Industry slams 5.8% increase in medicine prices

Company strategic trade head Stavros Nicolaou added: "Given the rand’s weakness and inflationary pressures we are experiencing in the economy‚ we are disappointed.”

Last year‚ Adcock Ingram chief executive Jonathan Louw said local manufacturers expected that the formula used by the department would yield a price increase of about 7.14%. But, he said, the industry ideally needed an increase "close to double-digit” figures to counter the recent depreciation of the rand and the sharp increase in utility costs.

Medicine prices are controlled by the Health Department, which publishes regulations each year indicating the size of the maximum increase allowed for drugs destined for the private sector.

The increase is applicable to the single exit price (SEP) of a medicine‚ which is the price paid by all retailers – whether neighbourhood pharmacies or a national chain of private hospitals. The retailers then add their markups. Nicolaou welcomed the fact that the SEP announcement came this week‚ noting that in previous years it had been delayed by months.

The rise in the SEP is calculated using a formula taking into account inflation and exchange rates against the dollar and other foreign currencies.

The department’s pricing committee uses the result of the calculation to make a recommendation to Health Minister Aaron Motsoaledi.

He then has the power to approve the recommendation or ask for a reduction in the recommended increase.

Nicolaou said the industry needed greater certainty about the way the formula was applied.

This was necessary as it was not clear what date was used to set the exchange rates and inflation rates used in the annual calculation of the relevant prices, he said. – BDlive