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Reducing the costs of medicine by dispensing
generic medicine
25 September 2013
Presented by:Christo Rademan – Managing Director
Contents
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
Mediscor PBM
• 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”
Legislation: Mandatory generic substitution
• Namibia 31-45%
• RSA 53%
• USA 70%+
Generic utilisation rate (2013)
Generic utilisation
trends
Generic utilisation trendsSouth Africa
0
10
20
30
40
50
60
70
80
Per
cen
tage
Generic equivalents Branded products - valid patent
Branded products - patent expired % Generisized
73.2%
43.0%
53.4%
27.7%19.8%
15.3%
26.8%
57.0%
Generic utilisation – SA vs. Namibia
40
42
44
46
48
50
52
54
56
Perc
enta
ge
South Africa Namibia
Generic utilisation trendsNamibia
40
45
50
55
60
65
Perc
enta
ge
Generic utilisation rate % Generisized
47.5%
44.9%
61.9%61.1%
Legislation had no impact
Generic utilisation trendsNamibia
0
10
20
30
40
50
60
70
Perc
enta
ge
Generic equivalents % Generisized
Originals - expired patent Originals - valid patent
61.1%
47.5% 44.9%
38.1%
16.2%14.7%
38.9%
61.9%
Generic utilisation 2013
% Expenditure % Volume
34.4
18.5
47.2
Generic equivalents Original - expired patent Original - valid patent
44.9
16.2
38.9
Generic utilisationPer benefit category (2013)
0
10
20
30
40
50
60
Perc
enta
ge
Acute Chronic Oncology OTC Other HIV
Generic medicines as a source of affordable health care
1.58(N$141.63)
1.48(N$132.74)
1.00 (N$89.42)
Originals - valid patent
Originals - expired patent
Generic equivalents
Based on 2013 data
0
50
100
150
200
Generics Original - expiredpatent
Original - valid patent
Rand /
N$
South Africa Namibia
Cost per item – SA vs. Namibia
R1.00
R1.39
R2.52
N$1.00
N$1.51
N$1.72
Namibia RSA
SEP +
50% Mark-up+
Dispensing fee (N$4.50)+
Broken bulk
SEP < R100: 28%SEP ≥ R100: R28
Current dispensing fee structure – SA vs. Namibia
NB: Namibian fee structure rewards dispensing expensive products
Government Gazette, 19 November 2010
Single Exit Price (SEP) band (incl. VAT)
Fixed fee (excl. VAT)
% Mark-up on SEP (excl. VAT)
<R75 R6 46%
≥R75 to <R200 R15.75 33%
≥R200 to <R700 R51 15%
≥R700 R121 5%
SA maximum legislated dispensing fee
Data: Namibian Medical Scheme
Ingredient cost band
% Items
% Ingre-dient cost
Ingre-dient
cost per item (N$)
Current mark-up fee structure
Proposed 1: GG 33775, 19 Nov 2010
Fee per item (N$)
% Mark-up
Fee per item (N$)
% Mark-up
% Diff. in total cost
% Diff. in fee per
item
Less than N$75 67.2 26.0 36.06 18.03 50.0 25.81 71.6 14.4 43.1
≥ N$75 and < N$200
23.7 31.2 122.76 61.38 50.0 64.29 52.4 1.6 4.7
≥ N$200 and < N$700
8.6 28.4 306.04 153.02 50.0 110.98 36.3 -9.2 -27.5
≥ N$700 0.5 14.3 2 643.89 1 321.95 50.0 289.85 11.0 -26.0 -78.1
Total 100.0 100.0 93.06 46.53 50.0 43.61 46.9 -2.1 -6.3
Impact of SA max legislated dispensing fee on Namibia
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
Measures to promote generic
utilisation
Success is achieved by
engaging all the role
players
Promoting generic utilisation - funders
Active pharmacy managementEngaging roll players to promote generic utilisationProvider 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 cost-
effective generic alternatives
• Promote high-performing pharmacies by area
• Communicating these pharmacies via the
authorization process
• SMS messaging to members regarding co-
payments
• Communicating quarterly with pharmacies
Tools to measure and model pharmacy behaviour
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
Mediscor Pharmacy Management
• 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
Value of PEM – Optimizes the experience
Tools to measure and model pharmacy behaviour
Generic efficiency
• 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
Conclusion
Thank you!
Any Questions?
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