The South African private healthcare system saved a record R7.2-bn in cost of medicines in the past year from the increased use of generic medicines alone. Albeit encouraging, generics only contributed 40% of the total R22-bn annual expenditure on medicines.
Paul Anley, CEO of local generics firm Pharma Dynamics, says even though generic use stands at 56% in the private sector, the substitution rate should be higher and more in line with the international average of 80% to increase the benefit of generics as cost savers.
“Doctors in the private setting continue to prescribe brand name medicines where generics are already available and patients in turn continue to pay co-payments to get what the doctor prescribed, which unnecessarily drives up healthcare costs. About 18% of medical aid patients are not taking a generic when they can.”
He says with R7.2-bn in savings from last year alone, it is clear that generics have and will continue to play a critical role in lowering health cost projections.
“Local overall healthcare spend could be slashed by a further R4-bn if patients take advantage of the newer generics on the market. More than 18% of originator drugs have come off patent recently which has opened the door for generic competition to drive down costs. Savings will continue to grow substantially as we enter the era of biosimilars, which is the next frontier of generic industry innovation.
“It’s also a myth that since the implementation of the Hatch-Waxman Act in the late 90s there has been a slow-down in the innovation of new medicines. Since then, multiple new medicines have been introduced to treat a range of conditions. By creating a fair balance between innovation of new medicines and accessibility to lower-cost generic medicines, it’s a win-win for providers and consumers,” he says.
The jump in use of generics this past year was primarily driven by several branded heavyweights losing their patent protection in 2014, which included esomeprazole and rosuvastatin used to treat GORD and GI ulcers and hypercholesterolaemia respectively. The market entry of more affordable generic equivalents gave thousands more patients access to these life-saving medicines.
Anley points out that the sustainability of the healthcare system and the national economy depend in significant measure on the availability of affordable medicines.
“Overall, the current levels of generic use in SA is fair, but there is potential for increased savings from generic medicine use both through increased availability and through increased substitution, particularly when it comes to therapeutic substitution among private healthcare providers,” concludes Anley.