The impact of the introduction of generics and generic references pricing and candesartan and rosuvastatin utilisation, price and expenditure in South Africa.
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Date
2017
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Abstract
Rationale for the study
The growth of pharmaceutical expenditure as a percentage of total health care expenditure has
stagnated, both locally and globally, despite increasing consumption. Two factors that contributed
to the stagnation are the introduction of generic medicines after patent expiry, and the
introduction of cost-containment policies, like generic reference pricing. The introduction of
generic medicines offer the opportunity to reduce medicine expenditure because of a switch in
utilisation from expensive brand-name originator products to more cost-effective generic
alternatives. Reference pricing is a policy where therapeutically similar medicines are grouped
together, and a maximum reimbursement rate is set for the group. If a patient chooses to use a
product more expensive than the reference price, they have to pay the difference in price. In the
South African context, generically similar products are grouped together and the reimbursement rate
is set at the average price of the generically equivalent products.
Aims and objectives
The aim of the study is to determine the impact of the introduction of generics and generic
reference pricing on two active ingredients, candesartan and rosuvastatin, which recently lost
their patent protection, in the South African private health care sector, for the period January
2012 to December 2015. To achieve this aim, three objectives were identified:
1. To measure the impact on medicine utilisation after the introduction of generics and generic
reference pricing on candesartan and rosuvastatin.
2. To measure the impact on the average medicine price after the introduction of generics and
generic reference pricing on candesartan and rosuvastatin.
3. To measure the impact on medicine expenditure after the introduction of generics and generic
reference pricing on candesartan and rosuvastatin.
Method
Medicine claims for candesartan and rosuvastatin was obtained from a Pharmacy Benefit Manager in
South Africa. The claims covered a 48-month period from January 2012 to December 2015 and provided
a pre- and post-reference price period for analysis. Medicine utilisation was measured as the number of Defined Daily Doses dispensed per 100 000 beneficiaries. Medicine price and expenditure was calculated as the average per Defined Daily Dose.
Results
Candesartan experienced an average 7.0% year-on-year decline in utilisation and rosuvastatin a 5.0% increase. Utilisation of generic medicines was 59.3% of the total volume in the final year of the study for candesartan and 76.4% for rosuvastatin. The introduction of generic alternatives resulted in a 31.0% reduction in the average price per Defined Daily Dose for candesartan and a 13.9% reduction for rosuvastatin. Medicine expenditure reduced by an additional 34.6% and 20.9% for candesartan and rosuvastatin respectively, because of the introduction of generic reference pricing. The total saving because of the introduction of generics and generic reference pricing was 54.8% for candesartan and 31.9% for rosuvastatin.
Conclusion
The introduction of generics and generic reference pricing did not have an impact on overall medicine utilisation, but reduced the price and expenditure of both candesartan and rosuvastatin.
Description
Masters Degree. University of KwaZulu-Natal, Durban.