Patients in the emerging health-care market — notably in urban townships and rural areas — will in future have less accessibility to the medicines that are becoming more affordable to them in the wake of new government legislation.
This is the contention of Suhail Gani, CEO of Johannesburg-based empowerment group Amalgamated Healthcare, one of the largest independent distributors of pharmaceutical products to the predominantly black mass-market-focused dispensing doctor community.
“Against the background of the Medicines and Related Substances Control Amendment Act — and its single exit-price requirement in particular — most multinational drug companies are flatly refusing to pay a distribution fee to companies, like ourselves, which specialise in supplying medicines into the emerging market,” says Gani.
“It is interesting to note that generic drug producers, by contrast, are not taking the same line.
“Because of the rebuff by the multinationals, it is no longer viable for independent wholesalers and distributors like Amalgamated Healthcare to continue to be a vital — and, in many areas, the only truly effective — link in the medicine supply chain to the masses via dispensing doctors.
“The net result is that, in the case of our group, thousands of rural and township patients — particularly those on chronic [patent] medication for conditions such as diabetes and hypertension — will in future have difficulty obtaining medicines from the 5 500 dispensing doctors to whom Amalgamated Healthcare has traditionally supplied,” says Gani.
He said his organisation may well seek government intervention in an effort to find a solution.
The looming accessibility problem was confirmed by Dr Kabs Makaba, CEO of Faranani Health Solutions, an emerging market-focused network management company that is contracted with health-care funders to provide — through its membership list of 1 500 dispensing doctors — a full patient-care service that includes the provision of medicines.
“Critical to the success of this capitation — as opposed to fee-for-service — health-care system is ongoing access to medicines. The reported refusal by most multinational drug producers to pay a distribution fee to companies which not only understand the rural and township medicine markets but also know their way around them is a serious threat to the supply chain that delivers into those markets,” says Makaba.
As an example, Gani says a delivery address could be “Dr So-and So’s surgery in Zone B Soweto, which is opposite the broken bus around the corner from Maria’s shebeen”.
“Deliveries to addresses such as this are an everyday occurance for Amalgamated Healthcare’s drivers, who have built up — over a period of 20 years — an in-depth knowledge of the high streets, byways, dirt tracks, lanes and footpaths in township and rural markets.
“There is a growing perception that some of the pharmaceutical majors are less than enthusiastic about doing business in these markets. Concern about the ‘integrity of delivery’ — which is polite-speak for fear of the threat of hijacking — is said to be a major underlying reason.
“The potential for bad debt is another apparent factor — although the fact that wholesale/distribution companies like ourselves generally carry the risk is conveniently overlooked,” says Gani.
Some multinational producers have made the point that they already pay fees to exclusive distribution agencies for getting their products into the market and there is, therefore, no need for them to fork out additional fees for other distributors.
“The question is, how effective are these exclusive agencies — three of which account for almost 70% of distribution in the R12-billion-sales-a-year pharmaceutical sector — at fully covering the mass market?
“If, indeed, they want to,” Gani concludes. — I-Net Bridge