The impact of international benchmarking on the price of immunosuppressive medicines for transplant recipients in South Africa

Abstract

Background. External reference pricing (ERP) is an internationally applied pricing policy to regulate the price of medicines. In 2005, the South African (SA) Minister of Health published a Government Gazette of regulations relating to a transparent pricing system for medicines and scheduled substances, stating that the Minister must publish a methodology for conforming to international benchmarks. In May 2014, the most recent proposed benchmark methodology was published, detailing that international benchmarking of medicines (IBM) requires that the lowest price in a selected basket of countries (Australia, Canada, New Zealand, Spain and SA) be used as the ultimate price for the purposes of benchmarking of originator products.

Objectives. To provide a broad observational basis for the use of IBM and the proposed countries as a pricing tool; the feasibility of using BRICS countries (Brazil, Russia, India, China and SA) as comparator countries; and a small sample comparison of local state tender pricing in relation to the IBM proposed basket of comparator country pricing. Immunosuppressant medicines for organ transplant patients were used for this comparison, as they are relatively expensive and there is reluctance to implement pricing and reimbursement policy options to contain their costs.

Methods. Ex-manufacturer medicine pricing information for 2016, 2017 and 2018 was sourced for immunosuppressive medicines for SA (public and private sectors), Australia, New Zealand, Canada, Spain, Brazil and Russia. Unit prices were compared for products with the same international non-proprietary name (INN), strength, formulation and manufacturer. In most cases the products were matched on product name, bearing translation nuances in mind.

Results. Across all 3 years, in the majority of products, ERP using the proposed basket of comparator countries Australia, New Zealand, Canada and Spain lowered the local private sector ex-manufacturer price of medicine. Similarly, for the majority of products comparing local pricing with that of available BRICS country pricing data, the comparison lowered the price. For 92% of products where a comparison could be made, the SA state tender price was the lowest available price.

Conclusions. Conducting an ERP analysis consumes time and resources. However, it may prove to reduce a current or proposed medicine price and may be considered as one of a range of medicine pricing policies employed by a country. It should not be used in isolation from other medicine pricing and reimbursement policies.