Single Exit Pricing (SEP) of Selected Mul source Interchangeable Medicines between 2018-2022: Assessment of Pricing and Product Con nua on in the South African Private Sector

Abstract

Background In developing countries, medicines represent a major component of healthcare costs. The high cost of drugs can limit funding available for other investments in health and can create unaffordable out-of-pocket costs for individual pa ents. Understanding medicine pricing policies and their intended and unintended outcomes is crucial. With South Africa having put in place the Single Exit Pricing (SEP) policy in the 2000s for the private sector market, the effects of this policy on the pricing and con nua on of selected essen al medicines have not been studied for more recent years. The research evaluates the impact of the Single Exit Pricing (SEP) policy on pricing and product con nua on trends between 2018 and 2022. This is the first analysis of SEP trends and product con nua on between 2018 and 2022, providing recent evidence for policymakers on pricing regula on, product availability, and generic market dynamics.

Method This research used the Mediprax database for a descrip ve, quan ta ve analysis of discon nua ons and pricing for a selected basket of South African registered medicines between 2018 and 2022. The World Health Organisa on and Health Ac on Interna onal (WHO/HAI) classifica on was used for product selec on. The NAPPI® codes in the Mediprax database which are unique iden fica on codes for healthcare products enabling the electronic transfer of informa on for reimbursement were used to represent individual Stock Keeping Units (SKUs) which are unique, alphanumeric codes for each specific drug variant (with different dosage form, strength, or pack sizes) to enable tracking of iden cal inventory.

Results The Single Exit Price (SEP) mechanism effec vely capped annual price increases for Schedule 1 and higher medicines, with observed average annual increments between 2018 and 2022 remaining well below the s pulated SEP ceilings of 3.50%–4.60%. Over the five years, pricing increases of approximately 3.14% for the global core medicines, 2.02% for the regional core medicines, and 2.50% for the supplementary medicines suggest that medicine prices rose broadly rather than exhibi ng sharp escala ons that could undermine access. In prac cal terms, this indicates that SEP func ons as an effec ve price-containment tool, limi ng cost burdens on pa ents and funders while maintaining predictable pricing trends for manufacturers. Most discon nued medicines showed declining or stagnant price increments in the years before discon nua on. Intra-basket comparisons show that these products were discon nued even when trading at compe ve prices. This suggests that discon nua on decisions may be driven by pricing pressures, reduced volumes and heightened compe on. The predominance of generics among withdrawn products across all three medicine categories may indicate that sustained low pricing in highly compe ve markets may reduce commercial viability over me. In total, 55 SKUs were discon nued between 2018 and 2022 from the selected basket, with the highest number of SKUs being discon nued in 2021. Of these discon nua ons, 30 were from the global core list, 15 from the regional core list, and 10 from the supplementary list of medicines. The concentra on of discon nua ons within the global core list despite its rela vely higher average price increments suggests that higher SEP increments do not necessarily translate into improved sustainability for suppliers. Instead, the interac on between SEP constraints, price compe on, and external regulatory influences appears to shape manufacturer behaviour, leading to SKU ra onalisa on.

Conclusions This research concludes that the SEP policy has not had a significant impact on the discon nua on of medicines over the period studied between 2018 and 2022. It has resulted in a cost-saving benefit for the private healthcare sector in South Africa. Overall, the findings indicate that, while SEP can be a contribu ng factor to some product withdrawals by introducing compe on among some stock-keeping units (SKUs), it does not appear to be the primary reason behind the withdrawal of the selected products between 2018 and 2022. By linking SEP price trends to product withdrawals, the study provides ac onable insights for regulators, policymakers, and private healthcare providers.