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Pharmaceutical Industry Funding Challenges. Val Beaumont July 07. True Cost Reflection Of Medicines As A Component Of Healthcare Expenditure. Total Meds Incl. Disp Fee. R bn. Total Meds Excl Disp. Fee. CMS Annual Report 2000-6 Disp Fee 2000-2003 = +50%-30% Disp Fee 2004-2005 = Max 26%.

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true cost reflection of medicines as a component of healthcare expenditure
True Cost Reflection Of Medicines As A ComponentOf Healthcare Expenditure

Total Meds

Incl. Disp Fee

R bn.

Total Meds

Excl Disp. Fee

CMS Annual Report 2000-6

Disp Fee 2000-2003 = +50%-30%

Disp Fee 2004-2005 =

Max 26%

Medicine Expenditure Trend Declining Back To 1990’s Levels

regulatory and managed care impact on medicine expenditure 1997 to 2005
Regulatory And Managed Care Impact On Medicine Expenditure – 1997 To 2005

R 16 bn.

Managed Care

Interventions

Drug Utilization Review/Clinical Entry Criteria

Regulatory

Interventions

Medical

Schemes

Act

PMB’s

Solvency

Requirements

Single

Exit Price

PMB

CDL

IBP

Medicines

Expenditure

Unregulated

Regulated

1997

1998

1999

2000

2001

2002

2003

2004

2005

SA Spend On Medicines In Line With International Benchmarks

& OECD Benchmarks

Medicines No Long A Cost Driver In Private Sector

benchmarking medicines as a percentage of healthcare spend 2004 oecd data
Benchmarking Medicines As A Percentage Of Healthcare Spend.(2004 OECD Data)

*

Including Dispensing Fees

Sources: OECD Health Report 2006 (Data 2004), *South Africa 2005-6 CMS Annual Report Figure 12, Pg 50 (Includes Dispensing Fees), ** South Africa 2005-6 CMS Annual Report Pg 88,89,90 Annexure I, Pg 99 Annexure K (Includes Dispensing Fees)

SA Spend On Medicines In Line With OECD Benchmarks

medicine expenditure benchmarked against other healthcare expenditure components
Medicine Expenditure Benchmarked Against Other Healthcare Expenditure Components

If We Include Non Healthcare Expenses In

The Healthcare Pie For 2005

**( 2005-6 CMS = 15.70%)

CMS Annual Report 2005-6

Non Healthcare Costs Consume More Than Medcines

complexity of member access to medicines influencers of patient medicine choices
Complexity Of Member Access To Medicines- Influencers Of Patient Medicine Choices

381

Plan

Options

139 Medical Schemes

Each With Different

Benefits & Rules

Formulary’s

Co-Pays

Clinical

Entry Criteria

DSP’s

Chronic Application Forms

Clinical

Motivation

Forms

Do These Member Access Barriers Lead To Healthier Members?

key challenge for entire healthcare sector focus on cost versus clinical value
Key Challenge For Entire Healthcare Sector- Focus On Cost Versus Clinical Value

Cost

Clinical Value

  • SEP
  • Provider Tariffs
  • Per Diems
  • More Co-pays for members
  • Patient Outcomes
  • Healthcare Outcomes
  • Healthcare Quality
  • Pharmaco
  • - economics

Who provides

The Balance

For

Members?

* Footnote

Source: Source

Does Competing On Cost Alone Lead To Healthier Members?

interests should be aligned for the benefit of healthy members
Interests Should be Aligned For The Benefit Of Healthy Members
  • Provider
  • Managed Care
  • Scheme

Patient

Can We All Do A Better Job In Ensuring Members Are Experiencing Value

from Our Products And Services?

conclusions a more member focused approach
Conclusions: A More Member Focused Approach
  • Medicines No Longer A Cost

Driver In SA Market

Due To Regulatory And

Managed Care Interventions

  • Medicines Costs In Line

With International Benchmarks

  • Members Access To Life

Saving Medicines A Complex

Process Which Might Not

Be Incorporating The

True Value Of The Medicine

  • New Innovative Medicines Have

Been Proven Not To Drive

Total Medicines Costs For

Schemes

Balancing Cost With Clinical

Value For Members Best Interest

Should Be The Focus Area For

All Stakeholders