National Health Insurance - UHC

29 SEPTEMBER 2014

Anban PillayDeputy Director General

National Department of HealthSouth Africa

pillaa@health.gov.za

Designing and Managing Medicines Benefits

Outline of presentation• Why NHI for South Africa• Designing the benefit• Selection of the medicine• Procurement design• Market Intelligence• Cost estimates• Drug supply management• Reimbursement of dispensers• Copayments

WHY NATIONAL HEALTH INSURANCE FOR SOUTH AFRICA

LIST OF GINI-COEFFIECIENTS FOR DIFFERENCT COUNTRIES, LATEST WORLD BANK DATABASE

2000 to 2009

South Africa South Africa (2006) 67 2006

Seychelles Seychelles (2007) 66 2007

Comoros Islands Comoros (2004) 64 2004

Micronesia, Fed. Sts. Micronesia, Fed. Sts. (2000) 61 2000

Haiti Haiti (2001) 60 2001

Angola Angola (2000) 59 2000

Honduras Honduras (2007) 58 2007

Colombia Colombia (2006) 58 2006

Bolivia Bolivia (2007) 57 2007

Central African Republic Central African Republic (2008) 56 2008

Guatemala Guatemala (2006) 54 2006

Brazil Brazil (2009) 54 2009

Rwanda Rwanda (2005) 53 2005

Lesotho Lesotho (2003) 53 2003

Nicaragua Nicaragua (2005) 52 2005

Mexico Mexico (2008) 52 2008

Chile Chile (2009) 52 2009

Panama Panama (2009) 52 2009

5

Health Status of South Africans

Distribution of health care resources between public and private sectors

ItemPrivate

sectorPublic

sector

Population per general doctor (243) 588* 4,193

Population per specialist 470 10,811

Population per nurse 102 616

Population per pharmacist (765) 1,852* 22,879

Population per hospital bed 194 399

Results – strong preference for medicines

9

Flow of NHI Funds

National Treasury

SARS

Designing the benefit• Defined list of conditions funded through UHC

if positive list. • Standard treatment guidelines for defined list

of conditions/ common conditions.• Guidelines should define disease severity and

the levels at which this should be managed.• Medicines should be linked to this clinical

guideline - formulary• Clear eligibility criteria for access to restricted

medicines

Selection of Medicines

• Burden of Disease

• Effectiveness

• Safety

• Quality

• Appropriateness

Strategy for medicines not on formulary

• Establish a central fund that manages access to restricted medicines. These may be high cost medicines or restricted use in public health interest.

• Clear criteria for access to such medicines through a transparent evaluation process.

Procurement design

• Options – tender process vs prequalified list of products.

• There are pros and cons to both approaches.• Tenders –

– Pros: likely to achieve a much lower price than pre qual given price vol arrangement.

– Cons: lock out other competitors for a period which may be detrimental to competition, where a supplier is unable to deliver then no alternative supplier immediately available – supply interruptions

Procurement design

• Prequalification list– pros: greater likelihood of maintaining

competition between suppliers; greater patient choice – usually more than 1 item per category.

– Cons: prices are usually higher since no exclusivity; risk of lower priced medicine being dispensed and higher priced item billed to fund

Market Intelligence• How many suppliers are registered to sell a

medicine in the market?• Where are they sourcing the product from?

Same source of base chemicals, API, formulation?

• What is the production capacity of the supplier?

• Importers – T/Cs of agreement with supplier.

Cost estimates

• Estimate likely medicine consumption over the period.

• Explore price volume arrangements with suppliers in the face of volume uncertainty

• Manage the risk of currency fluctuation and changes in the input costs that may affect suppliers

Drug supply management• Drug availability at facility level is as important as

procurement. Procurement strategy must appreciate the risk of stockouts and mitigate against this risk.

• An early warning system regarding medicine non availability should be linked to the procurement system.

• Integration between supplier procurement agreement and dispensing agreement.

• Rebates and discounts to wholesalers and dispensers may lead to inappropriate dispensing and higher costs.

Reimbursement of dispensers Options available: FFS, case based

reimbursement or capitationFFS- risk of overservicing, no incentive not to

dispense medicine, rewards process rather than outcomes

Case based – less incentive to overservice, no incentive not to dispense, some opportunity to reward outcomes.

Capitation – no incentive to overservice, risk of under servicing, can reward outcomes rather than process

Copayments• Difference in cost between reimbursed price vs.

product price. Reimbursed price is usually a maximum.• Reimbursed price must be related to lowest prices in

the market. • Why should manufacturer price be lower than the

maximum reimbursed price?• Where the patient elects to take the originator when a

lower priced generic exists – does the patient pay a copay for the orginator? What is the impact of this on the generic?

THANK YOU

Designing and Managing Medicines Benefits