The deadline for public comment on Government’s controversial medicine pricing regulations has come and gone.
These are predicted to have the intended effect of reducing the cost of drugs, although the extent of the savings is likely to be smaller than anticipated.
According to Adrian Baskir, executive at Old Mutual Healthcare: “Single exit pricing of manufactured drugs will trim some fat in the pharmaceutical sector and bring prices down.
“The regulations are about delivering more affordable health care and will potentially give consumers and medical scheme members access to enhanced benefits or reduced contributions.”
Government’s recommendations are aimed at driving down medicine prices by between 40% and 70% by establishing a single exit price for drugs, and by capping the distribution and dispensing fees added at each stage in the supply chain.
The draft proposals set a limit for the exit price of 50% of manufacturers current net price as reflected in the so-called “Blue Book” as at 16 January 2004. The maximum distribution and dispensing fees are proposed to be R6 and R24.
Some industry players, including drug manufacturers, private hospitals and retail pharmacies, have reacted negatively to the regulations. These are set to be promulgated for implementation in early May 2004.
In particular, the industry has suggested that the limits are too low.
“The regulations show that Government is serious about reducing expenses in the pharmaceutical sector and we support this. Of paramount importance is that the quality of care available to patients should not be compromised.
If cheaper medicines is the outcome, medical scheme members can expect their benefit limits to last longer and to have improved access to medicines.”
Baskir expressed concern that the costs will simply be shifted elsewhere in the supply chain as those impacted seek to replace their profits elsewhere.
He added that medical scheme trustees and their administrators will need to be more vigilant to ensure that cost savings achieved as a result of the medicine pricing regulations are not consumed elsewhere.
“The Government also needs to ensure that the final regulations do not promote inappropriate provider behaviour to the detriment of consumers,” he warned.
“Certain drugs, particularly those that are costly and not frequently used could be withdrawn from the market as they become less financially attractive to manufacturers.
“The single exit price may only be increased once a year. While we support this in principle, reality is that a worsening in exchange rates, for example, may make withdrawal a better alternative for manufacturers than continuing to supply a drug at a loss.”
There may also be delays in the arrival of newly established drugs, and care will have to be taken not to destabilise the retail delivery network, especially in rural areas.”
“Cheaper medicines is a laudable goal. However, if this were to happen at the expense of a pharmacy closing down or a doctor no longer dispensing, the consumer will be worse off.
"The final regulations will therefore need to achieve a fine balance between removing unnecessary fat while retaining access,” said Baskir.
“If this were achieved, the consumer and patients would be better off."