Medicine pricing under the spotlight at BHF conference

The high prices currently being charged for healthcare are “a clear threat to the government’s ability to meet the population’s healthcare needs.”

This was the contention of Dr Anban Pillay, Cluster Manager, Financial Planning and Health Economics for the Department of Health. He was speaking at the Board of Healthcare Funders (BHF) conference, held recently in Sun City. The conference, titled The Turning Point, attracted over 900 local and international delegates from the healthcare industry, including healthcare professionals, policy makers and regulators.

Dr Pillay described the government’s proposal for a holistic approach to price setting, which will involve key departments and include input from key stakeholders. He thanked healthcare funders for their support but lamented the lack of support from service providers for the government’s proposal for a voluntary negotiating forum and warned that a legislative provision was likely to be the only option to bring both parties to the table.

“The idea of the negotiating forum was to provide guidelines for payments and to stop co-payments by patients at the point of service,” he said. “We want to balance market power through a transparent engagement platform.”

During question time, Dr Pillay was assured by a delegate representing a group of specialists that they were keen to engage with the government.

“If specialist groups are keen to engage, we welcome that,” he said. “It brings more people into the fold and just leaves one grouping outside: that is the private hospitals.”

Dr Pillay also explained his Department’s support for the methodology of international benchmarking for medicine prices.

“Our aim is to protect the South African health system from paying distorted prices for medicines through the elimination of price distortions and price distorting behaviour,” he said. This system takes the lowest commercially viable price from a basket of medicines sold in five countries: South Africa, New Zealand, Spain, Canada and Australia. The medicines are selected on the basis of quality and patent and price protection.

Prof. Praneet Valodia, Advanced Specialist – Health Intelligence Unit, Medscheme, pointed out in his presentation that the legislation to determine fair and reasonable prices for all had certainly been successful, with medicine costs to consumers and to the medical schemes only increasing by a total of 30.4% over the past five years. The downside has been that the dispensers of medicines have borne the brunt of these decreases.

Valodia also said that cost effective medicines become cost-ineffective if used badly and irrationally, and referred to a number of studies which show low adherence to treatment guidelines.

Johan Bothma, Executive Director, Community Pharmacist Sector of the Pharmaceutical Society of South Africa (PSSA) gave a stark insight into the way in which pricing has affected pharmacists.

“It is all a bit scary,” he said, pointing out that pharmacists are affected adversely by both the medical schemes’ formularies or Nappi codes as well as the government’s dispensing fee quantum.

“Pharmacists have a legal requirement to offer generic substitutions for medicines,” he said. “But we have no way of knowing that the generic we may have offered is not on the medical scheme’s formulary. All we get is a note refusing payment.”

Bothma also questioned the fact that the Act only makes provision of generic substitution, not therapeutic substitution.

“Who takes responsibility for a therapeutic substitution?” he asked. “If a doctor prescribes a certain medicine that the medical scheme does not cover, and the patient asks for that medicine and then has a problem, does the patient have recourse under the Consumer Act?”

He said that both the prescriber and the pharmacist should be indemnified “because the therapeutic changes come from the medical scheme.”

He also pointed out that there has been no increase in the dispensing fee for pharmacists since 2004, and said that it was becoming increasingly impossible for small corner pharmacies to make a profit.

Bothma also proposed the formation of a stakeholders’ platform to address the issues that affect all players in the sector.

“It is not about collusion, it is about working effectively together,” he said.