Abstract
A major presumption underlying the current debate on pharmaceutical prices in South Africa is that South African medicines are priced at levels out of line with comparable products in other countries. This paper presents some empirical evidence in an attempt to ascertain the validity of these presumptions. The results provide little support for the view that South African prices are in need of controls over and above those already existing through competition. The evidence reveals that recent calls and public policy proposals for parallel importation and its variant reference pricing are misplaced. To put forward such proposals without taking account of existing empirical knowledge for policy (or legislative) making purposes is a less than optimal approach.
Highlights
A major presumption underlying the current debate on pharmaceutical prices in South Africa is that South African medicines are priced at levels out of line with comparable products in other countries
Following various allegations of excessive pricing in South Africa compared to international sources, as described in Report 6 of 1997 by the Public Protector, an analysis was undertaken of prices in the South African State sector
Put to maintain consistency with the methodology followed on the private sector studies, inter alia, use is made of expression [1] in the case of the public sector too
Summary
A major presumption underlying the current debate on pharmaceutical prices in South Africa is that South African medicines are priced at levels out of line with comparable products in other countries. To contain medicine costs Act 90 of 1997 (§15C and §22G) proposes the use of parallel importation or its variant reference pricing. Parallel importation refers to the policy of allowing the importation of the same drugs as those available in South Africa if they can be obtained cheaper, i.e. at a lower price, elsewhere. The results of two pricing studies, one for the private sector and the other for the public sector are presented. The study for the private sector presents a comparison between prices in South Africa and seven other countries. The study for the public sector presents a comparison between tender prices in South Africa and those obtainable through international competitive bidding, i.e. international tendering
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