Meds and you

13 November 2006

Tariffs may close pharmacies

As a result of the fact that the government's latest pharmacy tariffs are still too low, hundreds of pharmacies across the country might have to close their doors.

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As a result of the fact that the government's latest pharmacy tariffs are still too low, hundreds of pharmacies across the country might have to close their doors.

That is what a number of pharmacists' organizations said last week after having spent a week analysing the impact of the new tariffs.

Groups that differed about medicine prices before the court case held a joint media conference for the first time last week. Among those present were representatives of the Pharmaceutical Society of South Africa (PSSA), black pharmacists, courier pharmacists and a retail pharmacists' organization.

After the PSSA forced the government by means of legal action to revise the previous tariffs, among which a maximum of R26 for medicine costing more than R100, the government came up with new tariffs, which will be applied from 1 January.

The new tariffs would be as follows:

  • Medicines with a single exit price (SEP) less than R75 - R4 plus 33% of the (SEP).
  • Medicines that cost between R75 and R250 - R25 plus 6% of the (SEP).
  • SDP between R250 and R1 000 - R33 plus 3% of the SEP.
  • Medicines that cost more than R1 000 - R 50 plus 1,5% of the SEP.

The pharmacists are of the opinion that this is still not enough, but are not sure how the pricing committee made their calculations. They have made an appointment with the medicine pricing committee of the Department of Health to discuss the issue and also await the committee's report.

According to the studies done by the pharmacists, it costs approximately R29,81 per item to fill a prescription, while the pricing committee said during preliminary discussions in March that R16.30 should be enough. These amounts are based on the average cost of filling a large number of prescriptions.

The pharmacists are also of the opinion that their salary forms part of the cost of filling a prescription and that a part of the delivery cost should also be included. The department however did not include these two amounts in its calculations presented in March.

The pharmacists are also dissatisfied with the amount of R3 (7.3%) which the committee said should be a fair return on investment (ROI) per item. Auditors from PriceWaterhouseCoopers helped the pharmacists to decide on an ROI of R5.43 (20%) per item as being more suitable.

This means that according to the pharmacists they should be getting R35.24 per item, while the pricing committee said in March that R19.30 should be enough.

The new tariffs mean that 75% of pharmacists, depending on the amount and the kind of medicine they mostly sell, would only earn up to R23 per item, while only those earning R27 or more per item would have a chance of surviving.

Translated from an article by Antoinette Pienaar, Beeld, November 2006

 

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