Drug prices

Drug pricesThe sale of drugs in South Africa earned pharmaceutical companies about R8,25-billion last year, but the public sector only accounted for 24 percent of sales despite the fact that over 80 percent of the population depends on state health.

The sale of drugs in South Africa earned pharmaceutical companies about R8,25-billion last year, but the public sector only accounted for 24 percent of sales despite the fact that over 80 percent of the population depends on state health.

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The sale of drugs in South Africa earned pharmaceutical companies about R8,25-billion last year, but the public sector only accounted for 24 percent of sales despite the fact that over 80 percent of the population depends on state health.

This translates into R59.36 being spent on every person using the public health system last year, as opposed to a staggering R800.29 per person in private health, according to Andy Gray and Thulani Matsebula writing in the latest SA Health Review.  

Not only are the inequities in drug expenditure evident within our country, but also on a global scale. Despite large populations and a preponderance of diseases, all the countries in sub-Saharan Africa put together account for a mere 1,3 percent of global drug sales. North America provides the biggest market (46,7 percent), followed by Europe (24,8 percent) and Japan (11, 3 percent).

The pharmaceutical industry is also the most profitable sector in America, with profit margins of more than three times those of other leading companies, say Gray and Matsebula.

Chief executive officers of the top 10 pharmaceutical firms each earned some R75-million in 1999, plus stock options worth about another R75-million each.  

Contrary to popular belief, marketing and administration swallowed more than three times the cost of research and development of new drugs, according to a 1999 survey of the top 12 drug companies. Only 12,4 percent of expenditure was devoted to research and development.

But Gray and Matsebula warn that comparing prices for individual drugs from country to country is a difficult process, complicated the availability of generic drugs, different pack sizes and exchange rates.

In addition, they argue that a number of issues influencing drug pricing in this country are dealt with by the Medicines and Related Substances Act of 1997. However, the Pharmaceutical Manufacturers’ Association’s court challenge of the Act is preventing these measures from being implemented.