With 2009’s change in political leadership in South Africa, we’ve seen a rapid scale-up of HIV/AIDS testing, treatment and prevention services.  After years of neglect, we have a 17.8 percent adult HIV prevalence rate and 5.33 million adults and 330,000 children who are HIV positive, the largest in the world.  And only 37 percent of people in need of treatment are receiving it.

As a South African, I was delighted to see my government putting so much energy and attention to saving the lives of the millions of people needing treatment.  Then in 2009 Secretary Clinton announced a strategic initiative with the Government of South Africa to help accelerate scale up. Ambassador Goosby and the PEPFAR program committed to a one-time, two-year infusion of $110 million through USAID for PEPFAR’s Supply Chain Management System (SCMS) to purchase antiretroviral drugs (ARVs) on the international market at prices lower than those paid by the government of South Africa. PEPFAR South Africa and the SCMS team did a quick cost comparison of our prices versus the Government of South Africa’s prices and, working closely with our partners at the Ministry of Health, agreed on a list of ARVs for which we could get particularly competitive pricing.

Last year we completed the procurement of more than $70 million of the total $110 million with more than 7 million units of ARV’s being distributed to the provincial depots.  Comparing our prices with those paid by previous South African procurements, we saved $61 million (46 percent) procuring generic ARV’s purchased at international prices.  PEPFAR’s investment showed it was possible for the South African government to match international prices and set informal benchmarks for subsequent purchases.

In December, South Africa’s Minister of Health, Dr. Aaron Motsoaledi, announced success with South Africa’s own procurement of ARVs noting a “massive reduction in the prices of antiretroviral drugs which has resulted in the 53.1% reduction in the cost of the total tender which translates to a R4,7 billion [US$630 million] savings. The percentage decrease in the cost of each item ranges from 4% to 81% implies that South Africa can now afford to treat twice as many people on ARVs compared to that which was previously budgeted.”

By the end of this two-year initiative, PEPFAR’s investment of $110 million will have leveraged about $90 million in savings from SCMS’s procurement and a further $600 million for the South African government.  That’s quite a return on investment.