Medicine prices in the spotlight
Second largest driver of medical costs
The central medical store spends at least N$1.2 billion on medicines every year.
Medicines drive the second largest part of the cost of healthcare in Namibia at about N$3 billion annually. This for a population of 2.6 million, of which 42.2% are under the age of 18.The Ministry of Health and Social Services' central medical store spends at least N$1.2 billion on medicines for 80% of citizens, excluding medical services.
Registered private medical funds under the auspices of the Association of Medical Funds in Namibia (Namaf) spend at least N$800 million annually on medicine for 8% of the country's residents. For the state's medical aid fund (Psemas), the amount is at least N$1 billion for 12% of the population. Trends in the financing industry for private healthcare also show that medicine is the second highest cost driver after private hospitals.
In an effort to tackle high costs and ensure the sustainability of this financing industry, considerable progress has now been made for the implementation of the Namibian product and related prices for medicines, surgical and consumer goods. The latter will enable Namaf to introduce a standard tariff for medicines.
Pricing policy
According to Namaf's Corporate Communications and Stakeholder Relations Manager, Uatavi Mbai, the development of the government's pricing policy for pharmaceuticals will support the association's efforts to implement a local standard price for all medicines and pharmaceuticals on the market. The standard rates will ultimately support the government's efforts to introduce the pharmaceutical pricing policy. According to Mbai, a consultation process with role players will now begin in which the local standard tariff for pharmaceutical, medicinal, surgical and medical equipment as well as health products (Nappi) will be discussed.
Mbai said that Namaf has been tasked with developing strategies and interventions to tackle the risk to the sustainability of the industry. In the same breath, medical funds that fall under Namaf had to devise interventions that specifically apply to the fund.
The Namibian standard or base price for medicine is the price at which a retailer (pharmacy, hospital etc.) buys the medicine from the wholesaler and which consists of the manufacturers' price as well as the wholesale margin.
The implementation of the Namibian Nappi standard tariff involves a list of medicines that are registered with the Namibian Medicines Regulatory Council (NMRC) and available in the country, as well as a transparent process during which the landing costs of medicines in Namibia can be established and maintained.
Mbai said that products from South Africa are given public domain Nappi codes which are based on the price at which goods are bought in that country from wholesalers (SEP). For all products that do not originate in the neighboring country, vendors in Namibia create a usage process and dummy codes.
"The SEP (Single Exit Price) is the base price in South Africa and consists of a cost at which goods are purchased from a factory and with a logistics tariff component (value added tax) for medication supplied to all purchasers except the state. The SEP mechanism is the maximum price that can be asked for medicine."