The massive buying power of the NHI, once fully implemented, could provide huge benefit to some pharmaceutical companies and big pharma retailers, say experts, but contracting would need to be negotiated, and there is – not wholly undeserved – scepticism about the state’s capacity to pay on time.
Since the drafting of the Act, numerous questions have arisen about the impact of the legislation on drugmakers and retailers, reports BusinessTech.
These include concerns over pricing regulations, procurement models, potential reductions in earnings for suppliers, and the need for collaboration between the public and private sectors.
Before the Bill’s signing, one of SA’s biggest pharmaceutical manufacturers, Adcock Ingram, wrote that “the impact on pharmaceutical companies is not explicitly outlined in the Bill, relative to how other stakeholders will be impacted”.
“The pharmaceutical procurement model is expected to be based on negotiated central pricing, combined with balancing of government policy which prioritises reduced medicine costs,” it wrote, “and the presence of a single purchaser of scheduled pharmaceutical products (Schedule 3 upwards) may give the Fund significant buying power.”
Expected impacts?
On how the NHI would affect the pricing and market access of pharmaceutical products, Dis-Chem CEO Rui Morais said the regulatory environment for medication pricing would govern this to a large degree, specifically single exit pricing (SEP) regulation.
Broadly, SEP regulation mandates that pharmaceutical companies set a single maximum price for each medicine, encompassing both the manufacturer’s price and the mark-up by wholesalers and retailers to ensure transparency and affordability.
“Healthcare providers (like Dis-Chem as a pharmaceutical retailer) with scale and a proven track record at offering lowest cost equivalent medication will be well placed to contract the government under NHI,” he said.
He added that retailers could play a crucial key role in providing access to primary healthcare services – notably access to medicine and primary healthcare clinics.
Contracting discussions have yet to start, however, “so it is not possible to offer a formal view”.
“But assuming that market-related commercial terms are agreed, and given Dis-Chem’s established infrastructure and scale, being a participating private sector service provider should not be revenue or earnings dilutive,” said Morais.
“The big unknown is NHI’s ability and reliability to pay providers.”
BusinessTech article – The companies that could be big winners with the NHI (Restricted access)
See more from MedicalBrief archives:
Adcock CEO upbeat about increased drug sales with NHI
Key healthcare players flag NHI risk
Strong support for curbs to Health Minister’s powers in proposed NHI