Medicine price increases capped for 2020

Medicine price increases will be capped at 4.53% for 2020, according to reports.

The announcement was published in the government gazette last week,with health minister Dr Zweli Mkhize noting that that applications for adjustments of the single-exit price could be submitted for the first time from January 10 to no later than February 28.

Increases were capped at 3.78% in 2019.

The department determines the maximum price increase using a formula that factors in CPI, PPI as well as the exchange rate and international prices. It maintains tight control over medicine prices to ensure that companies do not pass margin strain onto consumers through higher prices.

Earlier in the year, the pricing committee said it would constantly review the formula used to determine the price caps, taking into account stakeholder feedback, but it would be consistent for at least the next three years (through to 2022).

Healthcare changes in South Africa

The price adjustments come amid a host of changes to South Africa’s healthcare landscape, with the introduction of the National Health Insurance being at the top of the pile.

Along with the NHI, medical aid schemes and private healthcare practitioners are preparing themselves for a shake-up in the industry.

The first moves along these lines was the recent “shock” announcement by the Council for Medical Schemes (CMS) that no Low-Cost Benefit Options (LCBO) will be allowed for low-income consumers and no health insurance products will be allowed beyond March 2021.

The decision by the CMS is purportedly to align such products ‘with the broader health policy discussion that seeks to ensure adequate access to care, irrespective of the economic status of the population’, the regulator said.

It said the concept of these low-cost schemes is to provide private healthcare to lower-income households, but its assessment of the situation showed that they were not offering the same level of care, and were often sending patients to government hospitals anyway.

The move has been criticised by some sectors, saying that it makes healthcare even more inaccessible for poorer households.

The NHI itself is facing major backlash from the private healthcare sector, with questions still remaining around costs, the source of revenue to finance the scheme, and how government – which has failed to successfully run any state-owned entity – will operate the scheme.

NHI is expected to roll out slowly – “at an affordable pace” – over the next six to seven years.

Read: South Africa’s ‘shocking’ new medical aid changes make way for the NHI

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Medicine price increases capped for 2020