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Meeting highlights:
- Cautious Optimism on NHI Rollout: While budgetary concerns persist, the government is steadily advancing National Health Insurance (NHI) implementation through regulatory steps like international benchmarking and tariff setting, prompting industry concern over potential centralization of power and further medicines price control.
- Public-Private Partnerships as Necessity: Pharasi emphasized that successful NHI implementation hinges on stronger collaboration with the private sector, including revisiting Section 33 of the NHI Act, acknowledging the role of innovative medicines, and introducing differential pricing to ensure equitable access.
- Leveraging G20 Presidency for Health Advancement: South Africa’s G20 leadership is an opportunity to align with global health priorities—pandemic preparedness, innovation, NCDs, UHC—and show that the innovative pharma sector is a strategic partner in shaping Africa’s healthcare future.
EF: What are IPASA’s current priorities?
BP: The NHI remains an important topic. Some government officials unofficially claim that the NHI is not being implemented yet because the National Treasury does not have the funds, or they are unsure of where the funds will come from. Nevertheless, a lot is taking place, and the government is even beginning to establish certain frameworks.
In a document on international benchmarking, the Department of Health solicited feedback from the public. We can tell from looking at that kind of material that they are looking for some strategy to control the cost of medications. It seems to be different from their use of the pricing committee. We provided our feedback and numerous instances, including public content from government-affiliated organizations, that showed that the issue with private healthcare costs is not pharmaceutical prices. Hospitals and specialists are the largest cost contributors, according to the Health Matters Inquiry (HMI) of 2018 and other reports over the years. Medicines have been regulated through substitution, generics, single-exit pricing, and other measures.
The government just released what they refer to as the Draft Interim Block Exemptions for Tariffs Determination in the Healthcare Sector. According to a report released by the Competition Commission, which was established to guarantee competition and constant adherence to the regulations governing it, healthcare providers, particularly those in hospitals, should be permitted to band together and agree on tariffs. They intend to accomplish it without the pharmaceutical industry's involvement. Since they would be able to regulate which medications enter hospitals, this could have an impact on the pharmaceutical sector. Additionally, they will use it as a means of controlling the cost of medications, which will severely disadvantage us if we do nothing about it.
Recently, they decided to enact a specific NHI Act provision that will enable the Minister to designate the fund's chief executive officer. Following the promulgation of such regulations, they will also be able to begin examining the costs associated with the purchase of medications and other services. It implies that they might be able to do that without taking into account our own opinions on procurement, what we have consistently presented to them, and other factors. Numerous events demonstrate the government's determination to move forward with NHI. However, we also know that roughly six organizations have filed lawsuits to prevent the Minister from implementing the NHI.
The government's gradual introduction of the NHI concerns us a lot. While we have no problem with universal health coverage, we have concerns about certain aspects of the NHI's regulations. The Minister will have absolute authority once this act for the NHI fund is implemented. One of the concerns is that, rather than going through Parliament, it will take the provinces' authority to manage their bills and ensure that their budgets are transferred to a central budget overseen by the Minister or the NHI fund, which answers to the Minister.
We commissioned research two years ago to determine whether intellectual property protection hinders medication access. The investigation was carried out by an Australian business named Evohealth. The study's results were received in the first quarter of 2024, and we planned to hold an IP roundtable to discuss the conclusions and suggestions made by the study with various stakeholders, including those who might not share our views on IP protection. We believe sharing this research with the Department of Science and Innovation and the Department of Trade, Industry and Competition (the dtic) would be an appropriate initial step. We shared it with them and showed them this a few weeks ago.
On another note, the ANC no longer controls the government as it has since the start of South Africa's democracy; instead, the government of National Unity (GNU) does. Although there are political events that appear to threaten the GNU's continued existence, everyone agrees that despite their differences, these political parties should cooperate for the benefit of the country and the economy. For us, this means that some parties in government will be able to recognize the significance of the innovative pharmaceutical industry since some parties within the GNU oppose the NHI as it is. These parties include the Democratic Alliance (DA) and others, which have a favorable attitude toward business.
A research known as the Footprint Study was released in 2020 and used statistics to show how much the pharmaceutical business contributes to the economy, and advances scientific understanding through clinical trials, technological transfer, and other means. Although our industries are small and we do not contribute much to the nation's GDP, we think that we have made a major contribution to scientific knowledge and other areas.
We held multiple meetings with our executive committee starting in January to review the events that have transpired. Based on these developments, we concluded that it is critical to be flexible and adapt to changing circumstances while working on the necessary tasks to ensure the sustainability of our sector so that government officials are aware that intellectual property protection is equally important as cost. Those are the top priorities. Naturally, it is also important to make sure that SAHPRA, the regulating body, is reinforced. Although it is difficult, we are making every effort to demonstrate to them that we are ready to provide the kind of assistance they need.
Additionally, we have begun collaborating with foreign organizations, such as the EU Chamber of Commerce and embassies. On April 2nd, we had a round table discussion with them. The media did a great job covering it, and the outcome will provide us with more opportunities and allow us to do much more with embassies. These are a few of the events that have occurred; there are some concerns, but there are also some interesting developments.
EF: How are South Africa and IPASA using their G20 Presidency to further the health agenda?
BP: Every year, when a country hosts the G20, IFPMA and the local innovator pharmaceuticals association collaborate to create a joint open letter that highlights the G20's Health Working Group's priorities. The attention then shifts to those areas, and in this open letter, IFPMA and IPASA promised to support the government and the G20 process as a whole by stating that we are willing to collaborate with them on these concerns. There are five that have been identified, namely, non-communicable diseases, human resources for health, innovation in general, pandemic preparedness and prevention, and universal health coverage, particularly in primary healthcare.
We have consistently told the government that we would like to collaborate with them on these issues and that we can advance in them. We expect that by the end of this year, a lot will have happened in South Africa that will advance the agenda for those healthcare areas because they are crucial, especially because the country is hosting the G20, and the international community is focused on it. We at IPASA ultimately aim to have played a significant role and for the government to consider us as a reliable partner more than ever before. There will undoubtedly be a lot of give and take in order to achieve this. As a pharmaceutical industry, we will be held to high standards both locally and internationally.
The European Union has actually stepped up and stated that they will cooperate with the South African government regardless of what the US government says, despite the potential that the US will not become part of this. They have promised their support, which is what South Africa needs and what matters. In addition, since this is the first G20 to be held in Africa, the rest of the continent will gain from it as more attention will be paid to regional developments like the CDC and the Treaty for the Establishment of the African Medicines Agency (AMA).
EF: What are the primary obstacles to public-private partnerships at the moment, and how may they be overcome?
BP: In order for the government or the whole country to advance in fortifying our healthcare system, the Department of Health must acknowledge the significance of the private healthcare industry. Given the expertise in the private healthcare industry and its capacity to support the public sector, they must make certain compromises to guarantee the industry's survival. We must see to it that the government realizes this. We think that in order to advance public-private partnerships, several parts of the NHI law need to be modified.
Section 33 of the NHI stipulates that private health insurance, or medical schemes as we refer to them, must cease operations in order to finance medical care after the bill has been put into effect. This is because the NHI fund should be the sole funder for medical services. A lot of us think that's problematic. In any event, the list of essential medications used in the public sector is made up of generic medications. Very few of the innovative medications that are introduced to the market today are included in the list of essential medications. Another issue is that, even in the private sector, while there are many alternatives for medical plans, only the best ones have access to cutting-edge medications that are recently released onto the market. For this to occur, many things still need to happen.
When it comes to issues like a single exit price, we think it has accomplished its objective. However, it is now time for them to permit differential pricing, which would allow us to charge different prices for medications to different communities based on the type of community. This is because not everyone can afford to pay the same price for innovative medications freshly introduced to the market. That price differential is necessary. The public-private collaboration still has a long way to go before it can be strengthened.
The Health Matters Inquiry (HMI), which reported in 2018, presented recommendations for reforms that needed to be implemented in the private sector. The administration is currently working to gradually adopt some of those that were never put into effect. We are telling them that if they return to the HMI’s recommendations, they must be implemented as a whole. We agree that the private healthcare industry needs some adjustments, but the government must take action in order for the private sector and the public to have a close working partnership.
We believe there has been sufficient collaboration between the public and private sectors, especially in the midst of the COVID-19 pandemic, that ought to have demonstrated to the government the need to accept the private healthcare sector as a trusted partner and collaborator. However, we have seen positive signs in recent interactions with the Health Department that indicate that some positive relationships are emerging.
EF: In the upcoming year, what do you hope will have changed?
BP: In reality, differential pricing is the reason we are devoting so much of our energy to persuading the government to embrace alternative reimbursement models (ARMs). By the time we meet again in a year, we expect to have differential pricing and other features that have encouraged more of our members to participate in clinical trials in South Africa, as the country will have provided a more favorable environment. These are a few of the things we're hoping will take place. Naturally, if NHI is to be implemented in part, it should be done such that every one may take part and that IPASA and the public sector collaborate. We sincerely hope that it will occur.
