THERE are not many parts of the private healthcare sector where thriving competition holds prices down and consumers benefit. But the generic drug market is just one such place, as pharmaceutical manufacturer Adcock Ingram yesterday revealed. CEO Jonathan Louw told investors the pharmaceutical division had been forced to slash the price of its generic anticholesterol drug, simvastatin, after rivals flooded the market with clones. Adcock's experience is a classic example of the risks and benefits of the generic field. Simvastatin was developed by MSD and sold under the brand name Zocor. When its patent expired in 2003, Adcock was first out of the starting blocks in SA with a generic version, which it sold at about a 30% discount: a 20mg prescription cost just under R100. By selling its version for less than the innovator, Adcock Ingram was able to capitalise on government regulations favouring generics over innovator medicines when they were cheaper and to grow its market share. But since then, a host of copycat products have hit the market (almost a dozen generics now), and even the innovator has dropped its price. Adcock Ingram has repeatedly had to cut prices to maintain volumes. By May last year, Adcock's competitors had cut their price to R60. In October, the price fell to R35. A month later, Adcock cut a deal with its suppliers to enable it to drop its price to just under R30 and regain market share. Now that's a tale to make both regulators and consumers smile.

Nick Wilson: The Bottom Line: Business Day, 26 May 2010

THE government is again busy with a plan to set up a structure that will determine the prices that should be charged by service providers in the private healthcare sector. It is reported that Health Minister Aaron Motsoaledi wants to establish an independent commission that will look at pricing in the sector with the aim of regulating charges. Motsoaledi is said to have told the Board of Healthcare Funders that he was asking the Competition Commission to consider exempting medical schemes from the Competition Act until such a commission was in place. Two years ago, the former Health Minister, Manto Tshabalala-Msimang, published the National Health Amendment Bill which had the same objective - to regulate pricing in private healthcare. But Tshabalala-Msimang's move did not receive the warm reception given to Motsoaledi's suggestion. The industry was up in arms, threatened court action and accused her of interfering. Eventually, it was announced that the National Health Amendment Bill would not be adopted because the government was focusing on introducing a national health insurance scheme. The Hospital Association of SA said it welcomed engagement and looked forward to discussing the matter with Motsoaledi. The thorny issue with Tshabalala-Msimang's proposal was that she would have the final say on the prices charged. Motsoaledi's idea would probably be different to that of his predecessor, but the objective is still the same - to regulate pricing in the healthcare sector. So, was the industry fighting against the principle or the person, Tshabalala-Msimang?

Slindile Khanyile: Business Watch: Business Report, 26 May 2010

NEW HIV infections in South Africa could be almost eliminated by combining prevention tools that have been proven to reduce transmission, an expert on the virus told a conference in the US yesterday. Dr Susan Buchbinder said scientific trials had shown that medical male circumcision, condoms and the prevention-of-mother-to-child therapies lowered the risk of infection. In South Africa an estimated 1 600 people a day are infected with HIV. But microbicides have not yet been shown to block the virus. For this reason, the 1000 delegates at the M2010 Microbicides conference in Pittsburgh, US, are eagerly waiting for the results - to be released in July - of the first human clinical trial to test an antiretroviral drug-based microbicide. The microbicide has been tested in a study led by University of KwaZulu-Natal Professor Salim Abdool Karim. Another prevention strategy being tested in South Africa is PrEP (pre-exposure prophylaxis), in which HIV-negative people take antiretrovirals to stop infection. Mitchell Warren, executive director of global advocacy organisation AVAC, said not only was South Africa at the forefront of testing individual approaches but it was leading the development of combination prevention, which was clearly the only way to truly end the epidemic. Three microbicide and PrEP trials are under way at sites across South Africa, another is taking place among couples in which one partner is positive and the other negative, and the country has been involved in vaccine trials.

Claire Keeton: The Times, 26 May 2010

STATE mid-level doctors hope to reach an agreement with the Department of Health on salary increases this week. The two parties will reconvene on today to continue the second round of negotiations of the state's occupation-specific dispensation (OSD) programme, according to Mark Sonderup, vice-chairman of the South African Medical Association (Sama). Since last Monday, Sama representatives and department officials have been in discussions over the department's offer to increase wages by between one and three percent for mid-level doctors, such as junior and senior specialists and clinical managers. However, many state doctors are unhappy with the offer, and Sonderup said little progress had been made since the new round of negotiations began last week. Wage increases under last year's OSD settlement benefited primarily the most junior and most senior medical officials. The second round of negotiations is expected to focus on salaries for mid-level doctors.

Nathalie Tadena: The Star, 25 May 2010

ANDREW Lansley, the new British Health Secretary, has outlined the coalition government's plans for health and social care and revealed that a new independent commission will be set up to provide advice on the future funding of long-term care. Personal budgets will be rolled out to older and disabled people, while direct payments to carers will be increased. The government also wants to improve community-based provision to improve access to respite care. The NHS will also be reformed to improve patient outcomes, Mr Lansley said. He said the vision was for a healthcare system which achieved outcomes that were amongst the best in the world, and free from day-to-day political interference. He promised to cut bureaucracy and hand back power to clinicians and patients to ensure they were at the forefront of decision-making about NHS services. Mr Lansley insisted that the proposals would "drive up standards of care, eliminate waste and lead to better outcomes".

Netdoctor.co.uk, 24 May 2010

WOOLWORTHS and private hospital group Netcare have pulled the plug on a three-year project to test the demand for upmarket retail pharmacy outlets. The pharmacies situated in Woolworths stores that opened in Kloof Street, Cape Town, and Athol Square in Johannesburg, in 2007, and one that opened in Eastgate Mall in Johannesburg last year, would close at the end of next month, the two companies said. Zyda Rylands, Woolworths MD for food, said pharmacies were an innovative idea at the time but Woolworths now had other retail priorities and, unfortunately, pharmacy was not one of them. Netcare CEO Richard Friedland agreed, saying a venture of this nature was not core to the business of Netcare. Pricing regulations prevent pharmacies from being money spinners, but they do attract customers to stores. Woolworths' rival, Spar, said this month it would open its first branded pharmacy in Shelly Beach, KwaZulu-Natal, next month. Shoprite has 100 pharmacies in its stores. Woolworths and Netcare said the pilot pharmacies, which targeted "customers who placed a premium on the value of their time", had dispensaries stocked, staffed and managed by Netcare, while over-the-counter health, wellness and beauty products were supplied and managed by Woolworths, but the response was weaker than expected.

Michael Bleby: Business Day, 24 May 2010

A SMALL but growing number of American physicians are abandoning traditional insurance-based practice to offer VIP treatment, including more time with patients, in return for upfront fees. In one common setup, often called concierge or retainer-based medicine, a primary care doctor charges an annual fee ranging from $1 000 to $20 000 just to get in the door. When doctors shift to this model they can cull their patient loads, selecting only those who can foot the bill. The services they provide often include a deluxe annual physical, 24-hour direct cell phone access to a doctor and escorts on visits to specialists. Some doctors still accept insurance and Medicare and bill normally for routine care. Others opt out of that system in order to charge what the market will bear. Some healthcare experts view this as an ominous trend that could exacerbate socio-economic disparity in the healthcare system in light of a looming doctor shortage. They say this development could be especially troublesome once the new healthcare law adds millions of Americans to the health insurance rolls and sends them looking for doctors. The healthcare legislation recently signed by President Barack Obama is aimed at lowering costs and adding insurance coverage for more than 30 million people starting in 2014, including 16 million new Medicaid and Children's Health Insurance Programme members. But it does not account for the projected shortfall of 35 000 to 44 000 new primary care doctors, nurse practitioners and physician assistants that are choosing alternate disciplines because of increasing workloads, low reimbursements, a paperwork burden and a huge gap in pay compared with medical specialists. A 2009 survey of general practitioners by the American Academy of Family Physicians showed that 42 percent were not accepting new Medicaid patients. Sixty-five million Americans are already living in areas the government has deemed short of primary care practitioners. Concierge-style medicine is one way that overloaded doctors have chosen to respond. The American Academy of Private Physicians, the trade group representing the concierge care movement, says more than 1 000 doctors have gone this route. By another measure, 1.2 percent of respondents to AAFP's survey say they practice concierge, boutique or retainer medicine. While fee-for-service or "private" doctors have long existed, primary care doctors began converting to the concierge model about 15 years ago. Companies came along to help doctors set up these practices and handle the administration. The largest, MDVIP, has more than 380 doctors. The American Medical Association says there is nothing inherently wrong with concierge-type of arrangements. However, its ethics manual cautions that they "not be promoted as a promise for more or better diagnostic and therapeutic services." That puts concierge doctors, particularly those who offer traditional service as well, in the awkward position of trying to promise patients that they are getting something for the extra money while telling the rest they are not giving up any medical services. Groups that support concierge physicians say the cost - about $4 per day in most cases - is not prohibitive, and that it comes down to a question of choice in the marketplace.

Adam Graham-Silverman: Kaiser Health News, 20 May 2010

HEALTH Minister Aaron Motsoaledi is proposing an independent commission to regulate prices in the private healthcare sector, paving the way for a cap on the fees doctors and hospitals charge their patients. In stark contrast to former Health Minister Manto Tshabalala-Msimang, Motsoaledi has quietly been meeting industry groups since he took office last year, gauging their positions and trying to achieve a broad consensus before policy and legislation are drafted in the hope that this will avoid the barrage of litigation Tshabalala-Msimang faced over her attempts to set prices. Almost all of her attempts to do so floundered. The legal row over the dispensing fee for pharmacists has not yet been resolved, and the Department of Health's attempts to publish a tariff guide for doctors is also still tied up in court. In 2008 she introduced the National Health Amendment Bill which introduced measures to regulate prices with a tribunal appointed by the Minister to oversee the process. But that bill did not make it into law. Tshabalala-Msimang's predecessor Nkosazana Dlamini-Zuma also faced litigation from the private sector with pharmaceutical groups challenging her bid to control medicine prices. International pressure ultimately forced the drug companies to withdraw the case.

At the heart of the government's struggle to curb rising private healthcare costs is a controversial ruling by the Competition Commission in 2004 that scrapped collective bargaining between medical schemes and service providers. The ruling, which found the parties had colluded to set tariffs in contravention of the Competition Act, was handed down in the hope that market forces would prevail and that competition would keep prices low. But six years down the line, the ruling has had unintended consequences. Motsoaledi said there needed really clear caps, adding that all in the sector - the Competition Commission, the Departments of Trade and Industry and Economic Development, the Council for Medical Schemes, the Board of Healthcare Funders, medical professionals - needed to get together and find a proper way to regulate prices. Motsoaledi declined to provide details of his proposals, saying only that the pricing arbiter should be at arm's length from his department. He said the Minister of Health could never be regarded as a neutral arbiter as he had only one goal - to make healthcare as affordable as possible.

Nevertheless, Motsoaledi's broad ideas appear to be an open secret in most of the industry. At a meeting with the Board of Healthcare Funders (BHF), the Council for Medical Schemes, and the Competition Commission in February, he made clear that he was unhappy with the status quo and suggested a commission along the lines of the National Energy Regulator of SA that would assess whether the fees proposed by service providers were fair and reasonable. BHF chairman Humphrey Zokufa said the BHF supported the idea of a pricing commission as individual medical schemes had little bargaining power with large service providers such as hospital groups. However, reaction was more muted among doctor groups, giving an indication of the challenges facing Motsoaledi. South African Medical Association chairman Norman Mabasa said he supported the proposal provided the commission included a wide range of stakeholder groups and did not represent vested interests. Chris Archer of the Private Practitioners' Forum, which represents specialists, said pricing must take into consideration the cost of running a practice, adding that any method that did not would cause serious problems. Private hospital group Life Healthcare MD Michael Flemming said he was unaware of the Minister's proposals, and would prefer the market to determine its own prices, as he did not believe in collective bargaining.

Tamar Kahn: Business Day, 19 May 2010

DRUG maker GlaxoSmithKline plans to double revenue from India and China by 2015 as the company cuts medicine prices to catch up to Pfizer, Sanofi-Aventis and Novartis in emerging markets. GlaxoSmithKline aimed to beat the industry's 12 percent to 14 percent growth in developing country sales, according to Abbas Hussain, the president for emerging markets at the London-based company. According to IMS Health, which tracks pharmaceutical sales, worldwide drug revenue will increase at least five percent a year through 2014. Hussain said the difference underscored the importance of winning business in emerging markets. He said there was a land grab going on right now because there was very little or no growth in the US and Europe. GlaxoSmithKline's sales in emerging economies have jumped 50 percent since 2007 to £3 billion (R32.6bn) last year. Hussain, hired in 2008, has been credited with increasing the sales force and snapping up smaller rivals. GlaxoSmithKline now had 13 000 sales representatives in emerging markets and would expand further, especially in China, Hussain said. The company has been slashing prices of products in emerging markets by as much as 70 percent. The company defines emerging markets as Latin America, Africa, the Middle East including Turkey, Russia and former Soviet states, India and China. Sales in those countries, excluding swine flu products, grew 17 percent last quarter. GlaxoSmithKline also has looked for growth through acquisitions. In December last year, the company bought Algerian drug maker Laboratoire Pharmaceutique Algerien for £26 million and paid £87m for NovaMin Technology of the US.

Trista Kelley: Bloomberg via Business Report, 18 May 2010

SICK soccer fans who do not speak English will not have to worry about their needs being lost in translation when they seek medical help during this Fifa World Cup. A major pharmacy chain has introduced a translation system to help bridge the language divide between pharmacists and their customers who cannot speak South African languages. Jan Roos, head of Clicks pharmacy operations, said the biggest thing was to help our customers in their home language, and it was quite important that they understood how to use the drugs that they required. Roos said his pharmacies will use an online translation system operated by Yahoo, known as babelfish. Sick foreign customers will type a complete sentence describing their symptoms, in their indigenous language, into the computer. The sentence will be translated into English for the pharmacist who will then be able to dispense the appropriate medication there and then, explaining which medicines to take and giving the correct doses.

Harriet McLea: The Times, 17 May 2010