Has the increase in the availability of generic drugs lowered the price of cardiovascular drugs in South Africa?

Abstract

Background: This research focuses on pharmaceutical competition in South Africa where concurrent pricing legislation is being implemented without monitoring the consequences on generic drug competition and usage.Objective: To examine the relationship between originator drug prices and the number of generic brands within the cardiovascular class of drugs and to compare South African prices with international reference prices.Method: Data on private sector drug prices was sourced from the South African Medicine Price Registry. The relationship between the median proportional price and the number of brands in the therapeutic class was analysed using correlation analysis. International reference prices were obtained from the Management Sciences for Health International Drug Price Indicator Guide (2012 edition).Results: A weak correlation between originator and generic drug prices and the number of available brands was observed, the exception being diuretic drugs. The median prices per strength of the originator generic were still higher than the most expensive generic version manufactured by any other company, the exception being telmisartan. Comparison of price ratios between the originator drug, lowest priced generic and international reference price values revealed that the originator drug prices had a median price ratio of 20.99 (interquartile range 7.31—53.46) and the lowest priced generics had a median price ratio of 4.28 (interquartile range 2.10—8.47).Conclusion: Increased generic competition is not a predictor of lower drug prices. The study also concludes that the current South African pharmaceutical policies have not yet achieved the lowest prices for drugs when compared internationally.

The impact of the single exit price policy on a basket of generic medicines in South Africa, using a time series analysis from 1999 to 2014

“…Directly after the introduction in 2004 of the SEP the difference between the price of the originator molecule and their cheapest generic showed a 11.1 fold increase in South Africa, in line with Cameron and Laing (2010) [25] suggestion for LMICs. Bangalee, et al revealed in their study on cardiovascular drugs a 40% difference in prices of generics against the branded versions, [7] and this is confirmed in the pre 2004 comparative in this study (42.9%). This study further suggests that the introduction of the SEP increased this differential, at least in the global core basket, to 111%.…”

“…This supports the observation by Bangalee and Suleman (2015) that originator companies do not engage in price competition. [7] This may also provide a reason for eight (8) of the fifty (50) originator molecules being withdrawn after 2004.…”

“…[6] The pricing committee made recommendations to the Minister of Health to implement the Single Exit Price (SEP) in 2004, effectively moving the private sector from a free market to a regulated environment. [7] The components of the single exit price include the ex-manufacturer price combined with the logistics fee (as determined by the manufacturer) and Value Added Tax (VAT). [8] The SEP for each medicine in the market in 2004 was a mandatory declaration of the weighted average of all 2003 sales after taking into account all discounts and off-invoice rebates.…”

“…[9] Further, the 1997 amendments to the Medicines and Related Substances Act in terms of section 18A, prevented pharmaceutical manufacturers from offering discounts and or rebates. [7]…”

Is there transparency in the pricing of medicines in the South African private sector?

“…[ 2 ] The loss of benefits to consumers resulting from the high levels of discounting and payment of incentives within the pharmaceuticals supply chain had raised serious concerns in the National Department of Health and made it difficult to determine the true price of a medicine. [ 3 ] The single exit price (SEP) regulation, first introduced in 2004 for all medicines in the private sector, is an example of SA’s attempt to control prices and improve pricing transparency in the supply chain. The SEP, which is a composite of the ex-manufacturer’s price, logistics fee and value added tax (VAT), standardised in SA at 14%, mandated that manufacturers sell their products at one price to all their customers (other than the State), regardless of the nature of the customer’s order size and consumption levels.…”