Managed care initiative more important, as South Africans increase expenditure

Christo Rademan, MD of independent specialist pharmaceutical benefit management firm, Mediscor PBM, was commenting on the findings of the 2013 Mediscor Medicine Review (MMR), which examines and analyses the use of medicines among a sample of approximately 1.7 million medically insured South African private healthcare consumers.

"Against a background of increasing medical inflation, the increase in medicine expenditure is placing added strain on our healthcare funding clients. In light of this, it has become more important than ever to maintain control over costs by employing managed care initiatives, such as adopting medicine formularies and encouraging the use of generic medicines. Such initiatives should, however, never be implemented at the expense of medical scheme members."

He further noted that at 40% of total rand value and 49.8% of total item value, the greatest proportion of South Africa's private healthcare medicines budget has once again been spent on acute medicines. Medicine dispensed for the treatment of prescribed minimum benefit (PMB) conditions made up the next most claimed medicine grouping, with beneficiaries claiming on average 24 items per patient during 2013. The top three therapeutic categories remained unchanged for 2013, with blood pressure medication in first position, oncology medicines in second position and diabetes treatment in third position.

Escalation attributable to approved increases

According to Madelein Bester, manager: benefit management of Mediscor, the escalation in medicine expenditure comes as a result of a 2% increase in cost per item and is largely attributable to the 5.8% approved increase in the maximum single exit price (SEP) as approved by the Department of Health (DoH) in 2013.

"In the previous two years, SEP increases were not a factor as no increase was permitted in 2011 and a maximum increase of only 2.14% was gazetted by the DoH in 2012. From January to May 2013, 42.2% of manufacturers, representing 85.3% of products, took an increase in SEP of 4% or more. In 2012, the actual increase in the same representative basket of medicines was a mere 1.2%, when compared to the increase of 3.9% in 2013. It is worth noting that this was somewhat tempered by a 0.1% reduction in the utilisation of items per beneficiary," she explains.

"On a positive note, the use of generics again increased from 53.4% in 2012 to 54.5% in 2013. During the past year, the majority (74.8%) of all products claimed were genericised items and, in 72.8% of these instances, where a generic equivalent was available it was used. The on-going increase in the use of generics has resulted in significant savings for the healthcare consumer and medical schemes.

"The use of generics is encouraged through the implementation of formularies, reference pricing and other benefit design strategies. The MMR indicates that the cost effectiveness of generics is increasingly embraced by funders and ordinary South Africans alike."

She suggests that the industry should continue to educate consumers about generics while encouraging their use through drug formularies. "It is in everyone's interest that healthcare consumers use generics whenever they are available. This is one area where we can continue to make inroads and achieve savings.

Lifestyle medical conditions continue to worsen

It is of concern that medicines for the treatment of what are often lifestyle-related medical conditions, such as high blood pressure, high cholesterol levels, and diabetes continue to feature prominently in the top therapeutic groups. These three categories now represent as much as 21% of both overall expenditure and item volume.

"The top ten therapeutic groups, ranked according to expenditure represented 47.3% of overall expenditure and 39.8% of the volume of items claimed in 2013. The top three categories, namely antihypertensive, cytostatic and anti-diabetic agents, remained unchanged from 2012. This year acid-reducing agents displaced hypolipidaemic agents from the top five, which is not surprising now that generic versions of all the statins are available," commented Bester.

Top 10 expenditure

Top 10 therapeutic groups according to total expenditure in 2013:

Medical technology continues to advance as new and better therapies become available, many for conditions for which there previously was no safe and effective treatment. Many of these new chemical entities (NCEs), are so-called speciality medicines.

"These are agents, often biologicals, which can target rare or orphan diseases, require special storage or administration measures, and must be accompanied by intensive educational initiatives to ensure safe and effective management of the member's medical conditions," continues Bester.

NCEs are without exception costly and are potentially major drivers of medicine expenditure as they are still under patent and do not have generic equivalents. "The average cost per unit of an NCE is R747, which is 5.5 times greater than the cost of an established medicine. Fortunately, this high cost differential is offset by the fact that only 0.3% of all medicines claimed were NCEs and they were not listed among the top 50 products that were claimed.

"We have observed the increasing burden that treating complex conditions with biological medicines places on both members and schemes. Managed care organisations, such as Mediscor, have already put in place tight measures to ensure the appropriate use of speciality medicines," concludes Bester.