Variation in Prices of Medicines Used in the Management of HIV, Type 2 Diabetes Mellitus, and Hypertension in South Africa’s Private Sector, 2022

Abstract

Background: There is significant variation in the price of medicines used to manage chronic diseases in the private health sector in South Africa. Understanding pricing structures can aid in reducing out-of-pocket payments, enhancing access, and improving medicine affordability. This study aimed to investigate the sources of variation in private sector single exit price (SEP) of medicines used in the management of Human Immunodeficiency Virus (HIV), type 2 diabetes mellitus (diabetes), and hypertension. Methods: This was a cross-sectional quantitative study design using private sector price data published on the Medicine Price Registry (MPR) as of July 11, 2022. To quantify the variation in SEP, the mean, median, and range was calculated for each Anatomical Therapeutic Chemical group (ATC) at level two (ATC2) and active ingredient. Decomposition using Shorrocks' method was used to examine the contribution of price sub-components, namely manufacturer fees and logistics fees to medicine price variations. Field’s inequality decomposition was used to understand the contribution of non-pricing-related factors such as origin of manufacturer and generics to medicine pricing variations. Results: Varying patterns were observed across disease classes, with HIV medicines showing the highest variability and overall highest average SEP per unit. Anti-hypertensives showed the least variation in SEP per unit. Variation in manufacturing costs consistently drove price inequalities across the three disease groups, overshadowing logistics fees. Field’s decomposition unveiled significant contributors to price disparities, such as drug class and origin of manufacturer. For example, hypertension medication pricing was affected by the number of available brands, while HIV medicine price variation was mostly influenced by combination formulations. Conclusions: The findings reveal the complex nature of medicine pricing in South Africa, impacted by regulatory policies and market dynamics. Considerable medicine price variation for HIV, diabetes and hypertension medicines was attributable to both pricing and non- pricing related factors. Policies to control prices of medicines should encompass both, including direct price controls, regulatory frameworks, and generic medicine policies. Policies that promote generic substitution can shift demand towards more cost-effective alternatives, contributing to more uniform pricing and increased access.