New South African Fee Regime Divides Pharmacy Groups

Following recent reports that a number of multinational drug producers have cautiously welcomed changes to the country's drug pricing structure, pharmacy groups now appear divided on the issue. While the Pharmaceutical Society of South Africa (PSSA) and the government remain at odds over the new legislation, and health officials continue to defend the measure in the courts, minority pharmacists' group SAPPA has claimed that its own negotiations with the government have been positive.

Although SAPPA did not disclose details of its pricing proposals, the fact that the group represents roughly 60 "previously disadvantaged" pharmacy business owners is key to understanding its cautious support for the government measures. Such retailers are likely to be much more accommodating of the plans, which envisage fixing dispensing fees at ZAR26 (US$4.38), or at 26% of cost. The cost assessment is based on the so-called single exit price, a calculation of the manufacturer's selling price, value-added tax and a hotly contested "logistics fee."

Meanwhile, the PSSA is unlikely to withdraw its opposition to the entire framework, or even acknowledge that the legislation does at least offer a greater degree of transparency. Given the nature of recent debate, no end to the war of words between the main drug retailers and the government, or deadlock on the status of the regulations, should be expected in the short term.