The national Department of Health has been asked to explain how it devised this year’s minimal 1.47% increase for private sector medicine sales, with the umbrella body for pharmaceutical manufacturers threatening legal action if there is not full disclosure, reports Business Day.
Long-standing friction relating to the department’s medicine pricing committee’s calculation to set the annual single exit price (SEP) adjustment, which caps the price increases manufacturers may impose on medicines sold in the private sector, has reached boiling point, say industry players, who have regularly complained that the annual SEP increases fall below their expectations and that the committee’s work is opaque.
With the Middle East war stoking cost pressure on the drug manufacturing industry, the pharmaceutical task group has written to the health department asking for full disclosure of the pricing committee’s methodology for setting the 1.47% increase.
The group says it has repeatedly and unsuccessfully asked for this information, and that the lack of transparency is at odds with the Promotion of Administrative Justice Act.
The latest increase is markedly below consumer price inflation (3.6%), sectoral salary increases (6%) and the tariff increase guidance for 2026 issued by the Council for Medical Schemes (3.3%), it added.
With the geopolitical turmoil and weakening exchange rate adding pressure, the group has also asked for a 1.73 percentage point adjustment to the SEP, to take the total for 2026 to 3.2%. The rand has depreciated by almost 6% against the dollar since the start of the war.
“Sustainable and efficient medicine supply is the cornerstone of a well-functioning healthcare system, and the group has noted with concern the rising geopolitically related input costs, which, if left unaddressed, will place significant stress on sustainable medicine supply,” said its Chair, Stavros Nicolaou.
“This concerning development has been further compounded by the department having granted the industry a meagre 1.47% increase earlier this year, which was less than half of inflation at the time.
“With inflation set to rise because of geopolitical tensions, we are appealing to the department of health to grant the industry an exceptional increase of a further 1.7%, which would take the aggregated increase to the inflation rate as it was prior to the rising input costs,” he added.
The pharmaceutical task group includes the Innovative Pharmaceutical Manufacturers Association of SA (Ipasa), Pharmaceuticals Made in SA, Generic and Biosimilar Medicines of Southern Africa, and the Self-Care Association of South Africa.
The health department had not responded to Business Day’s request for comment at the time of publication.
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