Eastern Cape health department spokesperson Sizwe Kupelo said the employee worked at the Frontier Hospital in Queenstown as a clerk.
He was stopped during a routine security check at the gate and found to be in possession of stolen ARVs.
"The private security company which is rendering security services at the hospital opened a case with the police and the official was handed over to the police," Kupelo said.
"During a recent stock count at the hospital's pharmacy - some drugs were found missing," he said.
Kupelo said the department praised the "excellent" work by the security guards.
"The arrested official will also be subjected to internal disciplinary process in connection with the theft incident," he said.
"We wish to warn all corrupt elements within the system that, the department will act decisively against anyone found guilty of fraud and corruption."
Kupelo said the department was conducting an investigation relating to fraudulent and suspicious legal claims lodged against the department.
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