The key factors influencing the increased cost per item were adjustments to the government-controlled ceiling price of medicines, changes to pharmacists’ dispensing fees and the extent to which generics were substituted for off-patent originator drugs. Picture: THINKSTOCK
The key factors influencing the increased cost per item were adjustments to the government-controlled ceiling price of medicines, changes to pharmacists’ dispensing fees and the extent to which generics were substituted for off-patent originator drugs. Picture: THINKSTOCK
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Medical schemes’ growing expenditure on medicines is largely driven by higher prices, not because people are sicker and using more products, says the latest Mediscor review.

Mediscor is an authoritative medical benefit management company that helps schemes control their pharmaceutical budgets. It publishes an annual assessment of medicine expenditure trends.

Its point about the impact of medicine prices on medical scheme expenditure comes at a critical time, as the pharmaceutical industry is lobbying the health department for an extraordinary price increase to offset increased import costs in the face of a weak rand.

Medical schemes have countered the industry’s appeal, saying they cannot afford further medicine price hikes in 2018.

Price increases

Drug manufacturers usually get one price increase a year for private sector sales, but there is scope for the health minister to allow an extra hike, as he did in 2016 when the rand weakened.

Mediscor’s latest review shows medicine expenditure per beneficiary rose 6.9% in 2017, primarily due to higher prices rather than increased utilisation. The average cost per item rose 6.3%, while the average number of items per beneficiary went up 0.6%.

The key factors influencing the increased cost per item were adjustments to the government-controlled ceiling price of medicines, known as the single exit price, changes to pharmacists’ dispensing fees and the extent to which generics were substituted for off-patent originator drugs. The single exit price adjustment for 2017 was 7.5%.

This continues the trend observed in 2016 and 2015 when overall spending rose 6.4% and 5.9%, respectively.

Mediscor scrutinises data from claims submitted by pharmacies, doctors and scheme members. It does not include SA’s two biggest schemes — Discovery Health Medical Scheme and the Government Employees Medical Scheme — but nevertheless captures a significant slice of the market, which has 8.9-million beneficiaries.

Its 2017 review highlights the growing cost pressures medical schemes face from expensive speciality medicines used by a tiny minority. Its analysis of the claims of 1-million beneficiaries shows just 0.2% of medicines dispensed in 2017 were speciality medicines, yet they accounted for 11% of the expenditure.

kahnt@businesslive.co.za

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