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Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

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Page 1: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

Medicines Review

2013

Page 2: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

Contents

Corita Badenhorst, MPharmMadelein Bester, MPharm

Justine Greeff MBChB, DA (SA)©2014 Mediscor PBM (Pty) Ltd

www.mediscor.net

Executive summary 3

Medicine expenditure trends: 2013 vs. 2012 5

Expenditure comparison 5

Expenditure per benefit type 9

Original products and generic equivalents 11

Pharmacies vs. dispensing doctors 13

Expenditure per therapeutic group 15

Cost-driving products 17

Factors affecting the data 20

Medical scheme demographics 20

The data sample 21

Cost calculations 21

Trend calculations 21

Abbreviations 22

Definitions 23

The patient experience 24

Speciality medicine 28

About Mediscor PBM 32

Contact details details 32

Page 3: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

Executive summary

3

Twenty-five years ago, the world was a place of great change. The year 1989 is now known by historians as the Year of Revolutions. In Eastern Europe, political transformation led to the fall of the Berlin Wall and the end of the Cold War not long after. The first commercial Internet service providers were established, and the first unofficial text message was sent. Mickey Mouse turned 60 and Daniel Radcliffe of Harry Potter fame was born, while Northern Transvaal and Western Province shared the Currie Cup. Amidst all of this, in a little office in Hatfield, Pretoria, Mediscor was established.

It is sometimes hard to believe what we have accomplished in the 25 years since then. Starting with a staff complement of 10 people, offering services to 50 000 medical scheme members, we progressed from a paper-only solution to online real-time claims processing. Today, we manage the pharmaceutical benefits of 1.7 million members who are affiliated with more than 40 clients.

Mediscor was the first pharmaceutical benefit management (PBM) organisation to be accredited by the Council for Medical Schemes as a managed care organisation, recognition of the comprehensive service we offer our clients. All South African pharmacies and dispensing doctors are included in the Mediscor service provider database and we process more than 150 000 real-time transactions each day.

So, it is with immense pride that, on the occasion of our silver anniversary, I present the 12th edition of the Mediscor Medicines Review (MMR). In the preparation of this publication, our team has carefully analysed all the data submitted by pharmacies, doctors and patients in the form of claims in 2012 and 2013.

Only fee-for-service schemes, on behalf of which claims processing was performed for the total period under review, were included, which can roughly be equated to a representation of one million beneficiaries.

Key trends in 2013

For the first time since 2011, medicine expenditure increased for the period under analysis. This increase, measured as the cost per beneficiary per annum, was 1.9% for 2013 when compared to 2012. This is the result of the 2% increase in cost per item. The increase in item cost was, however, offset by a 0.1% reduction in the utilisation of items per beneficiary.

In 2013, the Department of Health permitted a maximum single exit price (SEP) increase of 5.8%. A SEP increase was not permitted in 2011 while for 2012, a maximum increase of only 2.14% was gazetted. From January to May 2013, 42.2% of manufacturers, representing 85.3% of products, took an increase in

SEP of 4% or more. The actual increase in the same representative basket of medicines was only 1.2% in 2012 and 3.9% in 2013.

New chemical entities (NCEs), defined as innovator medicines launched within the preceding five-year period, are potentially major drivers of medicine expenditure. This is because these products are still under patent and have no generic equivalents. The average cost per unit of an NCE is R747, which is 5.5 times greater than that of an established medicine. However, this large cost differential is offset by the fact that only 0.3% of all medicines claimed are NCEs. And, once again, there were no NCEs among the top 50 products.

In terms of expenditure per benefit type, the landscape remained largely unchanged. The greatest proportion was spent on acute medicine, at 40% of total rand value and 49.8% of item volume. Medicines for the treatment of prescribed minimum benefit (PMB) conditions made up the next most popular grouping, with 22.4% of beneficiaries claiming on average 24 items per patient per year.

Once again, the generic utilisation rate increased, from 53.4% in 2012 to 54.5% in 2013. The vast majority (74.8%) of all products claimed were genericised items, and in 72.8% of instances where a generic equivalent was available, the generic was used. Almost 20% of overall expenditure was on original products with expired patents. This observation causes concern, since the average generic equivalent item cost was R96 compared to R131 for originals with expired patents. A great deal of work must still be done to educate prescribers, providers and members on generic substitution and the cost savings that can be gained from this practice, without negatively impacting on the quality of healthcare delivery.

It is always interesting to note the prescription trends of the top 25 therapeutic groups according to expenditure. These products represent 72.3% of overall expenditure, and 64.5% of item volume. In 2013, the top 25 products remained virtually unchanged, and there were no new additions to this list. The top five therapeutic groups, ranked according to contribution to total expenditure, were antihypertensive (11.0%), cytostatic (6.3%), antidiabetic (5.8%), antidepressant (4.4%) and gastric acid-reducing (4.3%) agents. The latter displaced hypolipidaemic agents from the top five, which is not surprising now that generic versions of all the statins are available.

Among the top 50 cost-driving individual products, there were 14 generic products, 29 products for which there are no generic equivalents yet, and seven original products with generic equivalents.

Page 4: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

Executive summary

4

The member experience

Medical schemes are expected to strike a balance between member satisfaction and adequate financial performance. This year, we have noted an increase in medicine expenditure, which is placing strain on our clients in this time of soaring medical inflation. It is imperative to maintain control over costs by employing managed care initiatives, like adopting medicine formularies and encouraging the use of generic medicines. However, this cannot be done at the expense of the member.

Effective benefit design should enable all stakeholders to choose appropriate and cost-effective medicines without transferring the risk to members in the form of a co-payment. Often, the member may be charged a co-payment if the provider charges an amount in excess of the default dispensing fee or scheme rate. Designated service providers are therefore contracted to protect the member against this practice, by applying fees that have been negotiated and agreed upon with the scheme. However, to ensure that the member is protected, the scheme should monitor the adoption of these measures by providers.

Provider performance-based reimbursement (PBR) is currently an important mechanism by which a satisfactory member experience can be ensured, while simultaneously exercising control over medicine expenditure. The Patient Experience Monitor, a Mediscor analytical tool, measures the financial experience of members at point of sale, comparing pharmacy networks and individual pharmacies. Compliance with generic substitution measures, negotiated fees and co-payment application rules can be quantified and trends measured. In this edition of the MMR, as in last year’s offering, we provide more background on how PBR can be paired with other measures to ensure that the needs of both members and schemes are met.

Specialty medicines

As medical technology advances, new and better therapies become available, many of them for conditions for which there previously was no safe

and effective treatment. Many of these NCEs are so-called speciality medicines. These are agents, often biologicals, which can target rare or orphan diseases, require special storage or administration measures, and must be accompanied by intensive educational initiatives to ensure safe and effective management of the member. In addition, these are, without exception, costly medicines.

We have observed the increasing burden that treating complex conditions with biological medicines places on both members and schemes. Managed care organisations like Mediscor have already put in place tight measures to ensure the appropriate use of speciality medicines. In this edition of the MMR, we examine some of these measures, like pre-authorisation procedures, formulary inclusion and speciality benefit design. We also touch on innovations in pharmaceutical benefit management that can be utilised to close loops that currently exist in the access to treatment.

I trust that you will find this edition of the MMR as informative as in previous years, and that you will gain much from it.

Twenty-five years on, the milieu within which we work has become almost unrecognisable to that within which we started off in 1989. We have been faced with challenges and work within situations which we could not have imagined then.

Looking forward, I can only say that Mediscor is as committed now as we ever have been to providing guidance and services that will enable our clients to successfully navigate the potentially turbulent times ahead. We want to ensure that, over the next 25 years, there will be even more satisfied members, providers and schemes.

Yours faithfully

Christo RademanManaging Director

Disclaimer

The information and opinions in this report is to the best of our knowledge accurate as at the date of this publication. This is public information and may be interpreted by organisations, agencies, units of government, or others based on needs. The user is however responsible for the appropriate application. You may distribute this document to other persons provided that you attribute the document as having been generated by Mediscor PBM(Pty) Ltd and that the document is available, free of charge, on the Mediscor website (www.mediscor.net). The information and content provided are for general informational purposes only. Mediscor PBM (Pty) Ltd shall have no liability of whatever nature in respect of any claim, damages, loss or expenses arising out of or in connection with the reliance by you, on the contentof this document. Statistics and opinions contained in this report are published for the assistance of recipients and should not be taken asa substitute for the exercise of judgement by any recipient. Copyright Mediscor PBM (Pty) Ltd. All materials in this report may be reproduced or copied without permission, with citation as to source.

A note from the authors

The authors would like to thank the many individuals that assisted in the production of this publication.

Page 5: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

5

Medicine expenditure trends 2013 vs. 2012

1. Expenditure comparison

Introduction

In contrast with the periods ending 2011 and 2012, medicine expenditure increased in 2013. This increase, measured as the cost per beneficiary per annum, was 1.9% for 2013 vs. 2012, compared to a decrease in expenditure of 5.1% from 2010 to 2011 and another decrease of 0.6% for the period 2011 to 2012 (MMR 2012).

A 2.0% increase in cost per item was the main contributor to the increase in medicine expenditure for 2013. Utilisation, however, decreased by 0.1% over the same period.

The changes in total expenditure, item cost and utilisation from 2012 to 2013 are summarised in Table 1, and the expenditure indicators, in Table 2.

Annual medicine expenditure, calculated as the “rands per beneficiary per annum”,

can be broken down into two components, namely cost and utilisation.

Table 1 Change in key expenditure indicators: 2013 vs. 2012

Key indicator % Change

Total expenditure Average cost per beneficiary ↑ 1.9

Cost componentAverage cost per item ↑ 2.0

Utilisation componentAverage number of items per beneficiary ↓ 0.1

Table 2 Expenditure indicators: 2013

Key indicator 2013

Total expenditure Average cost per beneficiary (R) 2 434

Cost componentAverage cost per item (R) 140

% PrevalenceUtilising beneficiaries as % of total beneficiaries

81.3

Intensity# Items per utilising beneficiary 21.5

The data sample

Analyses performed for this publication were done on the 2012 and 2013 medicine claims database of Mediscor PBM. Only fee-for-service medical schemes, on behalf of which claims processing was performed for the period

under review, were included. Approximately one million beneficiaries were analysed.

Because of growth in our client base, the data sample used in this publication differs from the sample used in previous years.

Useful definitions

Principal member is defined as the person in whose name all contributions are made to the medical scheme.

Beneficiaries include the principal members registered with a medical scheme and their dependants.

Utilising beneficiary is defined as the beneficiary of a medical scheme who accessed the medical scheme benefits, which in this case would be the medicine benefit.

Prevalence is defined as the proportion of beneficiaries that claimed, or the number of utilising beneficiaries expressed as a percentage of the total number of beneficiaries in the population.

Intensity is defined as the number of items claimed per patient or utilising beneficiary.

Page 6: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

6

Medicine expenditure trends 2013 vs. 2012

New chemical entities vs. existing medicines

From 2012 to 2013, expenditure on existing medicines increased by 1.5%. The average cost per item increased by 1.7%, while utilisation decreased by 0.2%.

New chemical entities (NCEs), or novel entities that came to the market during the preceding five-year period (2009 to 2013), also contributed positively to the change in medicine expenditure (0.4% increase).

The basket of NCEs included in this analysis was responsible for 1.7% of the total expenditure and 0.3% of the volume of items in 2013. The average cost per item for the basket of existing medicines was R138, compared to R747 for NCEs. While NCEs made up a small proportion of the volume, they contributed to an overall increase in expenditure, because of the high cost of these entities (Table 3).

The top 10 NCEs per active ingredient are listed in Table 4.

Haematinic agents made up 31.9% of the NCEs for 2013. Mircera® and Aranesp®, two haematinic agents, filled positions one and two of the top NCE list by

active ingredient (Table 4). The haematinic agents are followed by musculoskeletal agents (8.2%), dipeptidyl peptidase-4 (DPP-4) inhibitors (8.1%), cytostatic agents (7.5%) and antidepressants (5.9%) to make up the top five therapeutic groups contributing to overall NCE spend in 2013 (Figure 1).

New chemical entities are novel or innovator medicines that were launched in the South African healthcare market during the previous five years

(2009-2013). These products are still under patent and no generic equivalents are available.

Table 3 Comparison of expenditure on NCEs vs. existing medicines: 2013

Key indicator NCEs Existing medicines

% Expenditure 1.7 98.3

% Volume 0.3 99.7

Cost per item (R) 747 138

% Prevalence 1.6 81.2

Intensity 3.5 21.4

31.9%

8.2%

8.1%7.5%

5.9%

4.8%

4.4%

4.3%

3.8%

3.7%

17.5%

Haematinic agents

Musculoskeletal agents

DPP-4 inhibitors

Cytostatic agents

Antidepressants

Hormonal contraceptives

Smoking cessation agents

Anticoagulants

Biological agents

Anti-Parkinson agents

Other agents

31.9%

8.2%

8.1%7.5%

5.9%

4.8%

4.4%

4.3%

3.8%

3.7%

17.5%

Haematinic agents

Musculoskeletal agents

DPP-4 inhibitors

Cytostatic agents

Antidepressants

Hormonal contraceptives

Smoking cessation agents

Anticoagulants

Biological agents

Anti-Parkinson agents

Other agents

Figure 1 Expenditure distribution of NCEs per therapeutic group: 2013

Page 7: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

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Medicine expenditure trends 2013 vs. 2012

The role of item cost

Item cost increased by 2.0% from 2012 to 2013. In the previous period (2012 vs. 2011), item cost increased by 0.2% (MMR 2012).

Factors that influence changes in item cost include:• Changes in the price of medicines; in other

words, the change in the single exit price (SEP) or ingredient cost of the medicine.

• Changes in dispensing fees.• The number of units dispensed per item (i.e. the

number of tablets or capsules per prescription).• Changes in the mix of medicines used, or the ratio

of relatively more expensive to less expensive products, which may result from competition in the market or the introduction of newer, more expensive technologies.

The cost reported on in this document is the amount charged for the medicine, irrespective of how

the payment is divided between the medical scheme and the member. It reflects the gross cost of medicines, which is equal to the amount paid if no levies were implemented by the medical scheme. Gross cost includes the SEP, the value added tax (VAT) component and dispensing fees

normally payable.

Single exit price

For 2013, the Department of Health allowed a maximum SEP increase of 5.8% based on the SEP value that was applicable on 21 December 2012. This increase was announced in the Government Gazette (No. 36087) of 22 January 2013.

According to the Government Gazette (No. 34959) of 19 January 2012, the Department of Health allowed a maximum SEP increase of 2.14% for 2012. This increase was based on the SEP that was applicable on 9 December 2011.

No annual increase in the SEP was allowed during 2011, as published in the Government Gazette (No. 33961) of 24 January 2011. The Gazette indicated that the SEP for medicines that prevailed on 30 November 2010 may not be increased from 2 January 2011 until 31 December 2011.

The changes in SEP for a basket of medicines, including both scheduled and unscheduled products, available on the market between January 2011 and December 2013 and weighted according to the volume claimed during 2013, are illustrated in Figures 2 and 3.

Table 4 The top 10 NCEs: 2013

NCE rank 2013

Active ingredient

Brand name Therapeutic group Cost per

UB (R)Cost per item (R)

% Preva-lence Intensity

1Methoxy polyethylene glycol-epoetin beta

Mircera Haematinic agent 19 529 3 756 <0.1 5.2

2Darbepoetin alfa-polysorbate

Aranesp Haematinic agent 14 201 2 777 <0.1 5.1

3 Agomelatine Valdoxane Antidepressant 1 504 422 0.2 3.6

4 Tocilizumab Actemra Musculoskeletal agent 35 458 4 746 <0.1 7.5

5 Vildagliptin Galvus DPP-4 inhibitor 1 190 241 0.2 4.9

6Estradiol valerate –dienogest

QlairaHormonal contraceptive

677 161 0.3 4.2

7 Varenicline tartrate ChampixSmoking cessation agent

490 415 0.4 1.2

8 Pegfilgrastim Neulastim Biological agent 13 208 4 590 <0.1 2.9

9 Rasagiline Azilect Anti-Parkinson agent 7 363 940 <0.1 7.8

10 Oxycodone Oxycontin Narcotic analgesic 541 415 0.3 1.3

Note: All brand names are trademarks of their respective manufacturers.

Page 8: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

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Medicine expenditure trends 2013 vs. 2012

Figure 2 Percentage change in SEP: 2011 to 2013

Figure 3 Cumulative percentage change in SEP: 2011 to 2013

2.0

2.5

3.0

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For all scheduled and unscheduled medicines, the change in the cost of the basket, when comparing 2012 and 2013 year on year, was 2.9%. When only Schedule 1 to 8 medicines were taken into consideration, the cost of the basket increased by 2.7%.

The increase in the cost of the basket of Schedule 1 to 8 medicines, for the period January to May of each year, illustrates the average increase in SEP taken by manufacturers in each year:• 2012: 1.2%• 2013: 3.9%.

For the period from January to May 2013, 42.2% of manufacturers, representing 85.3% of products, introduced an SEP increase on Schedule 1 to 8 substances of 4% or more.

The balance of the change in item cost year on year is due to changes in other factors, such as dispensing fees, the number of units dispensed and changes in the mix of medicines used.

Ja

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Page 9: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

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Medicine expenditure trends 2013 vs. 2012

2. Expenditure per benefit type

Mediscor PBM processes and manages a variety of medicine benefit types on behalf of medical schemes. These include acute, OTC (over-the-counter), Chronic Disease List (CDL) as part of Prescribed Minimum Benefits (PMBs), non-CDL chronic, HIV/AIDS, organ transplant, oncology, ex gratia, vaccines, homeopathic and other specialised categories.

Benefit allocation is based on claims processing rules and authorisations; thus, the claiming provider cannot manipulate the allocation of benefits. It is important to remember that benefit allocation is a result of the benefit design and rules implemented by each medical scheme.

For the purpose of this analysis, benefits were grouped into the following main categories: acute, OTC, non-CDL chronic, PMB (CDL and non-CDL), HIV/AIDS, oncology and other. The percentage contributions to total cost and volume for each of these categories for 2013 are illustrated in Figures 4 and 5.

Table 5 summarises the expenditure indicators per benefit type.

In general, expenditure on non-CDL chronic medicines continue to make up less of the total medicine expenditure, while PMB medicines are contributing more to the overall expenditure.

Acute medicine

The largest proportion of medicine spend was again allocated to acute medicines, at 40.0% of total expenditure and 49.8% of item volume. The average cost per item increased from R107 in 2012 to R112 in 2013. The percentage of beneficiaries making use of the benefit category, however, decreased (from 73.8% to 71.2%), while the number of items used per patient increased from 11.9 to 12.2.

OTC medicine

The proportion expenditure on OTC medicine again increased from 4.0% in 2012 to 4.5% in 2013, after increasing from 3.9% in 2011. The volume of OTC claims increased from 9.3% of all items in 2012 to 10.4% in 2013. This is in line with an increase in the percentage of beneficiaires making use of this benefit, from 30.3% to 31.8%.

HIV/AIDS medicine

The expenditure on HIV/AIDS medicine again showed a decrease in most indicators. The average item cost, however, increased from R282 in 2012 to R304 in 2013. As more antiretroviral combination products are becoming available on the market, the average cost per item dispensed increases and the total number of items per patient decreases.

PMB medicine

Overall, slight changes were seen in the expenditure indicators for PMB medicines. A slightly larger proportion of expenditure was allocated to PMB medicines in 2013 (33.9% compared to 33.5%). This is in line with the increase in the volume of claims that was observed. The average item cost increased from R152 in 2012 to R154 in 2013, while prevalence decreased from 22.9% to 22.4%.

Non-CDL chronic medicine

Both the contribution to total expenditure and the contribution to volume again decreased in 2013. The percentage expenditure decreased from 6.9% in 2012 to 5.2% in 2013 and the prevalence decreased from 9.7% to 6.8%.

Oncology medicine

Oncology medicines were responsible for 9.4% of total medicine expenditure and amounted to only 0.8% of the total volume of items claimed in 2013. In line with previous years, 0.8% of beneficiaries claimed for oncology medicines, at an average cost of R29 100 per patient per annum, compared to R27 701 in 2012.

The average item cost and prevalence per benefit category are illustrated in Figure 6. Acute and OTC medicines continued to be high-volume and low-cost categories, with an average item cost of R112 for acute medicines and R61 for OTC medicines. The average oncology product, however, cost R1 735. In turn, 71.2% of beneficiaries claimed for acute medicines, compared to 31.8% for OTC and 0.8% for oncology medicines.

The proportion of expenditure and volume attributed to other benefits, falling outside of the usual benefit categories, continued to increase year on year, as more of these categories are created and managed.

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Medicine expenditure trends 2013 vs. 2012

Table 5 Expenditure indicators per benefit category: 2013 vs. 2012

Key indicator 2013 2012†

Acute benefit

Expenditure (%) 40.0 39.4

Volume (%) 49.8 50.3

Cost per item (R) 112 107

Prevalence (%) 71.2 73.8

Intensity 12.2 11.9

OTC benefit

Expenditure (%) 4.5 4.0

Volume (%) 10.4 9.3

Cost per item (R) 61 59

Prevalence (%) 31.8 30.3

Intensity 5.7 5.3

HIV/AIDS benefit

Expenditure (%) 2.5 2.6

Volume (%) 1.2 1.3

Cost per item (R) 304 282

Prevalence (%) 1.2 1.1

Intensity 16.8 19.4

Key indicator 2013 2012†

PMB benefit

Expenditure (%) 33.9 33.5

Volume (%) 30.7 30.2

Cost per item (R) 154 152

Prevalence (%) 22.4 22.9

Intensity 24.0 23.0

Non-CDL benefit

Expenditure (%) 5.2 6.9

Volume (%) 4.1 5.7

Cost per item (R) 174 166

Prevalence (%) 6.8 9.7

Intensity 10.6 10.3

Oncology benefit

Expenditure (%) 9.4 9.6

Volume (%) 0.8 0.7

Cost per item (R) 1 735 1 798

Prevalence (%) 0.8 0.8

Intensity 16.8 15.4

†MMR 2012

Figure 4 Contribution to total expenditure per benefit category: 2013

Figure 5 Contribution to total volume per benefit category: 2013

30.7%

10.4%

3.1%

0.8%

1.2%

4.1%

49.8%

Acute

Non-CDL chronic

HIV/AIDS

Oncology

Other

OTC

PMB

Acute

Non-CDL chronic

HIV/AIDS

Oncology

Other

OTC

PMB

33.9%

4.5%

4.5%

9.4%

2.5% 5.2%

39.4%

40.0%

Page 11: Medicines Review - Mediscor Medicines Review 2013.pdf · Executive summary 4 The member experience Medical schemes are expected to strike a balance between member satisfaction and

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Medicine expenditure trends 2013 vs. 2012

3. Original products and generic equivalents

The World Health Organization defines a generic medicine as a pharmaceutical product, usually intended to be interchangeable with an innovator product, that is manufactured without a licence from the innovator company and marketed after the expiry date of the patent or other exclusive rights.

The percentage of generic items claimed, also called the generic utilisation rate, increased to 54.5% in 2013, up from 53.4% in 2012 and 52.4% in 2011 (MMR 2012). In 2013, 74.8% of all products claimed were genericised items, which included items for which the patent had expired and their generic equivalents. Furthermore, in 72.8% of instances

where a generic equivalent was available, the generic was used.

In 2013, 37.5% of overall expenditure was on generic equivalents, while 19.0% was on originals with expired patents and 43.5% on originals with valid patents. The expenditure and volume distributions are illustrated in Figure 7.

In 2013, the average generic equivalent item cost was R96, while the averages were R131 for originals with expired patents and R241 for originals with valid patents (Figure 8). Originals with expired patents were on average 36% more expensive than generic equivalents, while originals with valid patents were 150% more expensive.

Figure 7 Expenditure and volume distribution by product type: 2013

0

10

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30

40

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60

Originals with valid patents

Originals with expired patents

Generic equivalents

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% of total volume

Figure 6 Average item cost and prevalence per benefit category: 2013

0

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Acute Non-CDLchronic

HIV/AIDS Oncology OTCOther PMB

Cost per item Prevalence2 000

R112 R174

R304

R1 735

R204

R61R154

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Medicine expenditure trends 2013 vs. 2012

An increase in generic utilisation can result in substantial cost savings for individuals and the funders of health care. This can be achieved through the implementation of formularies and reference pricing, and other benefit design strategies.

It can also be argued that the use of generic alternatives encourages adherence to medicine therapy, since they are more affordable.

A number of approaches can be used to encourage generic utilisation. These include:• Generic reference pricing.• Step therapy, where medicine therapy has to be

initiated with the most cost-effective and beneficial medicine, often a generic.

• Formulary design that promotes generic utilisation.• Benefit design that assigns a higher co-payment

to original medicines.• Consumer education through broad-based media

campaigns, direct communication to medical scheme members or information supplied through pharmacies and prescribers.

• Prescriber and provider education through academic detailing.

• A dispensing fee structure that promotes the dispensing of generic equivalents.

Generic utilisation per benefit category

The generic utilisation rate was highest for chronic benefit categories (non-CDL chronic, HIV/AIDS and PMB benefits) where management is stricter. These benefits are managed by means of formularies and reference pricing, and designated service provider (DSP) arrangements are often in place. The category with the lowest generic utilisation is OTC medicines, where fewer genericised medicines are available and patient choice and brand awareness may have a bigger impact (Table 6).

Generic utilisation per provider type

When comparing the generic utilisation rates, it was apparent that generic utilisation is highest for dispensing general practitioners (GPs) and courier pharmacies. This is consistent with the high volume of chronic medicines dispensed by courier pharmacies and also with the low average item cost observed for dispensing GPs (Table 7).

Table 6 Generic utilisation rate per benefit category: 2013

Benefit categoryGeneric

utilisation rate (%)

Generic uptake (%)

Acute 53.8 76.1

Non-CDL chronic 57.4 77.5

HIV/AIDS 78.2 85.4

Oncology 56.1 82.2

OTC 39.6 67.3

Other 38.7 68.0

PMB 60.8 68.9

Table 7 Generic utilisation rate per provider type: 2013

Provider typeGeneric

utilisation rate (%)

Generic uptake (%)

Retail pharmacies 51.6 70.5

Courier pharmacies 67.8 78.5

General practitioners 69.0 86.8

Medical specialists 32.3 60.8

Figure 8 Item cost per product type: 2013

Original with valid patent

Original with expired patent

Generic equivalent

R241

R131

R96

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Medicine expenditure trends 2013 vs. 2012

4. Pharmacies vs. dispensing doctors

Mediscor PBM processes claims submitted by a variety of provider types, including pharmacies (retail and courier), GPs and medical specialists.

In 2013, 90.4% of claims were submitted by pharmacies, of which 7.5% were from courier pharmacies. The remaining claims, submitted by dispensing doctors, accounted for 9.6% of the volume and 3.8% of the total expenditure (Figure 9).

The expenditure per provider type, for 2013 and 2012, is compared in Table 8.

Most patients made use of retail pharmacies (76.3% of beneficiaries), followed by dispensing GPs (21.7%) and courier pharmacies (4.7%). This is similar to previous years.

The contribution to total expenditure for medical specialists increased from 0.3% in 2011, to 0.4% in 2012 and 0.5% in 2013, while the contribution to volume remained at 0.1%. The reason for this is an increase in item cost from R368 in 2011 to R501 in 2012 and R609 in 2013. Increasingly, more expensive items are being claimed by specialists.

Table 8 Comparison of expenditure per provider type: 2013 vs. 2012 Key indicator 2013 2012†

Retail pharmacies

Expenditure (%) 79.5 77.3

Volume (%) 82.9 81.1

Cost per item (R) 134 130

Prevalence (%) 76.3 77.7

Intensity 19.0 18.2

Courier pharmacies

Expenditure (%) 16.6 18.8

Volume (%) 7.5 9.0

Cost per item (R) 310 286

Prevalence (%) 4.7 5.3

Intensity 27.8 29.7

General practitioners

Expenditure (%) 3.3 3.4

Volume (%) 9.5 9.8

Cost per item (R) 49 47

Prevalence (%) 21.7 22.2

Intensity 7.6 7.7

Medical specialists

Expenditure (%) 0.5 0.4

Volume (%) 0.1 0.1

Cost per item (R) 609 501

Prevalence (%) 0.6 0.7

Intensity 3.2 2.9

†MMR 2012

Figure 9 Contribution to total expenditure and item volume per provider type: 2013

Retail pharmacies Courier pharmacies Dispensing doctors

Perc

enta

ge

% Expenditure % Volume

82.9

0

10

20

30

40

50

60

70

80

90

16.6

7.53.8

9.6

79.5

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Medicine expenditure trends 2013 vs. 2012

Provider type and benefit category

The average cost per item for retail pharmacies was R134, compared to R310 per item for courier pharmacies, R49 for GPs and R609 for medical specialists. These differences in average item cost can, to a large extent, be explained by the categories of medicines typically dispensed by the different provider groupings and the generic utilisation rate per provider type.

GPs have the lowest average item cost (R49) and the highest generic utilisation rate (69.0%), compared to medical specialists with the lowest generic utilisation rate (32.3%) and the highest average item cost (R609). (Refer to Table 7 for generic utilisation per provider type.)

Similarly to the previous year, 61.1% of the medicine items claimed by retail pharmacies were classified as acute medicines (including OTC medicines), while 35.0% were for chronic medicines (including PMB CDL and non-CDL chronic). Specialised categories of medicines, which include oncology and HIV/AIDS

medicines, make up 4.0% of the total volume of items claimed by retail pharmacies for 2013.

In 2013, most medicine items claimed by courier pharmacies were again for chronic medicines (71.3%, compared to 73.0% in 2012). Larger proportions were also claimed for HIV/AIDS (13.6%) and oncology medicines (4.4%).

Dispensing doctors mainly claimed for acute medicines (91.9% by GPs and 42.6% by medical specialists). Only a small proportion of claims could be attributed to chronic medicines. In addition, as much as 43.6% of items claimed by medical specialists were for oncology medicines, making up 84.2% of the cost claimed by specialists. Another 13.0% of medicines claimed by medical specialists was for other categories of medicines, which include speciality medicine.

The volume distributions per provider type and benefit category are summarised in Table 9 and in Figure 10.

Table 9 Volume of medicines per benefit category: 2013 vs. 2012

Provider typeAcute and OTC medicines Chronic medicines Other specialised

medicine categories

2013 2012 2013 2012 2013 2012

Retail pharmacies 61.1 61.3 35.0 35.5 4.0 3.3

Courier pharmacies 9.9 9.6 71.3 73.0 18.8 17.4

General practitioners 91.9 91.7 5.6 6.0 2.5 2.3

Medical specialists 42.6 48.5 0.8 0.9 56.6 50.6

Figure 10 Volume distribution per provider type and benefit category: 2013

Perc

enta

ge

0

10

20

30

40

50

60

70

80

90

100

Retail pharmacies Courierpharmacies

Generalpractitioners

Medicalspecialists

Acute

HIV/AIDS

Non-CDL chronic

Oncology

OTC

Other

PMB

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Medicine expenditure trends 2013 vs. 2012

Rank2013

Rank2012† Therapeutic group

% Expen-diture

% Item volume

Cost per ben (R)

Cost per UB (R)

Cost per item (R)

UB as % of total

ben

# Items per UB

1 1 Antihypertensive agents 11.0 11.9 267 1 492 129 17.9 11.6

2 2 Cytostatic agents 6.3 0.3 153 21 935 2 646 0.7 8.3

3 3 Antidiabetic agents 5.8 3.9 142 2 461 209 5.8 11.8

4 5 Antidepressant agents 4.4 3.6 107 922 168 11.6 5.5

5 6 Gastric acid-reducing agents 4.3 3.2 105 599 188 17.6 3.2

6 4 Hypolipidaemic agents 4.2 5.2 101 889 112 11.4 7.9

7 7 Antiviral agents 3.1 1.3 76 1 736 328 4.4 5.3

8 11 Nonsteroidal anti-inflammatory drugs 2.8 3.9 67 242 100 27.7 2.4

9 8 Bronchodilators 2.7 2.0 67 646 195 10.4 3.3

10 9 Beta-lactam antibiotics 2.7 3.5 67 187 109 35.7 1.7

11 10 Antiepileptic agents 2.7 1.4 66 1 727 267 3.9 6.5

12 12 Sex hormones 2.5 1.9 60 1 070 182 5.6 5.9

13 13 Cough and cold preparations 2.3 7.1 57 142 46 40.0 3.1

14 14 Combination analgesics 2.3 5.6 55 134 56 41.2 2.4

15 15 Immunosuppressant agents 1.9 0.1 47 32 591 3 119 0.1 10.4

16 16 Topical nasal preparations 1.7 2.0 42 220 120 19.1 1.8

17 17 Sedative hypnotic agents 1.4 1.7 35 454 120 7.7 3.8

18 19 Biological agents (not elsewhere classified) 1.4 0.6 35 489 308 7.1 1.6

19 20 Antipsychotic agents 1.4 0.4 33 2 643 442 1.3 6.0

20 18 Antianginal agents 1.3 1.1 32 1 258 177 2.6 7.1

21 21 Haematinic agents 1.3 0.2 32 1 830 763 1.7 2.4

22 25 Central nervous system stimulants 1.2 0.4 30 1 925 491 1.6 3.9

23 23 Antihistamine agents 1.2 2.3 30 140 73 21.3 1.9

24 22 Hormone inhibitors 1.2 0.2 29 4 317 835 0.7 5.2

25 24 Antiasthmatic agents 1.2 0.7 29 603 245 4.8 2.5

†MMR 2012

5. Expenditure per therapeutic group

The top 25 therapeutic groups for 2013 represented 72.3% of overall expenditure and 64.5% of the total number of items paid. The top three therapeutic categories again remained unchanged for 2013, with

antihypertensive agents in first position, cytostatic agents in second and antidiabetic agents in third. Gastric acid-reducing agents moved into position five and displaced hypolipidaemic agents from the top five list. Antidepressant agents moved to position four, up from position five in 2012 (Table 10).

Table 10 Top 25 therapeutic groups according to total expenditure: 2013

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Medicine expenditure trends 2013 vs. 2012

There were no new additions to the top 25 therapeutic groups for 2013. Central nervous system stimulants, a new entrant to the top 25 list for 2012, moved up three from position 25 to position 22. These entities are indicated for the treatment of attention deficit-hyperactivity disorder (ADHD). This category of medicines displaced medicines used for the treatment of osteoporosis and other bone disorders from the top 25 list in 2012.

The most prevalent therapeutic groups

The top 10 most prevalent therapeutic groups were responsible for 29.9% of total expenditure and 42.9% of the total item volume in 2013 (Table 11). The top five most prevalent therapeutic groups remained unchanged for 2013.

Table 11 The 10 most prevalent therapeutic groups: 2013

Therapeutic group

Preva-lencerank2013

Overall rank 2013

% Expen-diture

% Item volume

Cost per UB (R)

Cost per item (R)

UB as % of total

ben

# Items per UB

Combination analgesics 1 14 2.3 5.6 134 56 41.2 2.4

Cough and cold preparations 2 13 2.3 7.1 142 46 40.0 3.1

Beta-lactam antibiotics 3 10 2.7 3.5 187 109 35.7 1.7

Nonsteroidal anti-inflammatory drugs 4 8 2.8 3.9 242 100 27.7 2.4

Antihistamine agents 5 23 1.2 2.3 140 73 21.3 1.9

Corticosteroids 6 28 1.0 2.1 119 68 20.9 1.7

Topical nasal preparations 7 16 1.7 2.0 220 120 19.1 1.8

Antihypertensive agents 8 1 11.0 11.9 1 492 129 17.9 11.6

Gastric acid-reducing agents 9 5 4.3 3.2 599 188 17.6 3.2

Mouth and throat preparations 10 41 0.6 1.3 102 66 14.5 1.5

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Medicine expenditure trends 2013 vs. 2012

Rank2013

Rank2012† Brand name Therapeutic

group Type%

Expen-diture

% Item volume

Cost per UB

(R)

Cost per item (R)

UB as % of total ben

# Items per UB

1 1Lantus SoloSTAR 100IU/ml

Insulin N 1.1 0.2 4 655 709 0.6 6.6

2 5Celebrex 200mg cap

Selective COX2 inhibitor

N 0.9 0.5 496 245 4.3 2.0

3 3 Nexiam 40mg tabProton-pump inhibitor

N 0.9 0.3 1 021 446 2.0 2.3

4 7NovoMix 30 FlexPen inj

Insulin N 0.8 0.2 4 890 677 0.4 7.2

5 4 Herceptin IV soln Cytostatic agent N 0.7 <0.1 158 585 29 556 <0.1 5.4

6 9MabThera 500mg vial

Cytostatic agent N 0.7 <0.1 79 140 20 832 <0.1 3.8

7 2 Gleevec 400mg tab Cytostatic agent N 0.7 <0.1 215 992 31 134 <0.1 6.9

8 8 Prexum Plus tabACE inhibitor combination

Gen 0.7 0.6 1 072 156 1.5 6.9

9 6 Crestor 10mg tab Statin O 0.7 0.4 1 487 240 1.1 6.2

10 10 Altosec 20mg capProton-pump inhibitor

Gen 0.6 0.5 536 172 2.9 3.1

11 13 Tramacet tabAnalgesic combination

O 0.5 0.5 229 134 5.2 1.7

6. Cost-driving products

The top 50 products, summarised in Table 12, were responsible for 21.3% of the total expenditure and 12.0% of the total item volume for 2013.

The top 50 list includes:• Fourteen generic equivalents.• Seven original products with generic equivalents.• Twenty-nine original products with no generic

equivalents.

There were no NCEs (introduced to the South African market after 2008) among the top 50 products.

The top product for 2013, Lantus SoloSTAR®, remained unchanged from the previous two years and had an average cost per patient per year of R4 655. Celebrex® 200mg capsules again moved up from position five in 2012 to second position in 2013, at an average cost per patient per annum of R496. NovoMix® FlexPen, an insulin preparation, moved into the top five products from position seven in 2012 to position four in 2013, displacing Gleevec® 400mg tablets to position seven.

There were nine new entrants to the top 50 product list for 2013:• Odimune®, an antiretroviral agent in position 18.• Concerta®, a central nervous system stimulant

used mainly in the treatment of ADHD, moved from position 52 in 2012 to position 32 in 2013.

• Rebif®, a biological agent used in the treatment of multiple sclerosis, with an average cost of R99 452 per patient per year, in position 41.

• Foxair® Accuhaler 50/50, a combination bronchodilator, in position 42.

• Crestor® 5mg, a statin, in position 45.• Two cytostatic agents, Xeloda® and Alimta®, in

positions 44 and 47 respectively.• Lyrica®, an antiepileptic agent also used in the

treatment of neuropathic pain, moved to position 48 in 2013.

• Angeliq®, a hormonal contraceptive and hormone replacement agent, in position 50.

The therapeutic groups comprising the top 50 product list are summarised in Figure 11. The five most represented therapeutic categories were cytostatic agents (six products), insulins (five products), proton-pump inhibitors (four products), bronchodilator combinations (three products) and immunostimulant agents (three products).

Table 12 Top 50 products according to expenditure: 2013

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Medicine expenditure trends 2013 vs. 2012

Rank2013

Rank2012† Brand name Therapeutic

group Type%

Expen-diture

% Item volume

Cost per UB

(R)

Cost per item (R)

UB as % of total ben

# Items per UB

12 11Eltroxin 100mcg tab

Thyroid hormone O 0.5 1.4 391 49 3.0 7.9

13 14Symbicord Turbuhaler 160/4.5 120 dose

Bronchodilator combination

N 0.5 0.1 1 916 463 0.6 4.1

14 17Foxair Accuhaler 50/25 60 dose

Bronchodilator combination

Gen 0.5 0.2 1 105 301 1.0 3.7

15 31 Tribuss tab Antiretroviral agent Gen 0.4 0.1 3 436 468 0.3 7.3

16 12 Crestor 20mg tab Statin O 0.4 0.2 2 003 332 0.5 6.0

17 19Levemir FlexPen 3ml

Insulin N 0.4 0.1 4 705 724 0.2 6.5

18 55 Odimune tab Antiretroviral agent Gen 0.4 0.1 3 944 466 0.2 8.5

19 15 Prexum 4mg tab ACE inhibitor Gen 0.4 0.5 730 123 1.3 5.9

20 20NovoRapid FlexPen inj

Insulin N 0.4 0.1 3 617 560 0.3 6.5

21 22Avamys 27.5mcg/ 1dose nasal spray

Nasal glucocorticosteroid

N 0.4 0.3 325 189 2.9 1.7

22 16Humira 40mg/0.8ml inj

Immunosuppressant agent

N 0.4 <0.1 78 494 8 846 <0.1 8.9

23 23Augmentin SR 1000mg tab

Beta-lactam antibiotic

N 0.3 0.3 215 188 3.9 1.1

24 21 Nexiam 20mg tabProton-pump inhibitor

N 0.3 0.1 971 323 0.9 3.0

25 18Epilim CR 500mg tab

Antiepileptic agent O 0.3 0.1 2 911 507 0.3 5.7

26 39Apidra SoloSTAR Pen inj

Insulin N 0.3 0.1 3 514 522 0.2 6.7

27 30 Ecotrin 81mg tabPlatelet-aggregation inhibitor

O 0.3 1.6 194 27 3.9 7.1

28 35 Yaz tabHormonal contraceptive agent

N 0.3 0.3 806 163 0.9 4.9

29 44 Arcoxia 90mg tabSelective COX2 inhibitor

N 0.3 0.2 463 236 1.6 2.0

30 24 Cilift 20mg tab SSRI Gen 0.3 0.4 483 100 1.5 4.8

31 36 Puricos 300mg tab Anti-gout agent Gen 0.3 0.6 372 67 1.9 5.5

32 52Concerta 36mg OROS

Central nervous system stimulant

N 0.3 0.1 1 906 607 0.4 3.1

33 37 Velcade 3.5mg inj Cytostatic agent N 0.3 <0.1 146 760 42 086 <0.1 3.5

34 41 Dormonoct 2mg tabBenzo-sedative hypnotic agent

N 0.3 0.2 815 253 0.8 3.2

35 34 Betaferon injImmunostimulant agent

N 0.3 <0.1 104 004 10 420 <0.1 10.0

36 47 Topzole 40mg tabProton-pump inhibitor

Gen 0.3 0.1 715 280 0.9 2.5

Table 12 Top 50 products according to expenditure: 2013 (continued)

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Medicine expenditure trends 2013 vs. 2012

Rank2013

Rank2012† Brand name Therapeutic

group Type%

Expen-diture

% Item volume

Cost per UB

(R)

Cost per item (R)

UB as % of total ben

# Items per UB

37 33Adco-Zolpidem 10mg tab

Benzo-sedative hypnotic agent

Gen 0.3 0.4 371 109 1.8 3.4

38 46Venlor XR 150mg cap

SNRI Gen 0.3 0.1 2 819 512 0.2 5.5

39 38 Avonex 30mcg injImmunostimulant agent

N 0.3 <0.1 107 877 10 216 <0.1 10.6

40 32Haemosolvate 1000U inj

Haemostatic agent N 0.3 <0.1 215 592 35 694 <0.1 6.0

41 54Rebif 44mcg/0.5ml inj

Immunostimulant agent

N 0.3 <0.1 99 452 10 038 <0.1 9.9

42 68Foxair Accuhaler 50/50 60 dose

Bronchodilator combination

Gen 0.3 0.1 1 809 391 0.4 4.6

43 42 Amloc 5mg tabCalcium channel blocker

Gen 0.3 0.4 630 99 1.0 6.4

44 71 Xeloda 500mg tab Cytostatic agent N 0.3 <0.1 17 357 4 255 <0.1 4.1

45 60 Crestor 5mg tab Statin O 0.3 0.3 859 138 0.7 6.2

46 28 Cymgen 60mg cap SNRI Gen 0.3 0.1 1 708 330 0.4 5.2

47 53Alimta 500mg/vial inj

Cytostatic agent N 0.3 <0.1 86 777 23 813 <0.1 3.6

48 65 Lyrica 75mg cap Antiepileptic agent N 0.3 0.1 724 293 0.9 2.5

49 29 Prograf 1mg capImmunosuppressant agent

N 0.3 <0.1 37 035 4 706 <0.1 7.9

50 51 Angeliq tabHormonal contraceptive agent

N 0.2 0.1 1 712 249 0.4 6.9

Note: All brand names are trademarks of the respective manufacturers.

Figure 11 Therapeutic groups represented by the top 50 products according to expenditure: 2013

Table 12 Top 50 products according to expenditure: 2013 (continued)

Cytostatic agents

Insulins

Proton-pump inhibitors

Bronchodilator combinations

Immunostimulant agents

Statins

Antiepileptic agents

Antiretroviral agents

Benzo-sedative hypnotic agents

Hormonal contraceptive agents

Immunosuppressant agents

Selective COX2 inhibitors

SNRIs

Other categories

†MMR 2012Key: Gen - Generic equivalent N - Original with valid patent O - Original with expired patent

38

6

5

4

3

3

3

2

2

22

222

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Factors affecting the data

Medicine expenditure is influenced by a number of factors related to member and medical scheme characteristics.

1. Medical scheme demographics

Transformations in the demographic profile of a medical scheme, such as changes in population size and distribution, have an impact on the volume and type of claims received, resulting in changes in expenditure patterns.

Utilisation behaviour and expenditure patterns are influenced by patient characteristics, medical scheme uniqueness, and the benefit design and management interventions implemented by a medical scheme, as well as prescriber habits.

Member characteristics that influence medicine usage include age, gender, ethnicity, health status, education, socio-economic status, marital status, family size, genetic predisposition, and geographical region.

Medical scheme characteristics that influence medicine usage include:• The niche market of the medical scheme.• Fee-for-service versus capitation arrangements.• Medical scheme size.• Open versus restricted medical schemes.• Geographical distribution of the member

population.

• Age distribution of the member population.• Gender distribution of the member population.• Differences in the medicine benefit design of

medical schemes, including the use of formularies, prior authorisation criteria and co-payments.

Age distribution

Age is an important and established factor influencing medicine utilisation. An increase in the average age of the beneficiaries is generally associated with an increase in utilisation and a subsequent increase in expenditure. The general age distribution of medical scheme members in South Africa, according to the 2012-2013 Annual Report of the Council for Medical Schemes (CMS), is bimodal, with a peak at five to nine years and another at 35 to 39 years. The distribution of Mediscor members included in this analysis shows a similar distribution pattern (Figure 12).

According to the CMS Annual Report of 2012-2013, the average age of open schemes in 2012 was 33.7 years, while the average age of restricted schemes was 29.8 years. The overall proportion of pensioners (beneficiaries 65 years and older) was 7.1% in 2012: 8.2% for open schemes and 5.7% for restricted schemes.

In 2013, the average age of the population included in this publication was 34.7 years, and the proportion of pensioners was 9.9%, compared to 35.8 years and 11.7% for 2012.

Figure 12 Age distribution of medical scheme sample: 2013 vs. 2012

Perc

enta

ge

0

1

2

3

4

5

6

7

8

2012 2013

<1

1 to

4

5 to

9

10 t

o 14

15 t

o 19

20 t

o 24

25 t

o 29

30 t

o 34

35 t

o 39

40 t

o 44

45 t

o 49

50 t

o 54

55 t

o 59

60 t

o 64

65 t

o 69

70 t

o 74

75 t

o 79

80 t

o 84

≥85

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Factors affecting the data

2. The data sample

The analyses performed for this publication were done on the 2012 to 2013 medicine claims database of Mediscor PBM. Only fee-for-service medical schemes, for which claims processing was performed by Mediscor PBM during the entire period under review, were included.

As a result of the growth of our client base in recent years, the data sample used in this publication differs from that of previous years. In this publication, the medicine claims data of approximately one million beneficiaries were analysed.

3. Cost calculations

The cost calculations reported on in this report are based on the following definitions:• “Cost” is the amount charged for the medicine,

irrespective of how the payment is divided between the medical scheme and the member. It reflects the gross cost of medicines, which is equal to the amount that would have been paid if no co-payments and/or levies had been implemented by the medical scheme.

• “Gross cost” includes the single exit price (SEP), dispensing fees and value added tax (VAT).

The gross cost is used as a reference amount to ensure comparability of data for different pricing and co-payment and/or levy structures associated with different medical scheme options. When making comparisons with other data sources, allowances must be made for these factors.

Expenditure is further reported on a per beneficiary per annum basis.

4. Trend calculations

Trends in medicine expenditure are demonstrated by calculating the change in annual expenditure per beneficiary, which is the product of two components, i.e. cost and utilisation.

Total expenditure is calculated as follows:

Total expenditure(Rand per beneficiary)

=Cost component(Rand per item)

XUtilisation component

(Items per beneficiary)

The utilisation component indicates the number of items claimed per beneficiary, and is calculated using prevalence and intensity.

Prevalence is measured as the proportion of utilising beneficiaries in relation to the total number of beneficiaries, and indicates the size of the pool of beneficiaries that is actively using their medicine benefits.

Intensity of use is measured as the number of items per utilising beneficiary, and indicates the intensity with which the members in the pool of utilising beneficiaries are claiming medicine.

Utilisation is calculated as follows:

Total utilisation(Items per beneficiary)

=Prevalence

(Utilising beneficiaries/total beneficiaries)X

Intensity(Items per utilising beneficiary)

The price component measured as “rands per item” is influenced by the following factors:• Inflation or the SEP changes of existing

medication.• Changes in dispensing fees.• Units dispensed per item (e.g. number of tablets

or capsules).• Changes in the mix of medicines used, or the ratio

of relatively more expensive to less expensive products. Examples of such changes include shifts between: expensive original products and their generic equivalents; more expensive and less expensive therapeutic alternatives; and different strengths and dosage forms of the same product.

5. Abbreviations and definitions

All the abbreviations and definitions used in this document are summarised in Tables 13 and 14.

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Factors affecting the data

Abbreviation Term

ACE Angiotensin-converting enzyme

ADHD Attention deficit hyperactivity disorder

Ben Beneficiary

Cap Capsule

CDL Chronic Disease List

CMS Council for Medical Schemes

COX2 Cyclooxygenase-2

DPP-4 Dipeptidyl peptidase-4

DSP Designated service provider

Gen Generic equivalent

GLP-1 Glycogen-like peptide-1

GP General practitioner

Inj Injection

IV Intravenous

MMR Mediscor Medicines Review

N Original product with valid patent

NCE New chemical entity

NSAIDs Nonsteroidal anti-inflammatory drugs

O Original product with generic equivalents

OROS Osmotic controlled-release oral delivery system

OTC Over-the-counter

PMB Prescribed Minimum Benefit

SEP Single Exit Price

SNRI Serotonin-noradrenaline reuptake inhibitor

Soln Solution

SSRI Selective serotonin reuptake inhibitor

Tab Tablet

UB Utilising beneficiary

VAT Value-added tax

Table 13 Abbreviations

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Factors affecting the data

Table 14 Definitions

Term Definition

Approved amountThe amount approved by Mediscor, after checking the price and fee, for scheme reimbursement prior to the application of benefit rules.

Beneficiary The principal members registered with a medical scheme, and their dependants.

Benefit design co-payment

All co-payments that result from benefit design rules, excluding overcharges resulting from providers claiming or charging more than the medical scheme’s reimbursement rate.

Claimed amountThe amount claimed by the dispenser/provider for reimbursement, which includes the SEP component, dispensing fee and VAT.

Financial vehicleSupplementary or top-up funds which are available in addition to the medical scheme benefits, and which are used to pay for expenses not covered by the medical scheme benefits.

Generic reference pricing

A pricing system that groups together products that are generically equivalent or similar into reference-pricing groups. A maximum reimbursement price is then set for each group of products.

Generic uptakeThe generic uptake refers to the percentage of instances where a generic equivalent was available, and used.

Generic utilisation rate

The number of generic equivalent products expressed as a percentage of the total number of items.

GenericisedWhere the chemical entity has generically equivalent products, 'genericised products' include both the original and the equivalent products.

Intensity The number of items claimed per patient or utilising beneficiary.

New chemical entitiesNovel or innovator medicines that were launched in the South African healthcare market during the previous five years (2009-2013).

Other co-payments Any benefit design co-payment not resulting from reference pricing.

Overall co-paymentThe difference between the claimed amount and the scheme amount (including savings and financial vehicles), which reflects the amount payable by the member at the point of sale.

PrevalenceThe proportion of beneficiaries that made use of their medicine benefit, or the number of utilising beneficiaries, expressed as a percentage of the total number of beneficiaries in the population.

Principal member The person in whose name all contributions are made to the medical scheme.

Reference price co-payment

A pricing system that groups together products that are generically or therapeutically equivalent or similar into reference-pricing groups. A maximum reimbursement price is then set for each group of products. Co-payments that may result from reference pricing are calculated as the difference in price between the medicine purchased and the applicable reference price.

Savings Medical savings accounts.

Utilising beneficiary The beneficiary of a medical scheme who accessed the medical scheme benefits.

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The patient experience

One of the many challenges faced by medical schemes is to strike a balance between member satisfaction and financial performance.

Effective benefit design is essential to the financial performance of medical schemes. An effective design should incentivise and guide members, providers and prescribers towards making clinically appropriate and cost-effective choices. Some benefit design measures, however, transfer risk or cost to members.

The level of co-payments

A co-payment on medicine can be defined as the amount payable by a member at the point of dispensing. Co-payments result from the implementation of various benefit design rules and, ultimately, the provider’s and member’s responses to these rules. These include charges above the scheme rate, levies, reference price co-payments, out-of-formulary co-payments and out-of-network co-payments.

Some co-payments can be avoided if specific action is taken by the prescriber, provider or member, while others are often unavoidable.

The most common co-payments experienced by members include:

• Charges above scheme rates: Medical schemes typically reimburse medicines at a default dispensing fee or at rates contracted with DSPs. Any amount charged in excess of the sum of the SEP and the dispensing fee applied, based on the scheme rules, will result in an overcharge or co-payment to the member.

• Non-DSP co-payments: Medical schemes can contract with preferred providers or DSPs to provide services to their members at advantageuos rates and within specified parameters. Often, penalties, in the form of co-payments, are applied when members opt to obtain medicines from non-DSPs.

• Non-formulary co-payments: Formularies are used to manage medicine spend, especially in the case of chronic medicines. When members utilise medicines that are not included in the scheme’s formulary, a penalty, in the form of a co-payment, may be applied. This co-payment could be a percentage of the total or a fixed amount, or it could be based on a reference price model (e.g. therapeutic reference pricing).

• Reference price co-payments: This involves a pricing system that groups together products that are generically or therapeutically equivalent or similar into reference-pricing groups. A maximum reimbursement price is then set for each group of products.

• Maximum value per script: OTC medicines are often reimbursed at a maximum value per script.

• Set co-payments applicable to specific benefits: Set co-payments are often applied to selected benefit types. For example, a 20% co-payment may be levied on speciality medicines.

The difference between the claimed amount and the scheme amount (including savings and financial vehicles) reflects the amount payable by the member at the point of sale or the overall co-payment.

During 2012, 55.6% of items claimed through pharmacies attracted co-payments at the point of sale, compared to 44.0% for non-pharmacies. This changed to 49.2% for pharmacies and 58.9% for non-pharmacies in 2013.

Co-payments per provider type

The balance between member satisfaction and financial performance is often maintained through contracted preferred providers or DSPs. This is especially relevant in the context of managing medicine benefits for prescribed minimum benefits.

One of the most prominent reasons that co-payments are levied is that there may be a difference between the dispensing fee charged by providers and the dispensing fee at which schemes reimburse medicines. Special contractual arrangements are often in place between medical schemes and providers that determine the level of reimbursement. Compliance to these arrangements is, however, not always monitored.

Similarly to 2012, the biggest difference between the claimed and approved amount (i.e. the amount approved by Mediscor, after checking the price and fee, and prior to the application of benefit rules) for 2013, is found in the retail pharmacy sector (4.1% in 2012 compared to 3.4% in 2013). This difference is a result of a larger variance between the default or contracted dispensing fee and the maximum legislated fee structure applied by some pharmacists. In the courier pharmacy sector, contractual arrangements are more common and adherence to these arrangements is better, because of the organisational structures that are in place.

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The patient experience

The co-payment experience per provider type is summarised in Table 15.

Benefit design co-payments include all co-payments that result from the application of benefit design rules, excluding charges above the scheme’s reimbursement rate. The benefit design co-payment as a percentage of the approved cost is highest in the retail pharmacy sector (11.3%), followed by GPs (9.2%), courier pharmacies (3.9%) and medical specialists (2.3%).

This low percentage among the latter can, however, be attributed to the fact that they predominantly claim for oncology medicines (43.6% of volume and 84.2% of expenditure). This category of medicine generally has low levels of co-payments.

Reference price co-payments are lowest for GPs, in line with the high generic utilisation rate (69.0%) observed for this category of providers.

Co-payments per benefit category

The levels of management and co-payment differ between benefits, depending on the associated risk to the scheme. Acute medicines are generally reimbursed from limited benefit pools or savings

accounts. Medicines for PMBs, including CDL medicines are, however, reimbursed from unlimited benefits.

Benefit design co-payments, expressed as a percentage of the approved amount, are highest for chronic medicine benefits, including PMB (12.8%) and non-CDL chronic (20.0%) benefits, but lower for the HIV/AIDS (1.0%) and oncology (0.9%) benefits. For acute and OTC benefits, the benefit design co-payment is respectively 10.1% and 5.2% of the approved cost per item.

The difference between the claimed amount and the approved amount is largest for the OTC and acute benefits (4.3% and 3.9%), but at a slightly lower value compared to 2012. In these categories, fewer provider pricing arrangements are in place, leading to more frequent charges in excess of the scheme reimbursement rate. The smallest difference is seen for the HIV/AIDS and oncology benefits. These categories of medicines are usually tightly managed, with case management, disease management and DSP arrangements in place, thus often operating within closed and controlled environments.

The different levels of co-payments applicable per benefit category are summarised in Table 16.

Table 15 Co-payments per provider type: 2013

Provider type

Scheme cost

(including savings

and financial vehicles) per item

(R)

Scheme cost

(excluding savings

and financial vehicles) per item

(R)

% Diff. claimed vs. approved amount

Overall co-payment per item

(R)

Benefit design co-payment per item

(R)

Reference price co-payment per item

(R)

Reference price co-payment as % of benefit

design co-payment

All providers 125.76 98.36 2.8 17.63 13.74 5.73 41.7

Retail pharmacies 118.84 87.74 3.4 19.43 14.97 6.01 40.2

Courier pharmacies 298.48 287.90 <0.1 12.08 11.99 7.14 59.5

General practitioners 44.21 35.64 3.0 5.92 4.46 2.21 49.4

Medical specialists 595.03 588.78 2.3 27.77 13.89 2.77 19.9

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The patient experience

Table 16 Co-payments per benefit category: 2013

Benefit category

Scheme cost

(including savings

and financial vehicles) per item

(R)

Scheme cost

(excluding savings

and financial vehicles) per item

(R)

% Diff. claimed vs. approved amount

Overall co-payment per item

(R)

Benefit design co-payment per item

(R)

Reference price co-payment per item

(R)

Reference price co-payment as % of benefit

design co-payment

Acute 100.77 56.96 3.9 15.55 11.25 3.13 27.8

Chronic 139.58 136.00 2.6 39.11 34.61 7.43 21.5

HIV/AIDS 300.54 299.23 0.4 4.16 3.06 2.88 94.0

Oncology 1 719.26 1 718.17 0.4 22.61 15.84 6.73 42.5

Other 197.46 173.18 2.6 11.69 6.41 2.74 42.7

OTC 58.07 20.51 4.3 5.72 3.13 1.11 35.5

PMB 134.30 131.78 2.3 23.09 19.65 11.66 59.3

Co-payments per product type

Originator medicines with valid patents attracted the lowest percentage of benefit design co-payments (6.8%), while originators with expired patents experienced the largest percentage (17.7%). Generic equivalents were at 9.6%. Reference price co-payments made up the largest part of overall co-payment for original medicines with expired patents (69.5%), followed by generic equivalents (37.9%) and originals with valid patents (14.7%). The main reason for this is that reference pricing in this category of medicines is limited to therapeutic reference pricing applicable to chronic medicines.

If all genericised products (i.e. products for which generic equivalents are available, including both the original and the generic equivalent product) were substituted by a generic equivalent with a cost at or below the generic reference price value, substantial savings of 5 – 6% in total medicine spend could be achieved.

The co-payment experience per product type is summarised in Table 17.

Table 17 Co-payments per product type: 2013

Product type

Scheme cost

(including savings

and financial vehicles) per item

(R)

Scheme cost

(excluding savings

and financial vehicles) per item

(R)

% Diff. claimed vs. approved amount

Overall co-payment per item

(R)

Benefit design co-payment per item

(R)

Reference price co-payment per item

(R)

Reference price co-payment as % of benefit

design co-payment

Originals with valid patents

224.52 177.25 2.8 22.79 16.21 2.38 14.7

Originals with expired patents

107.67 80.11 3.3 27.17 22.93 15.92 69.5

Generic equivalents 86.84 68.69 2.6 11.68 9.17 3.47 37.9

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The patient experience

Improving the patient experience

Effective benefit design is needed to manage medical schemes’ financial risk, and to guide members towards cost-effective medicine choices. Too often, however, members are left with co-payments at the point of sale, because of a lack of understanding or knowledge regarding their medical scheme’s rules.

It has become increasingly important for schemes to engage with members, prescribers and providers of medicine and to provide the appropriate tools and knowledge in order to avoid co-payments.

With this in mind, Mediscor has developed an analytical model that measures the financial experience of patients at point of sale, comparing pharmacy networks or individual pharmacies. Schemes are now able to measure providers’ compliance with generic substitution and negotiated fees and the overall co-payment experience.

In conjunction with this analytical service, medical schemes should actively manage their providers. The primary objective of this process is to enhance the patient experience and, in short, to ensure the cost-effective delivery of medicine benefits.

In order to achieve this, one should:• Actively manage dispensing behaviour at provider

level.• Reduce member co-payments and drive the

concept of a ‘wallet-free’ experience.• Drive generic substitution towards the use of

products below the generic reference price level.

These goals can be achieved through a combination of the following three approaches:• Provider engagement, through which providers’

performance with regard to generic substitution and pricing is actively monitored and providers are engaged to optimise dispensing behaviour.

• Member engagement, through which members are informed about more cost-effective medicine choices. They are guided towards cost-effective providers that comply with dispensing fee arrangements and actively substitute with generic alternatives not attracting reference price co-payments.

• Provider rewards will ultimately pull together the two engagement phases, by motivating pharmacies within a scheme-specific, performance-based reimbursement structure and directing members to high-performing pharmacies.

By actively engaging providers, schemes can improve the experience of their members at the point of dispensing, thereby enhancing member satisfaction.

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Speciality medicine

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Patients and funders are increasingly being burdened by the rising costs associated with the use of speciality medicines, typically high-cost biological medicines used to treat complex medical conditions. This phenomenon has been noted by many role players in the healthcare industry, both locally and internationally.

Biological medicines contain one or more active substances made by or derived from living

microorganisms, such as bacteria or yeasts. These active substances are physicochemically larger and more complex than those found in non-biological

medicines.

While definitions and classifications abound, most managed healthcare entities agree that a speciality medicine should satisfy the following criteria:• It has a high cost per unit.• It is used to treat rare or orphan diseases. A rare or orphan disease affects only a small

percentage of the population. In the European Union, for example, rare diseases are defined as life-threatening or chronically debilitating conditions that affect no more than 5 in 10 000 people. In the United States (US), the Rare Diseases Act of 2002 defines a rare disease strictly according to prevalence, specifically “any disease or condition that affects less than 200 000 people in the US, or about 1 in 1 500 people.

• It requires special storage, handling and administration procedures.

Medicines manufactured by using biological processes typically require special storage and handling, i.e. refrigeration. These entities are often not available in oral formulations and are administered by a healthcare provider.

• Its utilisation must be accompanied by a significant degree of patient education, therapeutic monitoring and management.

Patients being treated with speciality medicines often require intensive education and follow-up to manage their therapy and disease. Dosage, adherence and side-effects require careful monitoring to ensure effectiveness and patient safety.

In 2013, speciality medicines (excluding oncology treatments) were prescribed to 16.3 per 10 000 lives, but were responsible for 3.1% of total expenditure paid from medicine benefits. From 2012 to 2013, the expenditure on speciality medicines (excluding oncology treatments) increased by 5.9%. The average cost per patient increased from R44 179

in 2012 to R47 079 in 2013, while the prevalence increased from 16.2 per 10 000 lives. The increase in cost per patient is due to an increase in average item cost from R6 403 to R6 637, and an increase in the number of items claimed per patient from 6.9 to 7.1.

Expenditure on speciality medicines is expected to continue to increase. Many new agents are currently in development and new indications for existing agents are continuously being registered.

Cost-driving factors

A number of factors contribute to the high cost of speciality medicines.• Price: Speciality medicines are typically new

entities that attract premium prices. The absence of therapeutic alternatives and biosimilars further drives the cost higher, because of a lack of competition in the market. According to the US Food and Drug Administration (FDA), a biosimilar is a biological product that is highly similar to another biological medicine already available on the market. The introduction of biosimilars to the market is expected to result in significant savings on speciality medicines. However, in the absence of biosimilars and considering the magnitude of the pipeline of biological agents, the opportunity for realising savings through product choice is limited and the impact is not expected to be felt for many years.

• Benefit design: Few medical schemes have designed their benefit structures to directly address speciality medicines. The uncoordinated management of speciality medicines leads to reimbursement being fragmented between hospital and medicine benefits, resulting in inconsistencies in the management of patients.

• Distribution channels: Medicines delivered to healthcare providers by courier or speciality pharmacies may remain unused and cannot be refunded or returned.

• Reimbursement structures: By reducing provider reimbursement for the administration of intravenous formulations, it could potentially become unprofitable for providers to do so in their offices. This results in patients being directed to receive services at facilities where costs are higher for all parties involved. It further leads to the fragmentation of the service, in turn reducing the quality of care.

All cost drivers have to be addressed to some extent in order to develop a comprehensive, integrated approach to managing speciality medicines.

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Managing speciality medicines

The management of speciality medicines does not always fit neatly into traditional medicine benefit structures. Therefore, the medicine management strategies employed for conventional medicines are not always suitable for the management of speciality medicines.

Self-administered medicines are typically covered from medicine benefits, but often speciality medicines that have to be administered by a healthcare professional are authorised from hospital benefits. The division of speciality medicines between medicine and hospital benefits makes the management of this category more complex.

The fragmentation of the management and funding of speciality medicines can lead to differences in:• patient cost sharing, • provider reimbursement,• utilisation management,• clinical care management, • pre-authorisation criteria, and • claim data reporting.

This results in the misalignment of patient and provider incentives, and uncoordinated management of expenditure.

Managed care organisations apply a multitude of mechanisms to manage speciality medicines, such as:

• Formulary inclusion and pre-authorisation Once a speciality medicine is available on the

market, it will be evaluated for inclusion in formularies and treatment protocols. Pharmacy and therapeutics committees will typically review the safety data and appropriate use, focussing on preventing off-label use, rather than restricting use.

A speciality medicine manager is needed to determine the appropriateness of interventions, based on clinical and evidence-based guidelines. The value of pre-authorisation processes lies in the savings realised by following an appropriate pathway for patient care and the use of preferred entities should be promoted, where available.

• Speciality medicine benefit Patient cost-sharing strategies, adopted to

influence product choice, are generally effective

in the management of conventional non-speciality medicines, as well as speciality medicine classes where sufficient alternatives are available. Where fewer alternatives are available, high co-payments transfer the financial burden to patients, who then have no opportunity to change to less costly medicines. This could lead to poor adherence, which in turn may lead to increased hospitalisation and other costly interventions.

In addition, these patients often suffer from rare and complex conditions, which health insurance should actually target. These diseases are usually not lifestyle-related diseases, and changes in behaviour or alternative treatments will not improve health.

• Innovation An integrated hospital and medicine benefit

management system can overcome the challenges associated with this costly category.

Medicine and hospital benefits are often approached differently by funders with regard to both benefit design and management approach, creating many challenges. It could result in the duplication of resources, discrepancies in the level of funding and differences in pre-authorisation criteria.

An intergrated benefit for speciality medicines should aim to remove distorted incentives to patients to use one option over the other and will result in uniformity across patient cost sharing, pricing of medicines and services, utilisation review, protocols and policies, and data sources.

The multidimensional challenge of managing speciality medicines cannot be overcome without synchronising processes.

• Pricing The costs associated with the supply and

administration of speciality medicines differ, depending on the site of care and fee arrangements in place. It is key to manage these aspects of speciality medicine, to allow for the most cost-effective and efficient solution, while maintaining the healthcare provider relationship with the patient. Using smaller speciality networks should limit the number of distributors and secure a lower price.

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• Utilisation and care management Speciality medicines covered under medicine

benefits are typically subject to stringent utilisation management. Pre-authorisation, for example, to gain access to speciality medicines from medicine benefits are more product focussed, while access to hospital benefits are more procedure focussed.

The management of the utilisation of speciality medicines typically includes pre-authorisation processes that demand the use of step therapy, where less expensive conventional medicines are prescribed first.

Quantity and fill limitations can also be used to limit unnecessary or inappropriate use, to improve patient safety and reduce waste.

It is important to ensure that the correct speciality medicine is used in the correct manner by the individual that is most likely to benefit from it. The management of care is important to ensure patient adherence to therapy and the continued appropriate use of a therapeutic regimen. Poor adherence, either due to high levels of patient cost-sharing or side-effects, may prohibit positive patient outcomes and contribute to wastage. Significant cost savings could result from patient monitoring and the appropriate discontinuation of high-cost therapy, once incremental results are no longer realised.

• Information or data management Reporting on speciality medicines should

incorporate both hospital and medicine benefit utilisation, in order to understand the scope of the costs. This will allow managers to focus on the most relevant issues and provide the greatest return on investment.

Speciality medicine expenditure in 2013

For the purposes of this analysis, speciality medicines were defined as products:• With an average cost per fill of R1 000 or more;

and• That are used for the treatment of rare conditions;

or• That require special storage, handling and

administration; or• That require ongoing therapeutic monitoring.

This analysis, however, excludes all oncology benefit claims, which cover a large proportion of speciality medicines available on the South African market.

Table 18 summarises the speciality medicines by indication and Table 19 lists the top 10 speciality medicine for 2013.

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Table 19 The top 10 speciality medicine by brand name: 2013

Rank Brand name Active ingredient

% Expen-diture

% Item volume

Cost per UB (R)

Cost per item (R)

Preva-lence per

10 000 lives

# Items per UB

1 Humira 40mg/0.8ml prefill inj Adalimumab 9.6 7.2 76 237 8 891 1.0 8.6

2 Betaferon inj Interferon beta-1B 8.9 5.6 104 004 10 420 0.7 10.0

3 Avonex 30mcg inj Interferon beta 1A 8.5 5.5 107 877 10 216 0.6 10.6

4 Rebif 44mcg/0.5ml inj Interferon beta 1A 8.5 5.6 99 452 10 038 0.7 9.9

5 Cerezyme 400U/10ml inj Imiglucerase 5.1 0.3 1 607 588 123 661 <0.1 13.0

6 Mircera 150mcg/0.3ml inj

Methoxy polyethylene glycol-epoetin beta 4.4 7.6 20 662 3 830 1.6 5.4

7 Enbrel PS 50mg/1ml inj Etanercept 4.3 3.2 69 241 8 739 0.5 7.9

8 Eprex 4000U inj Epoetin alfa 4.0 7.3 21 337 3 643 1.4 5.9

9 MabThera 500mg inj Rituximab 3.8 0.4 89 084 58 665 0.3 1.5

10 Recormon 4000U inj Epoetin beta 3.6 7.3 19 720 3 282 1.4 6.0

Table 18 Speciality medicine by indication: 2013

Therapeutic groups Rank%

Expen-diture

% Item volume

Cost per UB (R)

Cost per item (R)

Preva-lence per

10 000 lives

# Items per UB

Treatments for central nervous system conditions 1 28.9 19.3 90 261 9 942 2.4 9.1

Erythropoiesis-stimulating agents 2 28.3 54.1 24 897 3 469 8.7 7.2

Biological medicines for inflammatory conditions 3 25.9 18.7 74 692 9 206 2.7 8.1

Enzyme therapy 4 6.4 0.6 675 015 69 829 0.1 9.7

Treatments for ophthalmological conditions 5 3.2 2.4 23 445 8 754 1.0 2.7

Treatments for endocrinological conditions 6 2.5 1.6 36 706 10 384 0.5 3.5

Treatments for infectious conditions 7 1.6 1.2 38 207 8 949 0.3 4.3

Treatments for haematological conditions 8 1.5 0.7 95 247 13 415 0.1 7.1

Immunoglobulins 9 1.3 1.2 26 618 7 158 0.4 3.7

Treatments for dermatological conditions 10 0.4 0.0 228 132 57 033 <0.1 4.0

Treatments for skeletal conditions 11 0.1 0.1 10 173 3 699 <0.1 2.8

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About Mediscor PBM

The power of effective medicine benefit management

As an independent specialist pharmaceutical benefit management firm, Mediscor PBM believes implicitly in the power of effective medicine benefit management and the pivotal role that it can perform in appropriate

and cost-effective patient care within the healthcare funding environment.

With an ever-growing, blue-chip client base that befits its impeccable, 25-year-long service record, Mediscor PBM provides pharmaceutical benefit management services to more than 1.7 million healthcare consumers.

The company offers a fully integrated, clinically intelligent, real-time pharmaceutical claims processing solution to a number of medical schemes, sick funds, healthcare funders and healthcare insurance companies. The Mediscor PBM system processes line item medicine claims submitted by community pharmacies, primary care clinics and dispensing doctors, at active ingredient level. Whether in a real-time or batch claim environment, each new prescription is electronically assessed by Mediscor’s clinical intelligence and rules database against the member’s medical condition, age, gender and plan rules, as well as the medicines currently being used by the member.

Despite consolidation in the medical schemes industry in recent years, Mediscor has increased its client base fivefold from nine to 50 since 2001, while diversifying into new healthcare funding arenas. The company provides pharmaceutical benefit management services to 22 South African registered medical schemes, five Namibian medical schemes, 14 health insurance products, four labour union sick funds and four capitation management clients.

With the aid of sophisticated technology and expertise, Mediscor is able to offer its clients a dedicated suite of pharmaceutical benefit management solutions which is tailored to meet the differing needs of each individual client.

A wholly South African-owned company, Mediscor’s shareholding includes members of the management team and Pan African Capital Holdings. The company has been rated as a Level-5 BEE contributor by independent ratings agency, VeriCom, and has also been accredited as a Managed Care Organisation by the Council for Medical Schemes after an exhaustive on-site standards compliance assessment process.

Since 2002, Mediscor PBM has been awarded 11 Professional Management Review (PMR) Diamond Arrow awards for service excellence. In 2014, the company was awarded two Diamond Arrow awards, for specialist managed healthcare services and also for technology services and electronic medicine management.

Contact Details

Mediscor PBM (Pty) Ltd

Mediscor House1257 South StreetCenturion

PO Box 8796Centurion0046

Tel: +27 (12) 674-8000Fax: + 27 (12) 674-8001www.mediscor.net

Executive Directors: CJG Rademan (Managing); Dr IS Mkhize; PG Potgieter; I Steyn; LF Venter

Non-Executive Directors: Dr ZN Kubukeli