THE high cost of new medicine for chronic diseases was threatening the sustainability of SA’s medical aid industry, delegates attending the Discovery Health Summit on Medicine in Johannesburg on Tuesday heard.

Unless something was done urgently, rapidly rising medical aid premiums would never be contained.

Medical schemes have come under severe pressure from the cost of treatments for illnesses such as cancer, diabetes and hypertension as global pharmaceutical companies launch new drugs at prices that developing countries are battling to afford.

Gilead’s Sovaldi, which is used for the treatment of hepatitis C, has generated heated debate across the world with its price tag of US$84,000 for a 12-week course.

Cancer is a particularly big issue, with estimates by research firm IMS that spending on all oncology drugs will reach $100bn in 2018, up from $65bn in 2013.

"High-cost drugs are a big issue. As Discovery Health, we are tremendously worried about the impact of these new oncology drugs on the sustainability of the schemes that we administer, as well as the other schemes on the market," Discovery Health CEO Jonathan Broomberg said.

"The question is: how can a medical scheme afford a product that is going to cost between R1m and R2m per patient per year, bearing in mind that the average premium per year is roughly R30,000 to R40,000?" he asked.

In 2004, government introduced the single exit price list to regulate price increases for all medicines in private healthcare.

Gavin Steel, chief director for sector-wide procurement at the Department of Health, said the introduction of single exit prices brought prices down in 2005, but the effect had probably run its course and a new method was needed.

Plans to introduce an international benchmarking method were at an advanced stage and a government gazette would be out in a matter of weeks, Dr Steel said. However, he warned that the method would have limited impact, just like the single exit price list, on new drugs.

Dr Broomberg called on the health industry to work with government and drug producers to ensure that SA got prices that were commensurate with the economic level of the country.

He proposed that government helped medical schemes get the volume discounts its got from pharmaceutical companies for high-cost medicine.

"We’ve had some discussions with the department along those lines over the years," he said.

Beyond pricing, Dr Broomberg proposed that SA considered the introduction of a risk-sharing arrangement, in line with international trends. One way of doing this was through an agreement between funders and drug producers by which manufacturers undertook to refund the payer for treatment that did not work.

Dr Steel said that before the introduction of risk-sharing agreements, SA needed to start doing pharma-economic evaluation.

This is a sub-category of health economics in which the value of one pharmaceutical drug or therapy is compared with another.

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