Reducing the costs of medicine by dispensing generic medicine
25 September 2013
Presented by:
Christo Rademan – Managing Director

1. Where does the data come from?
2. Legislation regarding generic substitution
3. Generic utilisation trends in Namibia
4. Factors that drive generic utilisation
5. Measures to promote generic utilisation

• Pharmaceutical Benefit Management Company
• Experienced – was established in 1989 and has been in business for more than 24 years
• An independent company with 119 staff members
• 85 Clients: medical schemes, insurance products, sick funds, price files
• More than 1.6 million lives
• Namibia: 4 open & closed schemes

• Medicines and Related substances control Act,
2003 (Act 13 of 2003)
• Came into effect August 2008
“A pharmacist must inform all members of the public of the benefits of substituting the requested medicine with an interchangeable multi-source medicine”
“And may dispense an interchangeable multi-source medicine instead of the medicine on the prescription”

• Namibia 31-45%
• RSA
• USA
53%
70%+

80
70
60 57.0%
50
40 43.0%
30
20
27.7%
10
15.3%
0
South Africa
73.2%
53.4%
26.8%
19.8%
Generic equivalents
Branded products - patent expired
Branded products - valid patent
% Generisized

56
54
52
50
48
46
44
42
40
South Africa Namibia

65
60
61.9%
Namibia
61.1%
55
Legislation had no impact
50
47.5%
45 44.9%
40
Generic utilisation rate % Generisized

70
60
50
40
30
20
10
0
61.9%
47.5%
38.1%
14.7%
Namibia
61.1%
44.9%
38.9%
16.2%
Generic equivalents
Originals - expired patent
% Generisized
Originals - valid patent

% Expenditure % Volume
34.4
38.9
47.2
18.5
16.2
Generic equivalents Original - expired patent Original - valid patent
44.9

Per benefit category (2013)
40
30
20
10
60
50
0
Acute Chronic Oncology OTC Other HIV

Generic medicines as a source of affordable health care
1.58
(N$141.63)
Originals - valid patent
Originals - expired patent
Generic equivalents
1.48
(N$132.74)
1.00
(N$89.42)
Based on 2013 data

200
R2.52
N$1.72
150
R1.39
N$1.51
100 R1.00
N$1.00
50
0
Generics Original - expired patent
South Africa
Original - valid patent
Namibia

Current dispensing fee structure –
SA vs. Namibia
Namibia RSA
SEP
+
50% Mark-up
+
Dispensing fee (N$4.50)
+
Broken bulk
SEP < R100: 28%
SEP ≥ R100: R28
NB: Namibian fee structure rewards dispensing expensive products

Government Gazette, 19 November 2010
Single Exit Price (SEP) band (incl. VAT)
<R75
≥R75 to <R200
≥R200 to <R700
≥R700
Fixed fee
(excl. VAT)
% Mark-up on SEP
(excl. VAT)
R6
R15.75
R51
R121
46%
33%
15%
5%

Impact of SA max legislated dispensing fee on Namibia
Ingredient cost band
Less than N$75 67.2
≥ N$75 and <
N$200
≥ N$200 and <
N$700
23.7
8.6
≥ N$700 0.5
%
Items
%
Ingredient cost
Ingredient cost per item
(N$)
Current mark-up fee structure
Fee per item (N$)
% Markup
Proposed 1: GG 33775, 19 Nov 2010
Fee per item (N$)
% Markup
% Diff. in total cost
% Diff. in fee per item
26.0
36.06
18.03
50.0
25.81
71.6
14.4
43.1
31.2
28.4
14.3
122.76
306.04
2 643.89
61.38
153.02
1 321.95
50.0
50.0
50.0
64.29
110.98
289.85
52.4
36.3
11.0
1.6
-9.2
-26.0
4.7
-27.5
-78.1
50.0
43.61
46.9
-2.1
-6.3
Total 100.0
100.0
93.06
46.53
Data: Namibian Medical Scheme

Factors that drive / influence generic utilisation
• Availability of generic alternatives
• Mandatory generic substitution
• Prescriber and provider education / attitudes
• Provider incentives
• Procurement behaviour of providers
• Consumer education
• Funder rules / benefit design
 Generic reference pricing
 Formularies

Promoting generic utilisation - funders
Active pharmacy management
Engaging roll players to promote generic utilisation
Provider engagement – actively monitor pharmacy performance
• Applying management tools (Patient Experience
Monitor)
• Monitoring co-payments at the point of service
• Engaging with pharmacy to change dispensing behaviour
• Specifying acceptable, cost-effective products during chronic authorisation

Promoting generic utilisation - funders
Member engagement – inform member of costeffective generic alternatives
• Promote high-performing pharmacies by area
• Communicating these pharmacies via the authorization process
• SMS messaging to members regarding copayments
• Communicating quarterly with pharmacies

Tools to measure and model pharmacy behaviour

Mediscor Pharmacy Management
Objectives:
• To actively work with Pharmacy to optimize dispensing behaviour
• To reduce member co-payments, driving the concept of a ‘wallet-free’ experience
• To drive generic substitution towards the use of
Mediscor reference price (MRP) products
• To drive members towards network pharmacies
Ensures cost-effective delivery of benefits

Value of PEM – Optimizes the experience
• Measures the ideal behaviour per line
 That can be rolled up by Option, Pharmacy, Group, etc.
 Very powerful
• Enables meaningful engagement at Pharmacy level
• Enables network contracting and management
Provides the ability to form preferred partnerships

Tools to measure and model pharmacy behaviour

• Generic utilisation decreased over the past 4 years
• 16% of volume is from brands with patent expired
• Multiple factors influence generic utilisation
• Legislation had no impact!
• Behaviour change needs to be driven by:
 Rewards & incentives
 Education
 Provider engagement
• Misalignment of provider and funder interests to be resolved

Any Questions?