Regulatory Analysis of Mark-up Structure in Medicine Prices by the Pharmaceutical Industry in South Africa

Abstract

Access to medicines depends on a number of interconnected factors: Medicine prices, one of the most common factors can be affected by the manufacturer’s selling prices, duties, taxes, patent legislation and mark-ups along the supply channel. The South African government has passed price legislation prohibiting discounts and rebates in the pharmaceutical sector by setting a single exit price for all manufacturers and a fee-for service logistics fee for wholesalers, distributors and dispensing fee for retailers as compensation. In this study the South African mark-up structure related to medicine prices is going to be analysed because of its tribulations in implementing a transparent wholesale reform and the fact that it was once classified under the nine countries from the WHO African Region for analysis of data from their Medicines Prices Surveys. This Literature based-analysis study made use of articles, journals for assessing and identifying the denominators responsible for high mark-ups on medications. Documentation pharmaceutical policy papers and publications, researches performed using PubMed and WHO/HAI medicine price database were also used to assess those areas and come up with possible strategies to reduce high price of medication and improve access of healthcare by the public. In private sectors, regulating mark-ups is more complex and weaker than in the public sector which is a reason for higher medicine costs. Policy development need to be reviewed in terms of pricing policies and regulation of mark-ups so that people of South Africa receive the medicine they need at a cost that they and the system as a whole can afford. This structure can help to raise further awareness and prompt the government to evaluate the regulation on entry point drug developers.