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:11/30/2015)... -- Booth #4303 – The Imaging Components business of Varian ... array of products in a new booth (#4303) at the ... America in Chicago this ... components "At the Heart of Imaging." Products will include a ... Claymount brand, and computer-aided diagnostic software from MeVis as well ...
(Date:11/30/2015)... -- Hanger, Inc. (NYSE: HGR ) (the "Company") today ... its previously announced consent solicitation (as amended and restated, ... amount 7⅛% Senior Notes due 2018 (the "Notes") to ... pursuant to the Consent Solicitation, (ii) the proposed increased ... date of the Consent Solicitation.    ...
(Date:11/30/2015)... , Nov. 30, 2015   VolitionRx Limited (NYSE ... diagnostic tests for a broad range of cancer types and ... LD Micro Conference, which will be held December 1 - 3 ... from VolitionRx will be David Kratochvil , Chief Financial ... of Investor Relations. ® blood-based tests for ...
Breaking Medicine Technology:
(Date:11/30/2015)... ... November 30, 2015 , ... It’s inevitable that everyone ... member, close friend, or animal pass away, death lives among us. It is your ... Coming from a family of 11 children, author T Sky understands that she may ...
(Date:11/30/2015)... ... November 30, 2015 , ... ... announce the speakers for “Value-Based Payer-Provider Partnerships: Three Case Studies,” an upcoming ... value-based care arrangements: Essentia Health and UCare, MissionPoint Health Partners, and Intel ...
(Date:11/30/2015)... IL (PRWEB) , ... November 30, 2015 , ... The ... an emerging pharmaceutical company. Because it is so important to this key industry segment, ... Factors in your IND Filing” on December 4th at 11am EST. , Federal law ...
(Date:11/30/2015)... ... November 30, 2015 , ... Insightra Medical, Inc. ... Surgical Mesh technology for soft tissue repair in the US via Insightra’s national ... resorbable surgical mesh intended to support and reinforce soft tissue for 6-9 months ...
(Date:11/30/2015)... (PRWEB) , ... November 30, 2015 , ... ... & Laser Center is one of a select few plastic surgeons in the ... non-surgical fat removal. , SculpSure™ is the world’s first heat-induced laser treatment for ...
Breaking Medicine News(10 mins):