SINCE it became clear that the government would go ahead with plans to introduce the National Health Insurance (NHI) scheme, there has been a huge focus on whether the current private medical aid companies will survive or not. This is because the general feeling is that the NHI will be competing directly with the schemes and that it would be mandatory for people to contribute to the NHI fund first before they can top up their cover if needed. There are those who are of the opinion that it will be too much for the public to afford both. Of course, if the NHI turns out to offer a "comprehensive" cover, as has been suggested, there will not be a need to add on private cover. Now, it looks like there is another segment of the health sector that should be concerned with the NHI around the corner. According to commentary released by Frost & Sullivan, the pharmaceutical industry should also be pondering what the new health funding plan will mean for it. The company said it was certain that the implementation of the NHI would increase consumption of prescription medicines, especially because the scheme was promising a comprehensive package. But Frost & Sullivan healthcare research analyst Tinotenda Sachikonye also warned that while demand for prescription medicines would increase, so would stringent cost containment strategies. He said that some cost-containment measures, such as price control in the form of the single exit price in the private sector, were already in place in South Africa. Sachikonye said based on experiences of other countries, more cost containment measures could be expected: some that would benefit certain pharmaceutical players, while threatening the survival of others. The industry will definitely pay attention to the opinions expressed by Frost & Sullivan, but the information will really become useful when the official document has been published and everybody has a clear picture of what the NHI in the country will look like.

Business Watch: Business Report, 13 May 2011