Pharmacists bear the brunt of pricing regulation

This was the opinion of Professor Sarel Malan, director of school of pharmacy at University of Western Cape. He presented his perspective on the impact of pricing regulations on the viability of community, hospital and manufacturing pharmacy at the 2^nd International Pharmacy Conference in Durban.

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He said the “maximum” dispensing fee related to single exit price (SEP) legislation affects the income potential of pharmacists.

Any number of pharmacists providing the same service and selling the same drug, could all earn varying incomes due to the wording provided in the Act, which is not “fixed” pricing but stipulated as a “maximum” pricing.

In November 2010, the dispensing fee came into effect, and has been adjusted at various time. In July of last year, many industry members submitted requests for proposals for a methodology on a systematic review of a dispensing fee.

“Price control distorts the allocation of resources. Price ceilings cause shortages while price floors cause surpluses, at least for a time. There is also an unequal distribution of resources with 68% of pharmacists in larger cities, 27% in towns, while rural areas are severely underserviced.

In addition there were a number of pharmacy closures during 2008 and a marked decrease of first-year pharmacy students between 2005-2008, which coincided with the introduction of price regulations.

According to a Helen Suzman Foundation report: Pharmaceuticals in South Africa – An Enquiry, the three factors impacting individually owned pharmacies are: licensing – process and application of regulations; horizontal collusion – lease agreement in malls and exclusion of individually owned pharmacies from access – promoted by vertical integration.”

Continuing the debate on pricing structures, Mogologolo Pasha, CEO of Black IQ Pharma lambasted legislative powers on placing rulings on dispensing fees and not on other costs in the healthcare chain.

“Hospital costs and specialist costs have escalated. These are the interventions that are not regulated and this is where the cost lies. We’re grappling with regulation of healthcare interventions vs the regulation of medicine. The victims here then are pharmaceutical professionals.”

He advocated the concept of rational use of medicines, which requires that “patients receive medications appropriate to their clinical needs, in doses that meet their own individual requirements, for an adequate period of time and at the lowest cost to them and their community”.

A World Health Organisation study estimates that “more than half of all medicines are prescribed, dispensed and sold inappropriately”. This means that according to IMS Dataview’s 2015 South African Pharmaceutical Market Breakdown, of the 53,2bn counter units of medical product sold nationally, half of this was sold inappropriately.