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New cap on Single Exit Price welcomed

By Sizwe Dlamini Time of article published Dec 18, 2019

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CAPE TOWN - The announcement by Health Minister Zweli Mkhize, that the Single Exit Price (SEP) of medicines and scheduled substances may be adjusted to a maximum of 4.53percent of the SEP of medicines and their related pack sizes, has been welcomed by the industry.

Mkhize said in a statement that this adjustment to a maximum of 4.53 percent was for the SEP of medicines and their related pack sizes that was available as at December 20, regardless of how that SEP was arrived at for the 2019 cycle.

He said applications for adjustments of the SEP could be submitted for the first time in 2020 from January 10, 2020, and by no later than February 28, 2020.

Pharmaceutical Task Group (PTG), which represents more than 90 percent of the South African pharmaceutical industry in value terms, welcomed the “timeous” announcement of the SEP adjustment for 2020 of 4.53 percent, compared with 3.78percent for 2019 and 1.2 percent for 2018.

PTG chairperson Stavros Nicolaou said in an interview on Tuesday that the adjustment represented a fair balance between inflationary increases in the businesses on manufacturers, which although exceed 5percent, continued to provide an accessible and sustainable supply of medicines to consumers, patients and funders.

“The timeous announcement is an important element in ensuring the sustainability of supply by manufacturers, as in previous years the notice has been somewhat delayed, which placed some strain on pharma businesses as they had to absorb inflationary increases while waiting for the adjustment to kick in.

“The timeous implementation is also important from a planning perspective and enables the pharma businesses and funders to better plan for the adjustment.

“Notwithstanding the adjustment, it is expected that the contribution of medicines to overall private sector healthcare spend will continue to demonstrate the declining trajectory that pharma has over the past decade,” said Nicolaou.

In his statement, Mkhize said all medicines and their related pack sizes with SEP approval with an effective date later than December 20, 2019, would not be eligible for a 2020 SEP adjustment. “An applicant may only submit once in the 2019 cycle unless a resubmission is made for eligible medicines that have not been previously approved for an adjustment in 2020 period in which an application was made.”

The final date for resubmissions will be April 3, 2020.

“An adjustment in the Single Exit Price 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 in terms of the notice published in terms of Regulation 21 of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled substances,” reads the Minister’s statement.

The implementation of SEP has always been a controversial matter as, while it allows pharmaceutical manufacturers to determine the launch price of their drugs, they may not raise their prices beyond the SEP set by the Minister of Health.

It effectively meant that the private pharmaceutical sector had to adjust from a free to a regulated market, where prices had to be cut and discounts discarded, according to Daleen Pretorius’ findings contained in a research report.


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