south africa - the south africa coesa cheaper meicines for consumers medicine prices in south africa
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By Francois van Schalkwyk, Andrew Young and Stefaan Verhulst
Code4SA Cheaper Medicines for Consumers
OPEN DATA FOR DEVELOPING ECONOMIES CASE STUDIES www.odimpact.org
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License
By Francois van Schalkwyk, Andrew Young and Stefaan Verhulst**
Code4SA Cheaper Medicines for Consumers
OPEN DATA FOR DEVELOPING ECONOMIES CASE STUDIES* www.odimpact.org
* Project conducted in collaboration with the Web Foundation, United States Agency for International Development (USAID), and the Mobile Solutions, Technical Assistance and Research (mSTAR) program at FHI 360.
** “Special thanks to Akash Kapur who provided crucial editorial support for this case study, and to the peer reviewers [odimpact. org/about] who provided input on a pre-published draft.”
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SUMMARY In 2014, Code for South Africa, a South Afri- ca-based non-profit organization active in the open data space, took a little-known dataset from the national Department of Health website and created the Medicine Price Registry Application (MPRApp, https://mpr.code4sa.org/), an online tool that allows patients to compare medicine prices. MPRApp allows patients to compare the costs of doctor-prescribed medicines with those of other (e.g., generic) medicines containing the same ingredients. It also helps patients verify that they aren’t being overcharged by their pharma- cies, and ensures cost-savings for both patients and society without compromising on efficacy. It was initially expected that middle- to upper-class
patients with better online access would be the primary beneficiaries of MPRApp. However, there is evidence that doctors also use the informa- tion provided by MPRApp to save their patients money. Because MPRApp currently relies on the time and skills of its developer to ensure regu- lar updates its continued use and impact remains uncertain unless sustainable funding can be se- cured. With no marketing or promotions to speak of, MPRApp has had an impact on the lives of a few South Africans; with a sustainable model and increased awareness of MPRApp, particularly among trusted intermediaries in the health sec- tor, it could provide many more patients access to cheaper medicines.
SOUTH AFRICA: CODE4SA CHEAPER MEDICINES FOR CONSUMERS Open Data for Developing Economies Case Studies
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CONTEXT AND BACKGROUND PROBLEM FOCUS/COUNTRY CONTEXT
Healthcare in South Africa is provided by pub-
lic hospitals and clinics, and by private hospitals
and doctors. Private general practitioners (GPs),
with surgeries across the country, are the first
port of call for many middle-class South Africans
seeking medical advice and who can afford pri-
vate consultation fees that range from USD 20
to USD 50. For those who cannot afford private
GPs, state medical facilities such as clinics and
hospitals provide the only alternative. Many mid-
dle to upper class South Africans take out med-
ical insurance (or “medical aid” as it is known in
South Africa) to cover the cost of private hospi-
talization and/or day-to-day medical expenses.
Medical doctors prescribe medicines, and phar-
macies dispense medicines. In the case of pri-
vate doctors, the doctor will prescribe a specif-
ic medicine and the patient will purchase the medicine from a private pharmacy. The patient
has access to a choice of medicines, and there are likely to be both branded and generic alter- natives to medicine prescribed by a doctor. In some cases, if doctors are unfamiliar with the alternatives available for a particular medicine, they may leave it up to the pharmacist to pro- vide the patient with an equivalent alternative (and may request this on the prescription note). However, the possibility of alternatives will de- pend on the availability of the medicine from the pharmaceutical company or distributor, and on whether the alternative medicines are stocked by the pharmacist. In the case of the public sys- tem, there is no or very limited choice available to the patient if the patient elects to obtain their medication from the dispensary at a public hos- pital. Public hospitals stock only those medicines made available to them through the public pro- curement system, and will typically only stock one brand for each type of medicine.
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er sMedicine prices in South Africa are regulated by
the government,1 and generic medicines that are cheaper than their brand-name equivalents are approved by the government to provide patients2 with access to more affordable alternatives.3 Moreover, legislation introduced in 2004 prohib- its drug firms from giving customers in the private sector discounts or rebates; they are required to sell their products at what is known as the “single exit price” (SEP) to all buyers. The national gov- ernment’s Department of Health is required by law to publish an annual notice of the maximum price hike allowed. In order to make medicine prices transparent, and in keeping with the Reg- ulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances,4 the Department of Health publishes a publicly-acces- sible SEP database on the Medicine Price Regis- try website (http://www.mpr.gov.za/).
The problem in the regulated market for pharma- ceuticals in South Africa is that doctors do not al- ways prescribe generic medicines, and although pharmacists are obliged by law to offer private pa- tients lower-priced generic medicines, this does not
1 The restructuring of the South African public health sector resulted in the development and implementation of the National Drug Policy in 1996. The primary objective of the Policy was to decrease the cost of medicines in both the private and public sectors. In 1997, the Medicines and Related Substances Control Amendment Act 90 was gazetted. It allowed government to reduce the cost of medicines.
2 Patients in the public healthcare system access prescribed medication via hospital dispensaries. These dispensaries are stocked with publicly procured medicines. Patients do not have a choice as to which medicine they receive and they do not pay for the medicines as they are charged a single fee (determined by their income level) for both the consultation and the medicines prescribed.
3 V. Bangalee and F. Suleman, “Has the Increase in the Availability of Generic Drugs Lowered the Price of Cardiovascular Drugs in South Africa? Health SA Gesondheid, 21, No. 1 (2016), pp. 60-66.
4 Medicines and Related Substances Act, 1965, Department of Health, South Africa, 2004, http://www.hst.org.za/ uploads/files/pricing_system_for_medicines.pdf.
5 M. Deroukakis, “Mandatory Substitution Successful,” South African Medical Journal, 97, No. 1 (2007), pp. 63-64. 6 Health24, “Cost of Medicine in South Africa Set to Skyrocket,” March 30, 2016, http://www.health24.com/Lifestyle/
Health-and-your-money/News/the-high-cost-of-medicines-in-south-africa-20160323. 7 Ibid. 8 The issue of the prices of medicines in South Africa and their affordability relative to international prices is not
addressed here partly because there is limited research available on the issue (see, for example, A. Makholwa, “Medicine Pricing: New prescriptions needed,” Financial Mail, January 30, 2014, http://www.financialmail.co.za/ features/2014/01/30/medicine-pricing-new-prescriptions-needed.), partly because there is unevenness in the affordability of medicines across different medicines types in the South African market, and partly because the specific problem here is the lack of information available to support informed medicine purchasing decision-making.
always happen.5 According to an article in Health24, a South African consumer health site, only 56 per- cent of patients in the South African private health sector use generic medicines while the global norm is closer to 80 percent.6 Price differentials between branded and generic medicines can be signifi- cant, and this affords private patients with greater opportunity to choose cheaper alternatives than those seeking care in the public sector. According to a study conducted by Bangalee and Suleman, of the 346 branded drugs in the study’s sample, the median cost differential was 50.4 percent; 75 per- cent of the generic drugs considered were more than 40 percent cheaper than the branded version.7 Although public patients encounter the biggest problems (since they are not given a choice of med- icines), private patients also suffer from this price dif- ferential as they lack access to information allowing them to identify and purchase more affordable alter- native to those prescribed.
As noted in the text box, medicine price data is actually published by the Department of Health (DoH) and available online. However, th