Feature Article: NHI foundations planted in quicksand

“Without the private health sector, the government won't be able to provide universal healthcare for all South Africans,” said Dr Chris Archer, chief executive of the Private Practitioners Forum. He was referring to the proposal made earlier this month by the Health Professionals Council of South Africa (HPCSA) to introduce a tariff guideline for doctors and dentists. “...it can't afford realistic private practice rates. This is clearly why the HPCSA is apparently so determined to press ahead with its plan, despite the widespread resistance to it that has developed across the professions,” he added.

The private medical sector tariff guidelines, released last August by the HPCSA, immediately attracted criticism from doctors and dentists who claimed that the tariffs were ‘unscientific’ and ‘out of kilter with the reality of running a healthcare business’. This prompted the HPCSA to withdraw the guidelines. This was not the first time that government attempted to ‘control’ prices within the private medical sector and it certainly will not be the last because instead of dropping the idea of introducing price controls, which would incur a number of unintended consequences, the HPCSA seems intent on pressing ahead.

Dr Archer is of the view that HPCSA has a “hidden agenda”, driven by the Minster of Health, Aaron Motsoaledi, to introduce a low guideline tariff schedule to force fees down to a level that the government's planned National Health Insurance (NHI) scheme could afford. According to Motsoaledi, “The NHI will be there within the next five years. Doctors who out-price themselves won’t be part of the NHI; I don’t know what they will be part of. I, as the health minister, need to make sure healthcare is affordable to all South Africans and I can’t be expected to be neutral in the matter”.

While the health minister may have ideological reasons for curtailing the private sector, he has not demonstrated that a state monopoly can provide quality healthcare to the poor. The terrible condition of state hospitals and the chronic shortage of skilled healthcare personnel do not augur well for the future of SA's healthcare should the private sector be significantly scaled-back. The private sector will be increasingly squeezed-out of its operations as the NHI is rolled-out and price controls and other pieces of legislation that hamper the efficient functioning of the market are introduced.

On 1 February, the Department of Health (DoH) published guidelines for assessing new medicines’ ‘value-for-money’ in the local market. The guidelines, which come into effect on 1 April, 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 so-called pharmaco-economic evaluation is expected to be done in parallel with pharmaceutical companies’ applications to register new drugs with the Medicines Control Council (MCC) and will be voluntary for the time being.

I have commented extensively that, because of current requirements, delays of up to five years can occur before a new drug is given MCC approval. Given that intellectual property rights protection lasts for a maximum of 20 years, these delays eat into the patent life of the drug, which reduces its commercial value and deters other research and development. These delays hamper access to medicines and could have potentially deleterious consequences for patients who need these drugs. Clearly the MCC is already struggling to fulfil this bureaucratic requirement so I find it bizarre that yet another layer of bureaucracy should be added.

It appears that the DoH is drawing upon the experience of developed countries’ efforts to provide so-called ‘value-for-money’ drugs. For example, in the UK, the oxymoronically named National Institute for Clinical Excellence (NICE) denies patients access to new and innovative drugs. NICE calculates the cost and benefits of each new drug and decides if it would be a suitable use of the NHS's fixed pool of cash, thereby, ostensibly, providing an economic and clinical basis to the NHS formulary. In reality, NICE gives economic and clinical justification for rationing. Should a government bureaucrat have the power to put a value on a patient’s life? Surely, that decision rests between the patient and doctor?

The results of this proposal in SA are entirely predictable. There will be a lack of local data, especially cost data, to use in the models. Given the lack of capacity at the MCC, there is no reason to assume that there will be sufficient capacity – or even a willingness – to examine and understand the data requirements for this new proposal. Ultimately, the system will get slower, the delays longer and patients will end up with even less access and choice.

A simple regulatory impact assessment can be undertaken before the proposal is implemented. Take a handful of medicines over the course of the past decade, where there has been no dispute that they have represented significant advances for patients around the world, and try to plug the cost data into the model to check if they pass the ‘value-for-money’ test. I am confident that the majority of drugs will fail the test, and thus reveal the deficiencies in the application of this proposal.

To impose a requirement that the MCC cannot and will not be able to fulfil is yet another example of the government’s intention to move ahead with the NHI regardless of the implications for the welfare of all South Africans, rich or poor, who require medical assistance and care.

Author Jasson Urbach is a Director of the Health Policy unit (a division of the Free Market Foundation). This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the authors’ and are not necessarily shared by the members of the Foundation.


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