Updated 22 January 2018

Expensive medications threaten medical schemes

New state-of-the-art drugs are exceedingly expensive and are proving increasingly challenging for medical schemes to afford.

New state-of-the-art drugs are constantly being introduced to the South African healthcare market and while these can have benefits for certain patients, some are exceedingly expensive and are proving increasingly challenging for medical schemes to afford.

This is according Dr Elsa Badenhorst of the pharmaceutical benefit management company Mediscor PBM who was commenting on the recently published research of the 2011 Mediscor Medicines Review (MMR). Mediscor explores medicine usage trends among a highly representative sample of some one million medically insured South Africans in this highly anticipated annual publication.

According to Dr Badenhorst the spend per medical scheme member on new chemical entities (NCEs), or drugs that were introduced between 2007 and 2011, increased 29.7% from 2010 to 2011. Dr Badenhorst says that this is a substantial increase and she is concerned that this situation is not sustainable for medical schemes into the future.

“Pharmaceutical companies put a great deal of money into drug development and it is understandable that they need to make a return on recently developed medicines while they still have the patent on them,” she adds. “This means, however, that many NCEs are relatively expensive and there is a concern that they are placing an increasing cost burden on medical schemes, which are often under a great deal of pressure to pay for such treatments. It is clear that this development needs to be carefully managed by medical schemes.”


Sustainability of medical schemes at risk

Dr Badenhorst says that some of the new cancer medicines that have recently come on to the market illustrate the issue well. According to the MMR, cytostatics, which include some biological agents, were responsible for 6.7% of medical scheme expenditure in 2011 while only making up 0.3% of the total item volume. It was the second most important group after anti-hypertensive drugs in terms of expenditure. Two cytostatics are included under the list of top 10 NCEs for 2011, the first products at an average annual cost per patient of R163 781 and the second at R189 827 per patient per annum.

Mediscor Managing Director, Christo Rademan, says that the medical scheme of today finds itself between “a rock and a hard place” when it comes to expensive innovator drugs. Expensive new categories of drugs such as high cost biologicals are threatening the sustainability of medical schemes. Although there is a strong demand for them, they are only indicated in certain cases.

“It is clear that the only way this challenge can be met into the future is for medical schemes, medical practitioners and the general public to understand the financial impact to medical schemes. Schemes need to manage the treatment of their members extremely well, as indeed many of them already are.”

Rademan points out: “Many members of the public do not understand that medical schemes have to perform a juggling act, making sure that each member gets the best possible treatment, while also keeping the interests of the broader membership in mind. Expensive innovative therapies need to be reserved for cases where the benefit is clear. A few members should not jeopardise the future of the entire scheme through the use of expensive experimental treatments. Each case has to be treated on its merits bearing in mind the most tried, trusted and cost-effective medications.”

Responsible medicine use

Rademan says that the responsibility of the medical scheme is to get this balance right while members should understand that they need to practise responsible medicine use. Members should also be aware that while many new drugs seem to promise much, they may be unproven for certain applications. Not surprisingly a medical scheme would not want to cover such treatments and prefer to follow a treatment route for which there is a scientific basis.

“We can establish a sustainable medical schemes sector in South Africa only if we can create a better understanding of the dynamics that drive healthcare costs higher and threaten the existence of the sector,” suggests Rademan. “And these threats can only be tackled if all stakeholders find a common purpose and work towards ensuring that the industry stays viable. To my mind this is a very urgent issue that requires immediate and decisive action.”

“Organisations such as Mediscor are fountains of information and medical schemes will increasingly need accurate information if they are to manage the challenges they face,” he concludes.

(Press release, August 2012)

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