the two-year contract, worth R4,2bn when it was announced last June, pharmaceutical companies were given no volume guarantees, yet had to make significant investments in production capacity, said Aspen senior executive Stavros Nicolaou.

Aspen had been disappointed by the volumes ordered by the state, he said. The government had tendered for 3,6-million packs of tenofovir, yet 18 months into the deal it had only bought 180000 packs, he said.

Although the state was providing AIDS drugs to an estimated 670000 patients by August, very few of them were using tenofovir -- current treatment guidelines reserve tenofovir for people who have experienced serious side-effects with a much cheaper drug called stavudine.

The actual value of the tender realised to date was about 60% of the value when it was floated, Nicolaou said. "Forecasting with such uncertainty is very difficult. You are far better off doing public private partnerships, which will give predictability of patient numbers," Nicolaou told delegates to a seminar hosted by Metropolitan Health Group and Qualsa medical scheme.

A public-private partnership for the provision of AIDS drugs would see the state enter into a long-term contract with drug makers with guarantees of patient numbers, Nicolaou said.

The health department expected that it would have to provide treatment to between 1,6-million and 2,5-million HIV patients in the next three to five years, he said.

"I don't believe a tender is the most competitive, nor the most sustainable, way to get antiretroviral medicines," he said.

Public-private partnerships should also be considered for pharmaceutical supply chain management, he said.

Delegates also heard Richard Friedland, CEO of SA's biggest hospital group Netcare , arguing that the government's model for partnerships with private hospitals should be expanded to allow them to provide clinical services.

The handful of public-private partnerships in the hospital sector are restricted to infrastructure upgrades and facility management.

Netcare's experience in the UK and Lesotho had shown that the private sector could improve the quality of care at state healthcare facilities at no extra cost to the government, and turn a profit for the company, he said.

"The private sector is willing to take the risk of providing clinical services. We need the government to allow us to do so," he said.

Netcare and its rival LifeHealthcare won contracts from the UK's National Health Service to provide cataract and orthopaedic services to reduce long waiting lists.

Netcare has also entered into a deal with the Lesotho government to upgrade and provide clinical services to a hospital in Maseru.