Pharmaceutical organisations committed to increased pricing
transparency will have a competitive edge as government pushes ahead with its
plans of expanding affordable healthcare to the masses through the
implementation of NHI.
This is according to Erik Roos, CEO of generics
pharmaceutical firm, Pharma Dynamics.
“Healthcare reform challenges all of us that operate
in the sector to keep and expand our place at the table. In its current form,
the proposed NHI is by no means perfect and there remains a lot of uncertainty
around funding, medical skills shortages, the role medical schemes will play
and how infrastructural problems, wastage and corruption in the public sector
will be tackled. It is becoming increasingly clear, however, that NHI is here
to stay, which makes it imperative for pharmaceutical companies to get involved
in the debate at the highest level to help shape a sustainable and effective
healthcare system for South Africa.
“Health firms need to ready themselves for the influx of
tens of millions new consumers – mostly of low income and how they are going to
care for them on a sustainable basis that focuses on disease prevention and management
as opposed to constant crisis management. Already more than 40% of deaths in
our country are associated with non-communicable diseases (NCDs). About 80% of
these diseases can be prevented if interventions are put in place to curb
unhealthy lifestyle behaviours early on.
“Access to affordable care for patients is the most
important component that needs to be considered in any health reform
legislation, therefore a great deal of focus will be placed on the price of
medication, devices and services. Providers operating in the sector need to
become resilient by connecting on a large scale to the culturally diverse
communities they serve while remaining cost effective,” says Roos.
The dilemma for hospitals is finding a way to provide more
access while simultaneously lowering costs. Doctors are likely to get caught up
in rapid industry consolidation and must adapt to new payment models, changing
traditional practices. As more people gain access to medicines via NHI,
generics are sure to grab a generous share of the pie, but the challenge for
pharmaceutical companies will be to remain competitive by providing more
cost-effective products, linked to other value-added benefits.
However, Roos warns that if government continues to award tenders
solely based on price under the NHI regime, that medicine shortages and
stock-outs – already a concern – could worsen.
“This will place tremendous pressure on pharmaceutical
firms, particularly suppliers of generic medication, who have already dropped
their prices significantly in an environment where annual increases are highly
regulated. Foreign investment is also likely to decline as multinationals
withdraw from the market and as a result patients’ needs will be compromised.
Shortages and supply chain breakdowns could also quickly spiral into outbreaks
of disease. To counter this, government could expand tax rebates for
pharmaceutical companies which will not only allow more patients to have access
to affordable medication, but also ensures the sustainability of the SA pharma
The local pharmaceutical industry employs more than 9625
full-time staff and contributes about 1.58% to South Africa’s GDP. It also
spends significantly on local socio-economic development initiatives and
training medical reps and healthcare practitioners on new pharmaceutical
molecules to ensure that medicines are appropriately administered. Continued
pressure placed on the price of generics under NHI, could over time degrade the
industry and lead to a lack of knowledge around the safe administration of
treatments, putting patients at risk.
Roos says it is imperative that the industry skilfully
navigates through the NHI conundrum, while managing the expectations of the
public at large.
“This seismic shift in healthcare won’t happen overnight.
Globally, National Health Insurance schemes, such as those in Europe, have
taken many years to implement and in SA it could take up to 14 years before the
NHI is fully rolled out, even though government is pushing for a 2026 deadline.
“Universal health coverage is a global priority and more
countries are adopting an NHI-type approach. Virtually all of Europe has either
publicly sponsored and regulated universal healthcare or publicly provided
universal healthcare. Yet, it is important to note that universal healthcare
doesn’t imply government-only healthcare, since many countries continue to have
both public and private insurance and medical providers. No flawless model
exists, but SA must attempt to augment its existing health system to
accommodate all of its residents by ensuring accessible and affordable quality
care, whilst buoying the healthcare industry as a whole.
“Government’s obligation to provide universal healthcare can
be complemented by leveraging the expertise of the private sector and
optimising business models to bring in more patients and reduce overall system
costs. There is a great need for medicine availability, skilled medical human
resources and quality care. A comprehensive approach should be taken in which
the quality of the healthcare system is improved simultaneously with the
rollout of the NHI, in order to benefit every South African,” concludes Roos.