A new dispensing fee for medicine will come into effect from Wednesday, the Department of Health announced in Johannesburg on Tuesday.
Where the single exit price (SEP) of a medicine is less than R75, the dispensing fee will be R4 plus 33% of the SEP, Director General of Health Thami Mseleku said at Gallagher Estate, Midrand.
Where the SEP is R75 or more but less than R250, the dispensing fee will be R25 plus 6% of the SEP. In the case of a SEP of R250 or more but less than R1Â 000, the dispensing fee will be R33 plus 3% of the SEP. Should the SEP be R1Â 000 or more, the dispensing fee will be R50 plus 1,5% of the SEP.
The new fees were set by the pricing committee, ordered by the Constitutional Court last year to reconsider a fee of 26% of the SEP, capped at R26. Pharmacies had complained that the prices would put them out of business.
Ivan Kotze, executive director of the Pharmaceutical Society of South Africa, which is also a member of the Pharmacy Stakeholders’ Forum, told the Mail & Guardian Online on Tuesday that the society is somewhat disappointed by the new regulations that have been proposed.
“We are glad there is finally an announcement on the dispensing fee … but we are disappointed that it is significantly lower than what we feel is necessary for continued viability and pharmaceutical sustainability,” Kotze said.
He said that what is needed is a more formal evaluation of the fee by the society before an official statement can be made. “It is a complex fee and the effects of it need to be analysed,” he said.
He added, though, that the society “most certainly will approach government” with recommendations and submissions regarding the pharmacies’ point of view in this matter.
Stability
New Clicks Holdings welcomed the new fee. “It is now critical that we have stability in the pharmacy sector, which has been operating in an environment of uncertainty for far too long,” New Clicks head David Kneale said in a statement.
He said the collaborative process followed by the department has resulted in a workable and transparent pricing model that provides a fair return to pharmacists and benefits customers.
The committee also announced an increase in the annual SEP for 2006/07. The SEP should be a maximum of 5,2% of the ex-manufacturer price, said Mseleku. The increase should be based on the SEP at October 1.
The pricing committee also recommended the implementation of international benchmarking, and identified Australia, Canada, New Zealand and Spain as countries with a similar medicine regulatory environment as South Africa.
The deadline for public comments on this issue is the end of January and the Department of Health hopes to implement the system by the middle of 2007.
Cost benefits
Mseleku dismissed claims that already-reduced medicine costs are not filtering through to consumers.
They are benefiting those who pay cash for medication — not because they are getting discounts, but because they are paying the same as medical-scheme members.
Even medical-scheme expenditure has dropped 22% since the regulation of dispensing fees first entered the public arena, he said.
However, that saving is not being passed on to members because there are increases in other sectors, most significantly private hospitals and specialists. Those areas are also being looked at, Mseleku said.
Pricing-committee head Anban Pillay said pharmacies will have to implement the new pricing structure immediately but will have until the end of January to iron out teething problems.
The department will also be encouraging pharmacies to post explanatory notices in-store, similar to those in use when value-added tax was first introduced.
The dispensing fee will apply to medicines of schedule one and upwards. It will include schedule-one or -two medication dispensed over the counter, even in the absence of a prescription.
It will not apply to dispensing doctors. Submissions in this regard are still being sought.
Survey
Pillay said in March this year that the department had sent questionnaires to all 2Â 532 pharmacies in the country to try to determine the appropriate fee. “We received only 162 analysable questionnaires back,” he said.
The survey showed that some pharmacies would not be viable no matter what prescription fee was charged.
Although pharmacies have argued that the government’s involvement is unconstitutional, the Department of Health is adamant that a free market cannot work.
“This is an industry that has been built on perversities. The idea that the healthcare industry is there to benefit the patient is in fact a falsity,” Pillay told the M&G in March. “It is a system that has been able to extract as much as possible from those who are in greatest need.”