The pharmaceuticals industry is set to challenge the 3.28% Single Entry Price (SEP) increase for 2023 endorsed by the Minister for Health Joe Phaahla on recommendations of the pricing committee.
The industry said it was disappointed that not only was the increase lower than the consumer price index (CPI) (at about 7%) but was also far lower than an increase granted to Medical Aid schemes of between 8 and 9%.
“Industry intends constructively and cordially approaching both the Ministry and the Pricing Committee to understand how the 3.28% was arrived at and to make representation in order to see what additional relief might be possible,” Chairman of the Pharmaceutical Task Group (PTG) Nicolaou Stavros said.
In a notice last week, Phaahla said he had determined that price adjustments be not greater than the 3.28%.
The single exit price is the price of medicines at the factory gate and includes a logistics fee to cover the cost of transporting the goods to retail outlets.
SEPA only applies to the private sector and not the public.
Stavros said the PTG, which represents 80% of industry would meet next week to consider its options but would not rule out making an application for a special determination to challenge the increase and hopefully bring it closer to the CPI related rate as have previous adjustments.
“We are concerned about the sustainability of supply. In these circumstances where the inflation rate is increasing and the exchange rate rate remains weak, it is not sustainable for the industry. Like all business, we are affected by inflation and then to get half of that makes you wonder what methodology was used by the Pricing Committee, it is out of kilter with the reality,” he said.
He said the adjustment should strike a balance between providing access to the medicines for patients on one hand and providing for a sustainable industry on the other.
“Disruption of industry does not augur well for long term medicine supply,” he said.
According to the notice, an adjustment in the SEP in terms of this notice may only be implemented by the manufacturer or importer of the relevant medicine or scheduled substance no later than 32 working days after the date that the manufacturer or importer has communicated the information requested by the Director-General.
It states that applications for adjustments of the SEP may only be submitted for the first time on January 11 and no later than 23 February this year. All medicines and their related pack sizes with SEP approved with an effective date not later than 23 December, 2022 are not eligible for SEPA 2023.
“An applicant may only submit once in the 2023 cycle unless a re-submission is made for eligible medicines that have not been previously approved for an adjustment in the 2022 period in which an application was made,” it said.
Stravos said the industry would consider all its options and was aghast that the production and supply of medicines was being made uneconomical.
“We are not oblivious to the economic circumstances but we will go the route of applying for an extra-ordinary pricing mechanism if we have to because we feel this is an unfair decision,” he said.
Phaahla in 2021 gazetted the regulated maximum increase of 3.5% for the single exit price for 2022 for medicines and scheduled substances supplied by the private sector.
BUSINESS REPORT