THE proposal for a National Health Insurance (NHI) scheme in South Africa has been under debate for the last few years. Economists have particularly debated the issues on the shortage of human resources, the shortage of healthcare facilities in the country and the overall financial sustainability of such a scheme in South Africa. Sceptics have even put forward numerous hypotheses on why such a scheme would not become reality in South Africa. However, following the announcement by Health Minister, Aaron Motsoaledi on the finalisation of the NHI policy document for first submission to cabinet, and the subsequent allocation of a portion of the national budget towards NHI, in February, the question is now "when, as opposed to if NHI happens". Although pharmaceutical expenditure has been observed to grow significantly with the implementation of NHI schemes in several countries, little has been put forward on what the potential impact of NHI would be to the pharmaceutical space in South Africa. What then, should pharmaceutical companies be pondering, as we all anxiously await the outcome of the policy document promised to be released "soon"?
Frost & Sullivan's Healthcare Research Analyst, Tinotenda Sachikonye said it was certain that the implementation of NHI would increase consumption of prescription medicines, especially considering that the proposed scheme was comprehensive and would cover the cost of these. With the implementation of NHI, it was expected that more people would seek medical care. Furthermore, at the heart of the proposed scheme is the focus on primary and ambulatory care, which is cheaper than hospital care. It has been observed in several countries, that primary and ambulatory care results in higher prescriptions after doctors' visits. Sachikonye noted that with this in mind, lucrative opportunities should be expected in the pharmaceutical space with implementation of NHI, but asked if this would really be true. The reality is, given South Africa's current fiscal position, sustainability of the NHI scheme will be of key importance. Demand for prescription medicines will increase, but so will the stringency of cost containment strategies according to Frost & Sullivan. Cost containment policies to control pharmaceutical expenditure have been observed to be more effective when targeted towards the supply side. Furthermore, cost containment on the demand side, particularly in the form of flat co-payments, would not be in the spirit of NHI in South Africa as this would make medicines inaccessible to the poor. Already, some cost-containment measures, such as price control in the form of the single-exit price in the private sector, are in place in South Africa. Sachikonye said that based on experiences of other countries, more cost containment measures could be expected: some that would benefit certain pharmaceutical players, whilst threatening the survival of others. For example, Frost & Sullivan anticipates a system of mandatory generic prescribing and dispensing under which only generic medicines will be reimbursed under the NHI scheme.
Sachikonye said this would benefit the generic players at the expense of the branded players. In addition to mandatory generic use on the scheme, limited formularies would probably be put in place. Only drugs on the formulary would be paid for by the NHI. This would be to the advantage of companies whose medicines were on the formulary, most likely those with the lowest-priced product, unless some form of pharmaco-economic evaluation was put in place. Such measures are used under the NHI scheme in Ghana. Frost & Sullivan also expects more defined application of "drug use reviews", particularly in terms of prescribing habits. In Romania, for example, the Romanian NHI Fund publishes a list of prescribers on their website that tend to over-prescribe. Such measures might be employed to deter prescribers from over-prescribing, which would limit the demand for pharmaceuticals, in order to contain costs. Although the cost containment strategies for pharmaceuticals highlighted above are by no means exhaustive, and their likelihood, as well as the manner in which they may be implemented is uncertain, Frost & Sullivan believes that the dynamics in the pharmaceutical space will change under NHI. Sachikonye said branded firms should be pondering whether it is worth their stay in South Africa under NHI, or at least strategise on how to remain afloat with this change in regulations. He asked if it would be worth staying just for the supply of niche medicines for which there were no generics. Another consideration was whether local generic firms would meet the anticipated increased demand; or whether this would increase South Africa's reliance on generic medicine imports.
BusinessLive, 13 May 2011
