MEDSCHEME, SA's largest medical scheme administrator, is to go ahead with the introduction of its controversial new medicines policy, which favours the use of generic drugs, in spite of a threat from the Pharmaceutical Manufacturers Association (PMA) that it will take the case to the Competition Commission.
More than 50 medical aid schemes administered by Medscheme are set to implement a new policy from tomorrow that will see them paying the full price only for medicines Medscheme deems to be cost effective.
Most drugs on the list are generics cheaper versions no longer under patent. Medscheme has also published an exclusion list, in effect blacklisting some pharmaceutical products that it says are too expensive.
Medscheme's strategy comes at a time of some confusion in the healthcare industry over the introduction of generic medicines. Government is intent on reducing healthcare costs by promoting the use of generics via the Medicines and Related Substances Control Amendment Act of 1997, but the regulations that would bring the relevant aspects of the legislation into effect have yet to be promulgated.
Medscheme represents about 40% of the private healthcare sector, with almost 3-million people covered by its medical aid schemes. These include FedHealth, Omnihealth, Sasolmed, Bonitas and SA Breweries.
PMA CE Mirryena Deeb said yesterday Medscheme's plans, which also included measures to incentivise doctors who cut costs by reducing unnecessary referrals, amounted to an abuse of its dominant market position and contravened competition law.
Restrictive structures such as product exclusion lists, market-unrelated reimbursements and perverse incentives to unduly influence prescribing patterns create the potential for ongoing abuse of that market dominance, she said.
Medscheme Group Services Division MD Gary Taylor said the medical aid schemes administered by Medscheme would begin implementing the new medicines reimbursement policy tomorrow, in spite of the PMA's threat.
Taylor said that medicines accounted for more than 30% of total healthcare costs in the privately funded healthcare sector, compared with 12%-15% in Western Europe and the US.
The discrepancy was largely due to the fact that, in SA, generic drugs accounted for only about 20% of the rand value of medicines prescribed in the private sector, compared with between 43% and 57% worldwide.
Taylor said Medscheme would consider passing on projected savings estimated at 20% of the R4bn annual medicine costs to members in the form of reduced premiums when it drew up its budget for the 2003-2004 year.
Source: Business Day, 30 April 2002
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