Decision not to raise drug prices accepted by South Africa's pharma companies

South African Health Minister of Health’s decision not to award any increase in the single exit price of drugs this year was in line with the agreed methodology and came as no surprise to the industry, pharmaceutical companies, reports the local Star newspaper.

Health Minister Aaron Motsoaledi told the industry two months ago that there would be a zero percent rise for medicines this year. Last week, Anban Pillay, the director for pharmaceutical economic evaluations in the Department of Health, said that, after applying the formula that took into account inflation (70%) and the exchange rate (30%), it was clear that drugmakers could not be allowed to raise prices as the strong rand outweighed mild inflation.

“The industry would have had to decrease the prices, but it was proposed that there should instead be a zero percent increase. This was communicated with the industry,” said Mr Pillay.
Drug makers are vulnerable to the exchange rate because they import all the active pharmaceutical ingredients. This includes the firms that manufacture drugs locally, the newspaper noted.