The Impact of the Implementation of Single Exit Pricing for Pharmaceuticals in South Africa
The impact of the implementation of single exit pricing for pharmaceuticals in South Africa
Daleen Pretorius
A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Business Administration
Johannesburg, 2011
ABSTRACT
Pricing regulations have been implemented within the pharmaceutical industry in South Africa to ensure improved access to healthcare. The implementation of the Single Exit Price (SEP) effectively meant that the private pharmaceutical sector had to adjust from a free to a regulated market, where prices had to be cut and discounts discarded. The pricing structure changed to a transparent structure. These price ceilings resulted into a decrease in gross profit margins within independent, group and hospital pharmacies in the private healthcare sector. The aim of this research was to explore the impact of the implementation of SEP for pharmaceuticals in the private sector in South Africa through considering consistent pricing benefits to the patients as well as the changes in the business environment for retail pharmacies. A mixed methodology approach was pursued, using both quantitative and qualitative data analysis. A specific and actual price was obtained for certain medicines from 50 pharmacies to determine if consistent pricing benefits were experienced by patients through the introduction of SEP. This construed the quantitative data. In addition to this, 22 semi-structured interviews were conducted with pharmacy managers from independent, group and hospital pharmacies to determine the changes in the business environment following the introduction of SEP. thematic perspective. Key findings from the research were that consistent pricing benefits were not realised to patients following the introduction of pricing regulations, and specifically SEP. Changes in the business environment of private retail pharmacies,
Daleen Pretorius
A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Business Administration
Johannesburg, 2011
ABSTRACT
Pricing regulations have been implemented within the pharmaceutical industry in South Africa to ensure improved access to healthcare. The implementation of the Single Exit Price (SEP) effectively meant that the private pharmaceutical sector had to adjust from a free to a regulated market, where prices had to be cut and discounts discarded. The pricing structure changed to a transparent structure. These price ceilings resulted into a decrease in gross profit margins within independent, group and hospital pharmacies in the private healthcare sector. The aim of this research was to explore the impact of the implementation of SEP for pharmaceuticals in the private sector in South Africa through considering consistent pricing benefits to the patients as well as the changes in the business environment for retail pharmacies. A mixed methodology approach was pursued, using both quantitative and qualitative data analysis. A specific and actual price was obtained for certain medicines from 50 pharmacies to determine if consistent pricing benefits were experienced by patients through the introduction of SEP. This construed the quantitative data. In addition to this, 22 semi-structured interviews were conducted with pharmacy managers from independent, group and hospital pharmacies to determine the changes in the business environment following the introduction of SEP. thematic perspective. Key findings from the research were that consistent pricing benefits were not realised to patients following the introduction of pricing regulations, and specifically SEP. Changes in the business environment of private retail pharmacies,
References: Table1: Regulated Dispensing Fees for Pharmacies in the Private Health Care Sector (Motsoaledi 2010).........................................................14 Table 2: Table 3: Quantitative, Mixed and Qualitative Methods (Creswell 2009) .......26 Demographic Data Including Functional Roles Reported by Respondents ....................................................................................34 2 Factors influencing the increase in medicine expenditure include an increase in the utilisation of member benefits, changes in medicine mix used by the population as well as more expensive therapies (Bester 2009)