Aspen welcomes minister’s move

Aspen Pharmacare has welcomed the 7.5% increase in the single exit price for medicines and scheduled substances announced on Thursday by the health minister, as well as the early timing of its implementation. In the past, the implementation of the annual price adjustment was delayed for several months, which had a significant detrimental effect on pharmaceutical manufacturers.

Aspen Pharmacare has welcomed the 7.5% increase in the single exit price for medicines and scheduled substances announced on December 29 by Health Minister Aaron Motsoaledi as well as the early timing of its implementation.

In the past, the implementation of the annual price adjustment was delayed for several months, which had a significant detrimental effect on pharmaceutical manufacturers, especially when the exchange rate of the rand deteriorated dramatically in the interim. This time, however, implementation will be in January.

Aspen senior executive Stavros Nicolaou said the multinational welcomed the minister’s announcement in terms of both the quantum and the timing of the implementation on January 6, which he said was “probably the earliest ever”.

The single exit price adjustment is applied annually by the minister on the basis of a formula and sets the increase in the factory gate price of medicines and scheduled substances. The formula takes into account both the inflation rate and fluctuations in the exchange rate, as about 90% of the inputs into the relevant pharmaceutical products are imported.

Nicolaou explained that, in terms of the formula, the increase should have come out slightly higher than the 7.5% announced, but noted that the government had granted a 2.9% increase in July to adjust for the deterioration in the exchange rate. This was only implemented in November, though.

The single exit price is applied to the base prices of all medicines as had been determined in 2004.

According to the government gazette notice issued by Motsoaledi on Friday, pharmaceutical manufacturers have to submit their applications for price increases on specified medicines between January 6 and March 6 2017. The price adjustments applied for can be no higher than 7.5% of the single exit price that prevailed on December 21 2016.