oa South African Health Review - Towards a transparent pricing system in South Africa : trends in pharmaceutical logistics fees
South Africa has instituted various mechanisms to render the pricing of pharmaceuticals more transparent, including the Single Exit Price (SEP) that clarifies the price at which a manufacturer may sell a medicine to logistics service providers or medicine dispensers. The SEP consists of an ex-manufacturer price, a logistics fee and Value Added Tax. However, as more countries look to South Africa for lessons from its pricing policies, an understanding of the manufacturer's price, logistics fees and their relationship has become increasingly necessary to support the principle that the SEP leads to more transparent prices.
This chapter provides a descriptive analysis of the pricing dynamics between the ex-manufacturer's price and the logistics fee; a determination of the logistics fee relationship to the number of manufacturers of a product; and an examination of logistics fees among different therapeutic classes as well as the relationship to the essential medicine status of a product within the therapeutic class.
The findings reveal that despite efforts to increase transparency in the supply chain, prices reflected in South African medicine price registries may not be a true reflection of prices negotiated between manufacturers and distributors/wholesalers.
Initiatives to conduct larger, in-depth pharmaco-economics evaluations are required for a deeper understanding of market trends, particularly in terms of the ex-manufacturer's price and logistics fee: how they behave in different therapeutic medicine classes and in response to changes in the patent status of medicines. These findings should guide policy decisions and importantly, gauge market changes in response to the various policies.
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