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Get more “bang for your buck” with generic medicines

01 November 2011 Dr Tumi Seane, Sechaba Medical Solutions

The Department of Health and Council for Medical Schemes have expressed displeasure at the inflation-plus annual increases in South Africa’s healthcare space. That’s why they’ve embraced the cost and benefit improvements that generic medicines offer...

The cost of medicine has been singled out as a major contributor to the inflation-plus medical aid contribution increases announced each year. Dr Tumi Seane, Managed Care Services Executive at Sechaba Medical Solutions, says generic medicines can be used to curb costs and assist members in getting the most from their medical scheme benefits. Generic medicines are cost-effective copies of original brand-name drugs – and they’re growing in popularity.

A profit guarantee

Why are generic medicines so much cheaper! It takes millions of rand to research and develop a new drug. In order to recover from the financial investment governments award pharmaceutical manufacturers a 10 to 17-year patent for exclusive research and development (R&D) of new drugs. The patent prohibits other pharmaceutical companies from “copying” the drug during that time frame. This process ensures the profitability of new drugs and encourages pharmaceutical manufacturers to continue their R&D work.

“After the patent period expires, other companies can manufacture medication with the same active ingredient and in the same form, creating a generic medicine,” says Seane. “The generic drug is more affordable because the manufacturer bypasses the development costs.” All generic medicines have to be registered with the Medicines Control Council to ensure that effectiveness and quality match the original brand product.

Same drug at half the price

It is important that all stakeholders understand that generic medicines offer similar quality and effectiveness to the mainstream product… Under no circumstances is quality compromised to generate a quick profit. Even so, doctors can prescribe generic drugs that cost 50% to 60% less than the brand-name equivalent.

While the clinical benefit is usually identical, the financial benefit of the use of generics to the scheme and its members is substantial. “From an administration perspective, medicines account for up to 20% to 25% of healthcare costs for medical schemes. The savings that schemes see as a result of the use of generic medicines allow for more benefits to be passed on to members. Nowadays where a member chooses to use a brand name instead of the generic they are responsible for the difference in price – a standard practice for most medical aid schemes in South Africa,” he says.

Gaining popularity

The use of generics also results in price competition between generic medicine manufacturers, leading to lower prices for similar product! As they gain in popularity these drugs are increasingly found on the formulary drug list which is used at design stage for care plans and treatment protocols.

While the financial benefits are real, Seane believes communication regarding these benefits is essential to promote the use of generics. He says that administrators and schemes are in regular communication with pharmacies, medical practitioners and members about the benefits of generics in a drive to increase usage. “The benefits of generics are significant and can make an impact on the bottom line for members and schemes. It’s up to administrators and schemes to communicate these benefits to decision-makers in order to see a shift in associated costs,” he concludes.

Cutting costs together

Medical administrators, schemes and government are hard at work to reduce the costs of providing healthcare in South Africa. Companies such as Sechaba wholeheartedly support the use of generic medicines where a generic equivalent is available, provided the drug is clinically suitable for the treatment of the particular illness, both in and out of hospital.

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