#InsideTheBox is a column by Dr Andy Grey, a pharmaceutical sciences skilled on the College of KwaZulu-Natal and Co-Director of the WHO Collaborating Centre on Pharmaceutical Coverage and Proof Based mostly Follow. (Picture: Provided)Remark & Evaluation
twelfth February 2026 | Andy Grey
In South Africa, as in lots of locations, pharmaceutical firms usually are not free to alter medication costs as they need. In his newest Inside The Field column, Dr Andy Grey unpacks how medicines costs are regulated within the nation and considers how this regulatory framework may change.
South Africa’s medication pricing insurance policies are recognised internationally for his or her dedication to transparency, however the actuality could also be completely different from what exists on paper.
Medication pricing is an efficient instance of the deficiencies within the Nationwide Drug Coverage (NDP), which has by no means been revised because it was first issued in 1996. The unique coverage doc proposed the institution of a Pricing Committee and dedicated to “complete transparency within the pricing construction of pharmaceutical producers, wholesalers, suppliers of providers, equivalent to dispensers of medication, in addition to non-public clinics and hospitals”.
Two key proposals have been that “the wholesale and retail proportion mark-up system can be changed with a pricing system primarily based on a hard and fast skilled price” and “value will increase can be regulated”. There was additionally a dedication to monitoring costs compared to these charged in different nations. Lastly, there was this assertion: “The place the State deems that the retail costs of sure prescription drugs are unacceptable and that these prescription drugs are important to the properly being of any sector of the inhabitants, the State will make them obtainable to the non-public sector at acquisition price plus the transaction prices concerned.”
Few insurance policies survive an encounter with actuality, and opposition, and this doc is not any exception.
By no means the twain shall meet
A cardinal characteristic of South Africa’s medication pricing system is the clear separation between the private and non-private sectors.
Within the public sector, the costs paid by the provinces, navy and jail providers are the results of a young course of. Solely medicines registered by the South African Well being Merchandise Regulatory Authority (SAHPRA) could also be provided in response to a young name. The Nationwide Division of Well being makes all tenders publicly accessible and likewise publishes the resultant tender awards, in addition to the Grasp Well being Merchandise Listing, up to date at any time when any itemizing modifications. The costs paid due to this fact mirror the downward affect of the shopping for energy of the state. The tenders embrace a quantification of anticipated demand over the tender interval (often three years). Costs are additionally influenced by the variety of potential suppliers and due to this fact the extent of competitors available in the market.
For some essential, high-volume medicines, such because the first-line antiretrovirals, the tender is break up amongst a number of suppliers, at barely completely different costs. Cut up tenders are supposed to make sure safety of provide if a contracted provider is unable to fulfill demand.
The place the state accounts for a lot of the amount bought within the nation, it’s often in a position to appeal to bids at decrease costs than are charged within the non-public sector. Nevertheless, in some circumstances, tenders appeal to no bids and the state is pressured to buy on citation. The place a registered medication is just obtainable from a single provider, the worth paid by the state could also be nearer to that paid within the non-public sector. In November 2025, the Director-Common of Well being revealed a press release of concern about bid costs exceeding the non-public sector single exit value (SEP), urging producers to “mirror on their pricing practices”.
Though there are some restricted agreements to offer state inventory, equivalent to childhood vaccines, to non-public healthcare suppliers, the 2 distribution chains and their pricing stay separate. The non-public sector can’t entry medicines on the identical value because the state.
Non-public sector – not solely clear
The Medicines and Associated Substances Management Modification Act, 1997, sought to place in place no less than a few of what was proposed within the 1996 Nationwide Drug Coverage. After the multinational pharmaceutical business withdrew a courtroom problem to the Act in 2001, and after one other Modification Act, the modifications got here into impact in 2003, however with the pricing portion delayed till 2004. Additional delay adopted, with courtroom challenges introduced by group and hospital pharmacy teams, resulting in an eventual Constitutional Court docket judgment in 2005. Whereas the fundamental assemble remained in place, the federal government needed to revise the dishing out price.
The essential assemble of the pricing provision, which has been inserted into the Medicines and Associated Substances Act, 1965, however is just not the accountability of SAHPRA, depends on what known as the SEP. The SEP is outlined as “the one value at which producers shall promote medicines and Scheduled substances to any particular person aside from the State”. In different phrases, the “exit” refers back to the value which is charged by the producer to the ultimate vendor equivalent to a pharmacy, hospital or healthcare supplier. This can be a little completely different from the extra generally used time period of a “manufacturing unit gate value”, which then permits additions to be made at every step within the distribution chain.
The SEP is the worth that the ultimate vendor fees to the affected person or medical scheme. Closing sellers are, nonetheless, entitled to a dishing out price, which is about as a most annually and differs between pharmacists and licensed dishing out practitioners. Wholesalers don’t add a mark-up to the SEP charged by the producer, however are paid a logistics price by the producer, as a portion of the exit value.
Crucially, the “single” element refers back to the intention that the identical value can be paid by all patrons, whatever the quantity of drugs procured. In different phrases, the non-public sector can’t use its shopping for energy to exert any stress on producers’ costs. The Act is prescriptive on this regard: “No particular person shall provide any medication, medical machine or IVD in response to a bonus system, rebate system or another incentive scheme.” Whereas the applying of this part to Schedule 0 medicines, medical units and in vitro diagnostics has been paused, it nonetheless applies to different medicines.
Yearly, the Pricing Committee asks for enter on two components: the dishing out charges for pharmacists and dishing out practitioners, and the SEP adjustment (SEPA). The latter is a most proportion enhance that producers can apply to the SEPs on an annual foundation. In some years, distinctive extra SEPAs have been allowed, however they’ve typically mirrored the patron value index. The SEPA allowed for 2026 was set at a most of 1.47%, in contrast with 5.25% in 2025. The SEPA mechanism has protected South Africa towards the massive pharmaceutical value will increase which were seen in different nations. Nevertheless, the preliminary launch SEP stays unregulated.
The dishing out charges embrace a flat quantity and a proportion of the SEP, various throughout 4 value bands. As the worth of the drugs will increase, the share element decreases. For instance, the September 2025 model states that the place the SEP of a drugs exceeds R1 530.73, the dishing out price charged by a pharmacist shall not exceed R270.54 + 5% of the SEP.
A spreadsheet exhibiting all declared SEPs (for registered medicines in Schedules 1 to six) is publicly accessible on the well being division’s web site. That website additionally offers entry to numerous SEPA paperwork. All ultimate sellers are required to confide in a purchaser what the SEP for a drugs is, after which point out the dishing out price charged, which can’t exceed the utmost gazetted annually.
So, what’s not clear?
The primary drawback lies with the logistics price paid to wholesalers by producers. Though there’s a column within the SEP spreadsheet that exhibits a logistics price, the precise quantity paid is thought to fluctuate significantly. Importantly, the place a ultimate vendor, equivalent to a big pharmacy chain, owns its personal wholesaler, it may possibly achieve extra earnings from the logistics price. That element is just not disclosed to patrons (sufferers or medical schemes) – however could affect the vendor’s skill to cost lower than the utmost dishing out price.
The Act permits the Minister of Well being, in session with the Pricing Committee, to “prescribe acceptable and prohibited acts” in relation to bonus techniques, rebate techniques or different incentive schemes. Regardless of being revealed for touch upon two events, in 2014 and in 2017, no ultimate rules have been issued. The extent to which co-marketing charges, information charges, shelf charges, formulary itemizing charges, affected person help programmes, off-invoice rebates and bonus techniques have crept again into the non-public sector is due to this fact unknown, as is the quantum of such doubtlessly perverse incentives. Definitely, such income streams usually are not clear to sufferers and caregivers.
The enforcement capability of the well being division and Pricing Committee can also be questionable. South Africa’s much-vaunted clear medication pricing system could conceal many unsavoury components.
New considerations – failure to declare an SEP
As soon as SAHPRA has registered a brand new medication, the net database is up to date. Nevertheless, SAHPRA doesn’t concern itself with pricing. The holder of the certificates of registration (HCR) can select to promote the drugs solely to the state. Nevertheless, if the HCR needs to promote the drugs within the non-public sector, an SEP must be declared. Among the questions requested within the declaration kind are fascinating, however of doubtful authorized weight. For instance, producers are requested: “The methodology used to find out the SEP and elements that affect the worth at which the drugs can be bought.” Regardless that no exterior reference pricing system is in place, the costs in different nations are requested. Whereas it’s affordable to ask what the registered indications for the drugs are, as authorized by SAHPRA, to demand the “prevalence of the illness or situation as established by the applicant in South Africa” is much less affordable. Up to now, no SEPs have been declared to be “unacceptable”, as was signalled within the NDP in 1996. Producers thus have a comparatively free hand to set their non-public sector launch costs.
Nevertheless, two high-profile registrations of HIV medication by SAHPRA, of cabotegravir by GlaxoSmithKline and of lenacapavir by Gilead, haven’t been adopted by the declaration of an SEP. One contributory purpose could also be a reluctance to make a value to be charged in an higher middle-income nation equivalent to South Africa clear to the remainder of world.
Unregistered medicines imported when it comes to part 21 (an software to entry an unregistered medication in circumstances the place there isn’t any appropriate product registered in South Africa) usually are not topic to the SEP. Within the case of the cystic fibrosis remedies bought by the pharmaceutical firm Vertex, a refusal to use for registration by SAHPRA, thus forcing medical schemes and sufferers to depend on part 21, has allowed the corporate to achieve agreements with particular medical schemes at undisclosed costs. These medicines usually are not obtainable to public sector sufferers.
The unknown unknown
Though the Nationwide Well being Insurance coverage Fund is predicted to be an “lively purchaser”, utilizing its shopping for energy to exert downward stress on costs, bolstered by well being know-how evaluation processes, the precise method through which the costs of medicines can be decided is unclear.
Specifically, how the fund will contract with private and non-private sector suppliers to serve beneficiaries in a selected geographical space, given the present clear separation in pricing, is but to be disclosed. As soon as NHI is totally applied, the present tender system won’t be tenable. A young award to a single provider would instantly make all rivals depart the market. As an alternative, a reimbursement system, maybe nearer to the reference pricing utilized in medical scheme formularies, can be wanted. The complexity lies within the interval of co-existence of the present private and non-private sectors and a nascent NHI.
Has the NDP 1996 been applied?
Though a hard and fast dishing out price proved impractical, some components of the 1996 coverage are discernible. Regulated value will increase are in place, for example. Different components are much less clearly applied, and full transparency stays elusive. There’s a must revisit the whole lot of the nationwide medicines coverage, not least in relation to how greatest to ship entry to inexpensive, quality-assured, important medicines as a part of common well being protection.
*Dr Grey is a Senior Lecturer on the College of KwaZulu-Natal and Co-Director of the WHO Collaborating Centre on Pharmaceutical Coverage and Proof Based mostly Follow. That is a part of a collection of columns he’s writing for Highlight.
Word: Highlight goals to deepen public understanding of vital well being points by publishing quite a lot of views on its opinion pages. The views expressed on this article usually are not essentially shared by the Highlight editors.
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