Medical schemes and members are likely to face having to pay a higher dispensing fee for medicines following the Constitutional Court judgment on the medicine pricing regulations last week.
The court ordered the Department of Health to review the dispensing fee it set for pharmacists in the regulations.
Dr Anban Pillay, the director of pharmaceutical economic evaluation, at the Department of Health, says it is highly likely that such a review will result in the dispensing fee being increased.
The regulations limit additional charges on medicines and originally limited pharmacists' mark-up to a dispensing fee of 26 percent of the cost of the medicine to a maximum of R26. But pharmacists challenged the regulations, first in the High Court and later in the Supreme Court, saying they would not survive on such a fee and predicted that many of them would close down.
The Supreme Court found the medicine pricing regulations to be invalid, but the Department of Health then took the matter to the Constitutional Court which last week found the regulations to be valid but ordered the pharmacists to give the department information necessary to review the dispensing fee.
Pillay says that the Department of Health will try to review the dispensing fee within the next 60 days, but does not know if the deadline is attainable.
A higher dispensing fee will mean that when you pay for medicines from your medical savings account or any limited day-to-day benefit, your funds will be depleted more quickly.
But a higher dispensing fee on medicines that your scheme pays for could create problems for your scheme, which has probably already calculated your contributions for next year. Many schemes are notifying members of changes for next year.
A sharp increase in the dispensing fee could result in interim contribution increases next year. However, a number of schemes say they don't expect a major shock and have based their 2006 contributions on assumptions about what dispensing fee will be charged in future.
Jacky Mathekga, the principal officer of Discovery Health Medical Scheme, says Discovery is currently paying a dispensing fee of 36 percent on the price of medicines to a maximum of R59.40, and expects the revised dispensing fee to have a similar overall cost.
He says this fee was discussed with pharmacy representatives. As it is a significantly higher fee than the fee put forward by the Department of Health, most pharmacies charge at or below the dispensing fee the scheme pays, he says.
Mathekga says international benchmarking of medicine prices - comparing local prices to those in other countries - is expected to be implemented next year and this could result in further costs savings.
Jeremy Yatt, the principal officer of Fedhealth, says after negotiations with United South African Pharmacies, Fedhealth has been paying an uncapped dispensing fee of 36 percent of the price of medicines. Yatt says this was partly to minimise the co-payments members were facing in the confusion around the medicine pricing regulations and partly because Fedhealth regarded the regulations as unfair to pharmacists.
Even by paying the higher fees the scheme has over the year to date seen a 15 percent reduction in average medicine costs per life per month, he says.
Paul la Cock, a senior executive and actuary at Old Mutual Healthcare, says the new dispensing fee is likely to be around 36 percent to a maximum of R36. He says although an increase in the dispensing fee will contribute to medical inflation, tighter regulation of the medicine prices and the dispensing fee will hopefully help contain this element of medical inflation in future.
Velaphi Petsana, the principal officer of Hosmed, says Hosmed built some margins into the pricing for 2006 to provide for the uncertainty about the dispensing fee.
However, the scheme is concerned that pharmacists might in the interim levy different dispensing fees and create confusion.
Heidi Kruger, a spokesperson for the Board of Healthcare Funders which represents medical schemes, said the board welcomed the fact that a decision was taken and that there was a time limit to the uncertainty in the market.