South Africa’s Health Minister Manto Tshabalala-Msimang is standing firm on her government’s interventions aimed to bring down the price of medications — in spite of legal action being taken against her department.
Speaking during her vote in Parliament on Thursday she said: ”Our research indicates that large profits are being made on the sale of medicines.”
”Indeed, it is widely admitted that medicine prices are often higher in South Africa than in many developed countries. What is bitterly disputed is who benefits from unjustifiable profit margins.”
”Until recently manufacturers charged different prices to different customers using a complicated system of rebates, discounts and other incentives. Some companies did this to a much greater extent than others. As a result it was very hard to know the price of a drug as it left the factory gate.”
Wholesalers and distributors added their mark-ups to the manufacturer’s price and retailers then added their mark-up. ”These amounts were totally unregulated. The consumer knew that the price of medicines differed hugely depending on which pharmacy you went to. But nobody could say for sure who was taking excessive profits.”
The medicines pricing regulations in terms of the Medicines and Related Substances Amendment Act scraps and outlaws all discounts, rebates and other incentives, requiring manufacturers to set a single exit price for each product.
The exit price was regulated through a prescribed formula and the wholesalers and distributors fees were incorporated into the single exit price.
Noting that these were being challenged in the Cape High Court, she said the single exit price was already in operation and had not been affected by the application to court.
The department had received 22 lists of single exit prices from various manufacturers and importers. ”We are currently analysing the impact of this provision on prices. But we recently quoted an analyst who suggested that prices of medicines have dropped by 16% to date. We should soon be in a position to give our own assessment.”
”What I must point out is that the basis for calculating the single exit price will change when we will require companies to benchmark against an international average price for each product.”
Although she said she wanted to ‘steer clear of the issues’ involved in the Cape High Court action ”as we will be arguing before a full bench today and tomorrow”, she said that unlike some of the applicants, her departments has respect for the sub judice rules and ”we do not go about cynically disguising ourselves as consumers in order to argue our case through expensive adverts in the national press”. – I-Net Bridge