Drug industry groups have urged the South African government to abandon proposals to use international reference pricing, or benchmarking, to set price levels for medicines sold through the private sector, claiming that this would reduce multinational drugmakers’ revenues in the country by around 35%.

The Health Department has sought comments on its proposals, published last December, to benchmark South African private-sector prices of innovator drugs at the lowest level among four comparator countries – Australia, Canada, New Zealand and Spain. In addition, the prices of generic versions would be capped at 40% below that of the originator product.

However, a joint submission from the five associations representing the industry in South Africa has reportedly requested the government to set prices based on the average (rather than the lowest) price in the comparator countries, to exempt low-priced products including antiretrovirals from the process and to provide assurances that price reductions would be passed onto consumers.

Influential HIV/AIDS advocacy groups have also told the government to consider price benchmarking as last resort only, and to use market competition instead as a means of driving prices down.

While “there is no magic bullet for ensuring a sustainable supply of affordable essential medicines,” the underlying cause of “unjustifiably” high drug prices in South Africa is the lack of competition, says a joint submission to the government from the Treatment Action Campaign (TAP) and the AIDS Law Project (ALP). The Medicines Control Council (MCC) should have the necessary resources to enable it to assess medicines within a reasonable time period, to avoid delays in generics coming to market, they say, while the state should also use market “creation” strategies such as ensuring that medical schemes fund the use of medicines.

If international comparisons were to be used, more appropriate nations would need to be added to Australia, Canada, New Zealand and Spain, especially developing countries with similar levels of development and/or burdens of disease, say the TAP and ALP. However, they add, benchmarking would at best have little impact, while at worst it would open the door to the “wholesale collapse of the local generic drug industry – primarily by guaranteeing originator medicines a 40% margin, regardless of current patent status.”

– The industry petition represents: the Pharmaceutical Industry of Association of South Africa (PIASA), which was set up in November 2006 with 28 members - including local firms as well as multinationals such as AstraZeneca, GlaxoSmithKline and Janssen-Cilag - and claims to represent around 55% of South Africa’s total private-sector pharmaceutical market; Innovative Medicines SA (Imsa), whose members are Eli Lilly, MSD, Novartis, Pfizer, Roche and Sanofi-Aventis; the National Association of Generic Manufacturers; and the Self-Medication Manufacturers’ Association of SA. By Lynne Taylor