* Cipla named as one of firms dropping out of tender process
* Health secretary says looking into possible shortages
* Activists, industry officials blame supply chain bottlenecks (Adds comments from government, industry officials, details)
By Zeba Siddiqui and Aditya Kalra
MUMBAI/NEW DELHI, Sept 4 (Reuters) - Indian HIV patient Rekha has missed her daily dose of medicine several times over the last few months because the government distribution centre at New Delhi's Lok Nayak Hospital ran out of drugs.
"Sometimes they give it to me for one week, sometimes two weeks, but not more. They keep saying the drug has not arrived from NACO," said Rekha, referring to India's National AIDS Control Organisation (NACO), a part of the healthcare ministry.
The community motivator at an HIV/AIDS support group, who declined to give her surname, cannot afford to buy the drugs on the open market.
Like thousands of other HIV/AIDS sufferers, she relies on free antiretroviral drugs handed out at state-run healthcare providers supplied by NACO through a tender process.
But they are facing shortfalls that have been blamed on supply bottlenecks, late payments to drugmakers and at least one large Indian manufacturer boycotting the process.
Some drugmakers stopped participating in the government's tender process over the past year because of delays in getting paid, said Leena Menghaney, an activist with the medical charity Medecins Sans Frontieres (MSF).
India had the third largest number of people living with HIV in the world at the end of 2013 and accounts for about four out of 10 people living with HIV in the Asian region, according to the U.N. AIDS programme UNAIDS.
Out of 2.1 million HIV/AIDS patients in India, about 750,000 people depend on the free distribution of drugs through government-run centres, according to NACO.
A senior official at the Maharashtra State AIDS Control Society, a government body, said the agency was facing a shortage of three HIV/AIDS drugs - two for treating children and one for adults.
The society, in the western Maharashtra state whose capital is Mumbai, is looking to get those drugs from other states where it is available, said the official, who declined to be named.
"There have been complaints, I won't deny that. But what they (NACO officials) say is that the situation is not as alarming as has been painted, so I have asked them to give me the facts," India's Health Secretary Lov Verma told Reuters.
"We are looking into that matter, we are trying to find out where the shortages exist and how we can address them."
Activists and A.S. Rathore, deputy director general of NACO, named Indian drugmaker Cipla Ltd as one of the firms that had stopped bidding in the tender process. Activists said delayed payments were the reason for the dropout.
It was not immediately clear which other companies had withdrawn from the bidding process in the recent past. A large number of domestic and overseas companies participate in the process to supply HIV/AIDS medicines and testing kits.
Cipla, which made headlines in 2001 by making antiretroviral medicines to treat AIDS in Africa for under $1 per day and is a major producer of HIV drugs for children, did not respond to a request for comment.
Rathore said HIV/AIDS drugs were not out of stock in India, and the government agency had advised state governments to use contingency funds to buy drugs from the retail market in case of shortages. He denied the department had delayed payments.
"Cipla is making drugs for tuberculosis, leprosy and cancer, etc, but for HIV they are not bidding because they are getting more margins from exporting the drugs," he said. "Individually we cannot pursue companies."
Several government distribution centres in states including Maharashtra, Gujarat and Karnataka are facing shortfalls because NACO has not supplied adequate quantities, activists said.
NACO's Rathore said states were often to blame because they failed to provide a proper estimate of the number of drugs required. He added that NACO was working towards communicating better with states to resolve this problem.
With around 40 percent of the population in India living below the poverty line, healthcare is a luxury for many.
The poorest patients beg for treatment outside a chronically underfunded and overstretched healthcare system. Corruption and a sometimes dysfunctional supply chain mean drugs procured from companies for free distribution often do not reach them.
India has been providing free antiretroviral drugs for HIV treatment since 2004, but only 50 percent of those eligible for the treatment were getting it in 2012, a report last year by the World Health Organisation said.
According to industry officials, the first line of HIV/AIDS drugs costs about 3,000 rupees ($50) for one month's supply in the retail market in a country where, according to the World Bank, one in three were living on under $1.25 a day in 2009/10.
Drugmakers in India, the world's largest source of cheap generics, have been hit in the recent past by a raft of regulatory changes that included expansion of a list of drugs whose prices are capped.
"There are always payment issues when working with the Indian government," said Ramesh Adige, a pharmaceutical industry consultant and former executive director of Ranbaxy Laboratories Ltd.
"Lots of companies say they are getting nothing out of these programmes, but they cannot ignore the market," he said.
Delhi Network of Positive People, a trust that works with HIV/AIDS patients, is planning to file a lawsuit against the government over the shortage of the life-saving drugs in various states, said its president, Vikas Ahuja.
$1 = 60.4650 Indian rupees Additional reporting Aman Shah in MUMBAI and Frank Jack Daniel in NEW DELHI; Writing by Sumeet Chatterjee; Editing by Mike Collett-White and Matt Driskill