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?