Navigation Links
Frost & Sullivan: Lack of Proper Price Regulation for Pharmaceuticals

CAPE TOWN, South Africa, Nov. 12, 2012 /PRNewswire/ -- Given the high burden of Sub-Saharan Africa's infectious diseases, improvements in healthcare systems are crucial to addressing these underlying issues. A lack of proper price regulations for essential medicine, however, remains a key challenge, threatening accessibility of medicine and continuing to place strain on out-of-pocket payments for pharmaceuticals.

Prices vary significantly within many Sub-Saharan Africa countries, as pharmaceutical products move down the value chain. Wholesalers and distributors in Zimbabwe for instance, add mark-ups of as much as 43% for branded and generic drugs, while innovator drugs are marked up as high as 45%. The same situation is evident in Malawi. Retail pharmacies add price mark-ups of approximately 35% for innovator and branded generic drugs, while generic drugs are marked up by an average of 25%.

"Given the high reliance on out-of-pocket expenditure for healthcare (approximately 72.4% for the Sub-Saharan Africa region) the ultimate burden of these high drug prices rests on private consumers who have to spend more for their medication," stated Frost & Sullivan's Healthcare Research Analyst Kudzai Moyo.

Health expenditure per capita in Malawi and Zimbabwe is $19.00 and $78.60, respectively, and any significant increase in the price of pharmaceuticals down the value chain has adverse effects on access to medication. Pharmaceuticals procurement by governments may, however, be insulated from these high price margins. Favourable prices are negotiated with manufacturers by leveraging on monopsonistic buying power to set prices below more liberalised prices, or alternatively if competitive bids are used.

"In contrast, the Mauritian government has imposed profit controls to manage spending on pharmaceuticals. A maximum allowable profit margin of 9% is set for pharmaceutical wholesalers and distributors, while retail pharmacies are allowed a maximum profit margin of 21.6%," noted Moyo. "Failure to adhere to these price caps result in significant fines. This is one manner in which the Mauritian government is keeping the prices of pharmaceuticals affordable."

Profit controls limit the amount of profit a pharmaceutical wholesaler or distributor may earn per product. Nevertheless, industry participants often see these price regulations as suppressive. Due to the low profit margins, sustainability for wholesalers only comes from large trading volumes, while other distributors are expanding into high profit margin food supplements.

Although, responsible authorities should look into ways of capping these exorbitant mark-ups, there should be a balance between access and liberal market policies.

The governments' actions should be focused on creating an environment that would best encourage a constant flow of new and innovative medicines to the market, providing substantial health benefits to consumers, Moyo concludes.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants.

Our "Growth Partnership" supports clients by addressing these opportunities and incorporating two key elements driving visionary innovation: The Integrated Value Proposition and The Partnership Infrastructure.

  • The Integrated Value Proposition provides support to our clients throughout all phases of their journey to visionary innovation including: research, analysis, strategy, vision, innovation and implementation.
  • The Partnership Infrastructure is entirely unique as it constructs the foundation upon which visionary innovation becomes possible. This includes our 360 degree research, comprehensive industry coverage, career best practices as well as our global footprint of more than 40 offices.

For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organisation prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies?

Contact Us:     Start the discussion

Join Us:           Join our community

Subscribe:       Newsletter on "the next big thing"

Register:         Gain access to visionary innovation

Samantha James
Corporate Communications – Africa
P: +27 21 680 3574
F: +27 21 680 3296

SOURCE Frost & Sullivan
Copyright©2012 PR Newswire.
All rights reserved

Related medicine technology :

1. Frost & Sullivan Solidifies the Prominence of Leading Organizations through Best Practice Recognition
2. Frost & Sullivan: Global Increase in Adoption of Real-Time Location Systems Depends on Technological Innovations
3. Radiopharmaceuticals and Contrast Media: Frost & Sullivan Predicts Market Growth in Europe
4. Frost & Sullivan: U.S. Medical Imaging Informatics Industry Reconnects with Growth in the Enterprise Image Archiving Market
5. Frost & Sullivan: Miniaturization of Medical Devices Reduces Mortality Rates among Cardiac Dysrhythmia Patients
6. Anesthesia Equipment and Associated Peripherals: Advanced, Patient-Friendly Devices Will Sustain Market Growth in Europe, States Frost & Sullivan
7. Advanced Knee Implants Serve a Wider Patient Pool in North America, Finds Frost & Sullivan
8. Frost & Sullivan Lauds IncellDx for Developing a Novel, Non-invasive Method for Cervical Cancer Testing
9. Frost & Sullivan Predicts Growth for the European Vaccines Market
10. Frost & Sullivan: Where Will Laboratory Budgets be Allocated?
11. Frost & Sullivan Acknowledges the Value Dell Healthcare and Life Sciences Brings to the Enterprise Imaging Informatics Marketplace
Post Your Comments:
(Date:11/26/2015)... 26, 2015 ... of the  "2016 Future Horizons and ... Drug Monitoring (TDM) Market: Supplier Shares, ... Opportunities"  report to their offering.  ... the addition of the  "2016 Future ...
(Date:11/26/2015)... , November 26, 2015 ... the addition of the  "2016 Future ... European Cell Surface Marker Testing Market: ...  report to their offering.  --> ... addition of the  "2016 Future Horizons ...
(Date:11/25/2015)... WOODBURY, N.Y. , Nov. 25, 2015  Linden ... access and optimizing treatment outcomes for patients suffering from ... its request for a Temporary Restraining Order (TRO) enjoining ... between the two companies. --> ... aggressively pursuing all of its legal options. ...
Breaking Medicine Technology:
(Date:11/27/2015)... , ... November 27, 2015 , ... ... the well-respected Microsoft Dynamics SL User Group (MSDSLUG). Recognized as Microsoft’s official group ... group of Microsoft Dynamics SL software users, partners, industry experts and representatives. Intellitec ...
(Date:11/27/2015)... ... November 27, 2015 , ... The men ... prominent nonprofit healthcare organizations in the country. They have overseen financial turnarounds, shown ... helped advance the healthcare industry as a whole through their advocacy and professional ...
(Date:11/26/2015)... ... November 26, 2015 , ... Inevitably when people think Thanksgiving, ... choose to buy during the Black Friday and Cyber Monday massage chair sales ... search the Internet high and low to find the best massage chair deals, they ...
(Date:11/26/2015)... ... November 26, 2015 , ... PRMA Plastic Surgery is updating ... our surgeons performed their 6,000th free flap breast reconstruction surgery! , “What an accomplishment ... day excited to rebuild lives and it’s an honor to have served all of ...
(Date:11/25/2015)... BROOK, Ill. (PRWEB) , ... November 25, 2015 ... ... larger and potentially more aggressive than those found on mammography, according to a ... MRI findings of additional cancers not seen on mammography may necessitate a change ...
Breaking Medicine News(10 mins):