Pharmaceutical wholesalers proposed on Friday a gradual reduction in the manufacturer’s exit price of medicines instead of the immediate 50% slash the government wants to come into effect by May 2.
However, this alone will not enable the industry to survive, the National Association of Pharmaceutical Wholesalers (NAPW) said in a statement.
”The staggered implementation should be coupled with carefully thought-through amendments in regard to issues like the wholesale/distribution fee as well as the dispensing fee.”
The NAPW expressed concern over the potential domino effect of new draft government regulations on drug prices, saying they could cripple the entire medicine supply chain.
”The mandated 50% reduction in price will, simultaneously, result in a corresponding reduction in turnover, but does not automatically result in a 50% reduction in overhead costs,” said NAPW executive director Trevor Phillips.
The regulations, announced by the government last month, compel manufacturers and importers to drop by at least 50% the exit price of medicines as listed on Friday January 15. The new price cannot be increased for a period of one year.
Wholesalers or distributors can add no more than 15% to the manufacturer’s exit price of a medicine under R40, and a maximum R6 fee for more expensive drugs.
This is not viable, and will see wholesalers operating at a loss, the NAPW said.
”The profit margins of wholesalers are already very low,” according to Phillips.
”For wholesalers to survive even marginally, they would have to drastically reduce their product range and service levels, to the detriment of the South African population.”
The regulations determine that pharmacists can charge a dispensing fee of no more than R24.
This, the NAPW said, is insufficient for retailers to survive.
”The need for a strong and robust retain sector is of vital importance to all players further up in the supply chain, from manufacturers right through to distributors and wholesalers,” Phillips said.
”Without a strong and healthy retail base, none of these businesses will be able to continue. This is contrary to the fundamental objectives of the new health care dispensation to provide affordable, accessible and quality medicines to all.”
The organisation also warned the draft regulations could result in medicine shortages as wholesalers and retailers, running the risk of a significant depreciation of their stock’s value, would be inclined to stock as little as possible.
They may also be stuck with ”old stock” acquired at the old price, but which they would have to sell at a significant loss.
The NAPW said it intends making a full submission on its concerns to the Department of Health. — Sapa