Health Minister Aaron Motsoaledi has gazetted an increase in the single exit price for medicines and scheduled substances, which the pharmaceutical industry says is “pitifully low” and will have a devastating impact on small manufacturers, in particular. Business Day reports that the Pharmaceutical Task Group, which represents all the formalised trade associations and covers about 95% of the market, plans to take up the 1.26% increase with the minister in a bid for him to use his discretion to decide on an increase that is higher than that generated by the formula used.

Aspen Pharmaceutical senior executive Stavros Nicolaou said that while the industry agreed that the increase was based on the formula, the minister had discretion to make decisions outside of it. In the long term, the industry wants to have the formula restructured so it adequately reflected market forces.

“In the past, the formula has only been used as a guide. The minister does have the discretion to operate outside of it and has applied this previously. Although the percentage increase was not totally unexpected, it does not accurately reflect real market conditions insofar as some of the inflationary drivers in the industry are concerned, such as input costs and salaries and wages,” Nicolaou is quoted in the report as saying. Medical scheme increases, for example, had been much higher than the 1.26% – between 7% and 10.5%.

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