Medicine makers await price hike decision

Pharmaceutical manufacturers are anxiously waiting for health minister Aaron Motsoaledi to make a decision on their request for an extra price increase on medicines to compensate for the rand’s slide, after an advisory committee submitted its recommendation to him last week.

Manufacturers usually get one increase a year for private sector prices, but the minister has the power to allow an extra increase, and has previously done so.

He will have to weigh up the concerns of an industry that says it was hard hit by a January price increase that failed to cover rising input costs against the prices charged to consumers and medical schemes.

The weak rand has made imports more expensive and squeezed pharmaceutical manufacturers’ margins: they cannot pass on their increased input costs to consumers because medicine prices are controlled by the health department.

The rand has shed 19% of its value against the dollar since the start of 2018 and closed at R15.24/$ on Friday.

Pharmaceutical manufacturers raised their concerns with the minister and his officials in August, before meeting the medicines pricing committee, which advises the minister. The committee’s chair, Fatima Suleman, said at the weekend that it had made its recommendation to the minister.

The health department’s deputy director-general for National Health Insurance, Anban Pillay, said a decision on whether to allow an extra price adjustment had yet to be taken.

Pharmaceutical Task Group spokesperson Stavros Nicolaou said the weak exchange rate threatened the continued supply of some products. He conceded regulatory provisions allowed drug makers to seek permission to raise the price of individual products if they had become unprofitable, but said the process was bureaucratic and companies have had “marginal success” with it in the past.

The Pharmaceutical Task Group represents SA’s key associations for drug manufacturers.