THE Department of Health has finalised guidelines for assessing new medicines’ " value for money" in the local market, which is expected to help the government and medical schemes to determine which drugs to provide patients.
It will also open their decisions to greater public scrutiny, potentially giving more power to patient groups lobbying for access to expensive new medicines.
The guidelines, which were published in the Government Gazette on February 1 and come into effect on April 1, provide technical details of how pharmaceutical companies should build their arguments for the value-for-money of new treatments compared with the existing standard of care.
This pharmaco-economic evaluation is expected to be done in parallel with pharmaceutical companies’ applications to register new drugs, and will be voluntary for the time being.
The guidelines give the department the power to publish a list of medicines that fail the cost-effectiveness test. It is not clear how the assessment of cost-effectiveness will be linked to the department’s plans to use global benchmarking to control private-sector medicine prices, but it could be used as a last resort if companies and the department cannot agree on benchmark prices.
The development is particularly important for multinational companies that intend to launch expensive new-generation drugs such as biologics, or want to register new uses for existing drugs that are very costly, but is unlikely to have any immediate effect on the generics market, said Aspen Pharmacare’s head of strategic trade, Stavros Nicolaou.
He said the guidelines imposed a "huge" administrative burden and it was not clear what benefit pharmaceutical companies would gain by volunteering information on the cost-effectiveness of their drugs. However University of KwaZulu-Natal pharmacologist Andy Gray suggested pharmaceutical companies might use the voluntary process to gauge the government’s threshold of cost-effectiveness. There was, thus, a danger they would peg their prices to this level, even if the cost of producing them was lower.
As the process for establishing the cost-effectiveness of a new drug was formal and transparent, consumers would be able to see the basis on which medical schemes made their decisions on whether to reimburse members for such drugs, said the department of health’s deputy director-general for regulation and compliance Anban Pillay.
It would also help the Council for Medical Schemes mediate disputes between members and their schemes, he said. The department may also use the cost-effectiveness data for deciding whether to put new medicines onto its Essential Drug List, which guides provincial health departments on which drugs they may purchase.
Vicki St Quintin, chief operating officer of the Pharmaceutical Industry Association of South Africa, which represents global pharmaceutical firms said: "Research and development-based companies have questioned the voluntary basis of the proposed system, and have voiced their concern that the introduction of such an approach may further delay market access."
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