Tag: pharmaceutical prices

NHI Act Offers no Answer to High Medicines Prices

Photo by Gustavo Fring:

By Fatima Hassan

The National Health Insurance Act does not deal with the systemic issues that cause high prices and inequity in medicine access, and government is not listening, argues Fatima Hassan.

As the department of health lunges forward with implementing a system of National Health Insurance (NHI), with business and other interests trying to thwart that, what lessons from the COVID-19 pandemic can help us to ensure health equity for all – for both users of the public and private health sectors?

A few key themes come to mind: market power, secrecy, transparency, accountability, timely access, and affordability.

COVID’s lessons

The human cost of COVID-19 globally was at least fourteen million people who died in just two years. In South Africa, COVID was the leading cause of death in 2020 and 2021, outstripping deaths due to other diseases in those years.

To mitigate the COVID pandemic and to move forward, we needed vaccines. Then, the creed of intellectual property fundamentalism preached to us by the ultra-wealthy and by pharmaceutical corporations was to tell us to monopolise and privatise the manufacture and supply of publicly created vaccines and medicines, while relying on voluntary market measures – not effective regulation or compulsory measures – to ensure access. That creed failed us.

At the time, agreements with private manufacturers for the supply of vaccines were entered into, and at the request of a very powerful industry, treated as a secret. The Health Justice Initiative (HJI) litigated to compel disclosure, and we won.

Our analysis showed a set of one-sided terms, including conditions that required Non-Disclosure Agreements with significant advance payments without legal obligations on suppliers in terms of delivery volumes or dates. The contracts provided sweeping indemnity terms, limits on international redistribution/donations, and overly broad intellectual property protections. We also found that in several instances, South Africa overpaid for vaccines compared to higher middle income countries.

Where we live

We live in a country with worsening health outcomes, a high burden of HIV and TB, and alarmingly high levels of gender-based violence.

Politically, we have had multiple health ministers in the space of just five years – even during a pandemic – due in part to corruption allegations and now, a new Government of National Unity (GNU). We have an unaccountable rotating door system for appointing ministers, deputy ministers, and health Portfolio Committee members, seriously blurring the Legislature’s oversight function. This is not good governance.

We have outstanding laws and regulations that could address some of the “now” issues but which are not being prioritised. For example, we are still subject to an apartheid-era Patent Law that is deferential to patent seekers, resulting in over patenting or evergreening. Vested interests, we believe, are blocking key amendments that would limit patent protection in favour of the public interest.

We do not have a robust local, properly state-subsidised health manufacturing industry in South Africa, often making us reliant on external manufacturers. We have xenophobia seeping into our health system, where patients have been attacked in state hospitals because of their nationality.

And on top of all of that, we have growing reports not just of provincial health product stockouts but also reports of widespread health sector tender corruption, and targeted assassinations of whistleblowers. Finally, given, among other things, our outdated patent system and inability to reign in medicine prices, our medicine costs are astronomical, needlessly (even when compared to other BRICS countries).

The NHI as the GNU’s test (and ours)

It is in this context, that even before the 2024 national elections, NHI has become a lightning rod of disagreement even within the GNU, including for business, creating a hostile climate for civic engagement. Sadly, the political gamesmanship over NHI especially at the Executive level, is coming across as unaccountable, arrogant, and non-engaging. This will not build our health system. In this debate, government has rarely admitted it made any mistakes so that is why it was surprising that in a recent Bhekisisa interview, the health minister conceded that restricting NHI basic health services (so non-emergency care) to South African ID holders may be self-defeating for public health. He said that that is a “mistake” that needs to be “rectified” in the NHI Act.

NHI and state-led procurement

The NHI Act envisages a single state procurement entity for all health products for NHI users (as selected by a benefits committee). In theory, this should provide greater negotiating power and leverage.

With the lessons of COVID and more recently Mpox, we can expect that may not be so. Even under NHI, there will be a scramble for much needed supplies, where South Africa will have to compete on the international market for often scarce and high priced supplies.

Thus, addressing the pharmaceutical industry’s power, and by virtue of that, the global and local medicine patent (reward) system and its abuse matters – but we need to do it now, not incrementally or at some later or undefined point.

For the NHI to financially sustain itself (and assuming here for a moment that it has sufficient funds to begin with), it will have to either overthrow or better regulate the current medicine over-patenting and pricing transparency system to survive, failing which, NHI money could dry up just on health products and medicine costs alone.

At present, South Africa on average pays more for medicines than comparator countries. Business is eerily silent about this aspect in its critique of NHI. Since medical schemes will continue to operate under NHI for some time, one would expect greater concern about the disproportionate use of scheme members’ resources in this respect too, from business.

On top of this, under an apartheid era drafted law (the Patents Act), South Africa is still also doling out patents allowing companies to evergreen their patents on several essential medicines including for TB and HIV, and cancer with limited regulatory and legal repercussions.

While the HJI vaccine procurement judgment should be having far-reaching implications, not just for the next set of pandemic procurement negotiations, but also for substantial state-led procurement due to take place under NHI, we would be naïve to think that the industry and powerful global and local actors in the pharmaceutical sector will change its ways for the better just because South Africa is implementing NHI.

The NHI, we are told, will be based on the principles of “universality and social solidarity” and will “unify” our health system. Yet, if we focus on just one aspect included in the Act – the medicine access system – it is a far cry from the promised system of unification. This is because it is drafted in a way that by our count and reading, creates at least four medicine access systems, operating in parallel (NHI for NHI users; Medical Schemes for scheme beneficiaries – while schemes are permitted to operate under NHI (could be decades); complementary cover via insurance coverage for NHI users; over the counter via out of pocket payments/insurance coverage for non-NHI users such as foreign workers, foreign students, resident non-nationals, etc.).

Either way, for all of its admirable “equity” intent, NHI in South Africa will be fully dependent on the global medicines access market whether we like it or not because we are not operating in a neutral, access friendly global system. Nor are we operating in a context where the executive has any real, public, and committed plan to drive down medicine prices before or while NHI is implemented – and without business interests interfering in the execution – it is leaving that totally to the market, to whimsical unenforceable donations and voluntary business conduct. That is not sustainable.

The President is fully aware of how the latter affected our vaccine access and procurement strategy and costs in the COVID-19 pandemic. What is he going to do about it?

NHI and “top-ups”

Under NHI, the Act will allow top-up products and complementary cover via insurance offerings to presumably fill the gap for those health products, services or medicines that the state may not select or include in the NHI Formulary because of affordability constraints. So how will those complementary cover products and medicines be priced and regulated? Will the current imperfect and expensive system, called the Single Exit Price System, for non-state medicines be used?

Imperfect, because in South Africa, public sector medicines prices are largely determined by the bids companies submit in response to advertised government tenders. In the private sector, companies are free to launch a medicine at any price, although once launched, annual price increases are regulated – so that every drug in the private sector has a single exit price. In rare cases, excessively high medicine prices have been challenged using competition law, but this is the exception.

There have been moves toward reference pricing – where maximum prices for specific medicines would be determined by reference to prices for that medicine in a basket of other comparable countries – but none of several rounds of regulations proposing such a system have been implemented, mainly because pharmaceutical companies usually litigate against the state to prevent it from implementing such a comparator system – in other words, like elsewhere, while we face exorbitant medicine costs, we also face powerful corporate lobbies that do not want proper transparent systems for setting medicines prices. This only serves a profiteering agenda.

NHI and medicine access questions

Just on the narrow point of medicine access under NHI there are critical issues that need to be clarified. They include the following:

  • Whether we can be guaranteed transparency and information, including about the deliberations of the various NHI ministerial advisory, benefit and selection committees, and procurement structures under the NHI – or will we have to litigate every access to information request, as we did in COVID?
  • How will the NHI Fund (Office of Health Products Procurement) negotiate with the global pharmaceutical industry without, for example, the bullying we witnessed in the COVID-19 pandemic?
  • And specifically for medicines and health products:
    • Will manufacturers be permitted to sell to health providers other than the state? If so, how will this be done, and how will the maximum price be determined or regulated?
    • Which medicines and health products will be covered under NHI benefits as part of the NHI Formulary and how will the price of those not covered (top-ups/complementary cover) be regulated?
    • What role will the current private sector pricing system play including the single exit price system – and how and when will it be amended?

As our country pushes ahead with the NHI, there are some immediate concerns like these that we believe will affect implementation.

Of course, we all support the vision of a unified, equitable health system. But aspirations aside, the NHI Act does not deal with the systemic issues that cause high prices and inequity in access. Instead of investing effort into systems that control prices better at the outset, it is investing in systems to deal with the consequences of unaffordable drugs, hoping for self-correction, all while deferring to powerful vested interests including business lobbies that have the President on speed dial.

Regulatory bodies and civil society actors can only take on the tip of the medicine pricing iceberg – the question to the President is, while the Executive dithers on amending keys laws including the Patents Act, under NHI: who exactly will fight for every single patient and for every single medicine?

Since the NHI Bill was signed into law, the President (and his Cabinet) are now duty bound to take constitutional steps to remedy the deficiencies in the NHI Act, and at the very least, to listen to all sectors, not just business.

*Hassan is director of the Health Justice Initiative. This piece is drawn from her key note address at the 2024  Annual David Sanders Lecture in Public Health and Social Justice hosted by the University of Western Cape’s School of Public Health and Peoples Health Movement South Africa.

Note: Spotlight aims to deepen public understanding of important health issues by publishing a variety of views on its opinion pages. The views expressed in this article are not necessarily shared by the Spotlight editors.

Republished from Spotlight under a Creative Commons licence.

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Competition Law has again Worked to Fight a Bad Drug Patent, but We Need Other Solutions

By Fatima Hassan and Leena Menghaney

A Competition Commission probe recently resulted in a patent on an important tuberculosis medicine being dropped in South Africa. Twenty years ago, a similar Competition Commission case resulted in a settlement that helped drive down the prices of several antiretrovirals, thereby helping to set the stage for the country’s HIV treatment programme. Fatima Hassan and Leena Menghaney connect the dots between the two landmark cases and map out what has and has not changed over the last two decades.

In the late 1990s and early 2000s, South Africa faced a major uncontrolled AIDS epidemic, worsened by state sponsored AIDS denialism. South Africa was at the epicentre of a global epidemic, with hundreds of thousands of people getting sick and dying, needlessly, because lifesaving antiretroviral medicines were out of reach.

This was in the main because of the Mbeki government’s deadly science denialism denying public sector patients antiretrovirals and the high cost of some of these medicines, which at the turn of the century was available in the private sector but only for the very rich or medically insured. The private sector price for the combination of three antiretrovirals needed by most people living with HIV was exorbitant.

This was because of patent monopolies held at the time by multinational pharmaceutical companies, particularly GlaxoSmithKline (GSK) and Boehringer Ingelheim (BI). In essence, people in South Africa living with HIV had to beg to live – by seeking donations and charity or pressuring their respective medical schemes to provide coverage. Meanwhile, lifesaving antiretrovirals were generally available in the Global North and in some parts of the Global South where governments like those in Thailand and Brazil had taken action to reduce prices.

Hundreds of thousands of people in South Africa died prematurely because they did not get access to these medicines in time.

The landmark Hazel Tau case

Looking for a way to challenge the high prices of key antiretrovirals, activists turned to South Africa’s newly revamped post-apartheid competition law. In September 2002, the Treatment Action Campaign, Hazel Tau, a woman living with HIV and several others lodged a complaint with the country’s Competition Commission. They alleged that the price that GSK and BI were charging for important antiretrovirals was excessive and anti-competitive, undermining not just Competition Law but also the right to health as enshrined in the country’s still fairly new Constitution.

The Competition Commission agreed to investigate. Several months later, they announced that there was a prima facie case of excessive pricing and that they would be referring the matter to the Competition Tribunal (the next phase of a complaint to the Competition authorities). Almost immediately after that announcement, TAC was approached by GSK and BI to “settle” the matter. This meant there would be no public hearings, and the companies would not have to defend their pricing decisions in the dock.

The terms of the settlement, negotiated by the TAC’s legal team, mirrored what TAC had publicly demanded at the beginning of the case. Most importantly, GSK and BI agreed to grant voluntary licenses to several generic manufacturers that would allow them to make and sell the antiretrovirals in question. It was this generic competition that would drive down the prices of antiretrovirals in the years that followed.

Even though the Competition Commission only has jurisdiction in South Africa, the licenses included many other African countries, which meant those countries could also benefit from the generic competition and lower prices. The settlement (including the terms of the voluntary licenses) was agreed to by the Competition Commission, made an order and publicly announced, leading to the conclusion of the complaint.

The case, which came to be known as the Hazel Tau case, would in the years to come be recognised as one of the foundations that made large HIV treatment programmes possible in South Africa and other African countries. Despite this victory, the ongoing effects of AIDS denialism meant that it would in reality be several years before the more affordable generic antiretrovirals would be made widely available in South Africa.

20 years later, the spotlight is on TB drugs

HIV has not been the only health crisis to affect SA. According to the World Health Organization (WHO), Tuberculosis (TB) is one of the leading infectious causes of death globally, and drug-resistant TB (DR-TB) remains a public health crisis. The WHO estimates that around 304 000 people fall ill with TB in South Africa per year, and it claims over 50 000 lives, which means it remains one of the country’s top killers. While TB rates are slowly declining, there is concern that rates of drug-resistant forms of TB (DR-TB) are increasing. DR-TB requires newer, more expensive treatments.

Republished from Spotlight under a Creative Commons licence.

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Biden Urges Drug Companies to Join in Insulin US Price Cuts

Photo by Dennis Klicker on Unsplash

Following pharmaceutical company Eli Lilly’s much-lauded move to cut US prices for its insulin products, US President Joe Biden is calling on other drugmakers to make similar reductions for the vital medication.

According to Euronews, Lilly is directly slashing its insulin prices by about 70%, since many patients cannot access discounts, and is capping consumer costs at US$35 (R635) a month.

Biden is driving a push for cheaper insulin, signing a law that capped insulin at US$35 a month for senior citizens on Medicare, and urged companies to lower prices on their own. “For far too long, American families have been crushed by drug costs many times higher than what people in other countries are charged for the same prescriptions,” Biden said.

“Insulin costs less than US$10 to make, but Americans are sometimes forced to pay over US$300 for it. It’s flat wrong”.

Biden has called for a national cap on insulin prices, but his current Act does not extend to that.

A Lilly press release revealed that the price of Humalog® (insulin lispro injection) 100 units/mL (Lilly’s most commonly prescribed insulin) and Humulin® (insulin human) injection 100 units/mL by would be cut by 70%. This price change would take effect around the end 2023. Lilly also said it would cut the price for the generic Lispro to US$25 a vial starting in May. In South Africa, a Humulin® 10mL vial costs R525.28, or US$28.08, according to Health-e’s medicine price registry.

Lilly CEO David Ricks said his company was bringing the changes as not all patients could benefit through discounts through insurers or pharmacy benefit managers.

“We are driving for change in repricing older insulins, but we know that 7 out of 10 Americans don’t use Lilly insulin. We are calling on policymakers, employers and others to join us in making insulin more affordable,” said Ricks. “For the past century, Lilly has focused on inventing new and improved insulins and other medicines that address the impact of diabetes and improve patient outcomes. Our work to discover new and better treatments is far from over. We won’t stop until all people with diabetes are in control of their disease and can get the insulin they need.”

Since insurers and pharmacies will take a while to implement the price cuts, Lilly will immediately cap monthly out-of-pocket costs at $35 for people who are not covered by Medicare’s prescription drug programme.

The Same Medications for Humans are Pricier than for Pets

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In a research letter published in JAMA Internal Medicine, researchers compared the prices of 120 medications commonly used in humans and pets. The authors found human medication prices were typically higher than the price of pet medications – with the same ingredients at common human-equivalent doses.

While some medications are common to both pets and humans, but price differences can be extreme. In 1991, levamisole (introduced in the 1960s as a veterinary antiparasitic) demonstrated efficacy in treating human colon cancer. The introductory human price of Janssen’s Ergamisol (brand-name levamisole; $5 per 50mg tablet) was 100 times the then veterinary price (approximately $0.05 for an equivalent amount). With the COVID pandemic, a misinformation-driven demand for ivermectin as a COVID treatment led to people seeking veterinary formulations of the drug, increasing the price 15-fold over a month ($6 to $92 for 3 tubes). In this cross-sectional study, the researchers sought to compare prices of commonly prescribed medications used to treat both humans and pets.

The researchers from the University of Minnesota found that retail price for human medications was on average 5.5 times higher than pet medications. For more than 60% of medications, even discounted prices for humans were higher than pet prices. On average, discounted prices were 1.5 times higher for human medications than for pet medications.

‘’A 10-day supply of the same medication costs $2 for a pet dog, $10 for a person with a discount coupon, and $100 for a person without a coupon,” said Arjun Gupta, MBBS, assistant professor at the U of M Medical School and oncologist with M Health Fairview. He is also a member of the Masonic Cancer Center. “With many humans and pets uninsured or underinsured, it is important that cash prices for medications are affordable and that pricing is not exploitative.”

Human prices were also higher than pet prices for drugs such as antibiotics. Researchers warn this may promote humans sourcing antibiotics for their own use from pet sources, especially since human antibiotic use is more regulated.

Exactly why there is such a significant price difference is unclear. One possibility may be drug manufacturers engaging in price discrimination by charging consumers different prices in different markets for the same product, the researchers suggest. Additionally, price differences could reflect variations in medication effectiveness, willingness to pay, and manufacturing, storage, and regulatory standards.

Further research is suggested to explore the causes of price differences.

Source: University of Minnesota Medical School