Health Minister Aaron Motsoaledi has announced a 3.78% annual
increase in the single exit price (SEP) of medicine for 2019 that will take effect next
month. Pharmaceutical manufacturers have been severely hit by this year’s low
1.2% SEP increase against the backdrop of the steep fall in the rand’s value
against the dollar in 2018 and have been lobbying the Minister for an
additional price increase of at least 2.8% in the past year as their input and
import costs skyrocketed.

But despite several meetings between the Department of
Health and the Pharmaceutical Task Group that represents most of the pharmaceutical
companies in the country the additional increase was not granted. The task
group also discussed the possibility of revising the mechanism used to
determine SEP increases and introduce a formula that brings the number closer
to inflation in a bid to provide greater certainty to drug manufacturers.  However, this request is still under consideration
by the Health Department’s Pricing Committee after consumers and medical schemes
vehemently opposed additional price hikes.

PTG spokesperson, Stavros Nicolaou told Business Day that
the 3.78% increase for 2019 is welcomed as it is closer to the current
inflation rate which was 5.2% in November.

“It is more closely aligned to trading conditions and its
more timeous implementation will assist the difficult environment and also
reduce administrative burden in the sector, per President Cyril Ramphosa’s call
to reduce red tape and reduce the cost of doing business in our country,” he told
Business Day.