New dispensing fees to boost generics

2010-11-23 17:13

Johannesburg - Leading generic drugs manufacturer, Pharma Dynamics said on Tuesday that the new dispensing fees structure would improve viability of retail pharmacies and secure access to medicines in more remote areas.
Gazetted on Friday, the new fees put to rest a six-year legal battle that has cost the industry more than R30m in legal fees and clouded the sector's relations with the government.

Pharma Dynamics said the government's move was a win for drug manufacturers, patients and pharmacists.
Paul Anley, chief executive of Pharma Dynamics said the new structure was also likely to encourage more use of generics.

“The fee structure provides a higher mark-up on less expensive medication, which will incentivise pharmacists to substitute with a generic equivalent, which is in the patient's best interest,” he said.

He said that similar models were commonplace in Europe and North America where incentive schemes are used to encourage pharmacists to choose cost effective generic medication.

This results in far higher market share for generics against their originator equivalents, and in doing so also saves the state billions in healthcare spend,” he added.

Anley estimates that in South Africa the use of generics saves in excess of R2bn a year and more aggressive use could double that figure.

He said that while the dispensing fee on more expensive products is no longer capped - but has been increased according to the tiered system - it makes pharmacies more viable in terms of their professional fee and the return on capital for holding the medication in stock.

“It is important to note that the regulations stipulate the maximum dispensing fee that can be charged by a pharmacist. Individual pharmacists may continue to adopt their own fee structures as long as they don't charge more than that which has been specified in the bill,” said Anley.