Features, South Africa

How Medicine Prices are Regulated in South Africa

Executive Director of the Self-Medication Manufacturers Association of South Africa, Nicola Brink, explains why and how medicine prices are regulated in SA.

Medicine Prices - EHN

Executive Director of the Self-Medication Manufacturers Association of South Africa (SMASA), Nicola Brink, explains why and how medicine prices are regulated in South Africa.

Improved access to healthcare services has been a focal point in South Africa for more than 20 years. To this end, various transparent price control mechanisms have been introduced to regulate prices in the South African pharmaceutical market, including capped annual price increases and mandatory generic substitution for medicines with expired patents. This said, the patient may still choose to buy originator products.

In 2004, the government introduced transparent pricing for medicines, including a single exit price (SEP) for medicines sold in the private sector, and put a stop to discounts and additional levies on medicines. The SEP is the price at which a manufacturer must sell to all pharmacies, irrespective of volume sold. The introduction of the transparent pricing ensured that no-one could supply medicine according to a bonus system, rebate system or any other incentive scheme, including sampling of medicines. It should be noted that SEP applies to medicines which can only be bought in a pharmacy; medicines such as paracetamol, which you can buy in a supermarket, are not subject to SEP.

Why SEP was introduced

SEP was, and is, good news for consumers. The SEP, which allows for the addition of a dispensing fee in order for the pharmacist or dispensing doctor to make a small mark-up, has helped to discourage the unnecessary use of high-cost products and is aimed at making medical scheme contributions more affordable, and making private healthcare accessible to more South Africans. The combination of the introduction of SEP and capped annual price increases led to an overall decrease of 22% in medicine prices in South Africa in the first year after the introduction of SEP.

Research shows that consumer access to essential medicines in developing countries is mainly driven or blocked by price. At the time of formulating the SEP legislation in South Africa, medicine price inflation, medicine price transparency, and medicine price uniformity were all significant problems in an unregulated medicines market.

Medicine price inflation was in fact in the double digits during the 1990s and early 2000s in South Africa, and it was impossible to determine the true price of a medicine given the proliferation of discounts and rebates through private arrangements between medicine manufacturers, distributors, and retailers; and as a result, patients were, in reality, paying different prices for the same medicines depending on where these were accessed.

SEP aims to address these issues by reducing medicine price inflation, improving medicine price transparency, and ensuring patients pay the same price for medicines irrespective of where they buy them – from pharmacies, hospitals or dispensing doctors.

The price of a medicine may differ slightly from pharmacy to pharmacy, or from dispensing doctor to dispensing doctor however, although there is a set maximum dispensing fee, no minimum dispensing fee is stipulated.

Benefits of medicine price regulation

Because of the rising cost of healthcare, many South Africans have less money to spend on doctors’ visits. More consumers are therefore opting for self-medication, a trend encouraged by widening access to the internet. People are going online to find healthcare information which, in turn, is increasing their confidence in their ability to self-medicate.

Aimed at ensuring the affordability of quality medicines, SEP offers consumers several benefits in this regard:

  1. You know what you can expect to pay when you get a prescription from your doctor
  2. You know the maximum price that you should be paying for your medicines
  3. You can ensure that you are not being overcharged for your medicine
  4. You can find possible generics for branded prescribed medicine, which are often more cost-effective alternatives

Consumers can easily access SEP information from the South African Medicine Price Registry at www.mpr.gov.za.

Every year, the Minister of Health determines the extent to which the SEP may be adjusted after taking into account the recommendations of the Pricing Committee. This price adjustment is based on inflation and the need to ensure the availability, affordability and quality of medicines in the country.

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