The answer is patently obvious

The question of how the government intends to finance our National Health Insurance (NHI) is a critical piece of the health puzzle that remains unanswered. As the pilot projects have rolled out in different parts of the country, the national debate around the entire feasibility of NHI has heated up. Yet, while it remains unclear where the financing for NHI will come from, the government has yet to draw any broader links to the process of patent law reform currently underway that has the potential to vastly reduce overall costs.

According to industry figures the private sector, a minority of the population at just 16%, spent an enormous R26 billion on medicines in 2011. The government itself spent R5 billion in the public sector to provide for the other 84% of the population. The cost differences can be attributed to a lower level of healthcare provision, the benefit to the government of securing less expensive public sector prices from the pharmaceutical industry, and the government’s ability to negotiate better deals through the tender process as a large single payer. This indicates a significant amount of spending and a substantial economic burden that must be addressed if we are to see a successful NHI in the years to come.

In terms of HIV, while first-line antiretroviral regimens (ARVs) are now relatively affordable at about R90 per patient per month (ppm) in the public sector, costs will significantly increase as patients are shifted to second-line or even thirdline regimens that remain far more costly to the government at R238 ppm and R1 501 ppm respectively, and as more people are initiated onto treatment in line with NSP targets, at earlier CD4 counts in line with changing treatment recommendations.

When it comes to TB, the situation is worse. Linezolid (one of the only options for patients with extreme drug-resistant tuberculosis) is not being procured in the public sector given its high price tag of R288 per pill. Currently, it is provided through Médecins Sans Frontières (MSF) who are forced to procure it at the private sector price of R676 per pill (this while it is available in India as a generic pill at R25). Given that TB is the leading cause of death in South Africa, mostly affecting poorer communities, it is unimaginable that treatments go unfinanced in the public sector.

In addition, new cancer, diabetes, heart disease and hepatitis medicines are all likely to push up spending on medicines significantly. These examples are just the tip of the iceberg. Without drastic change how will the government finance an effective and equitable NHI?

South Africa is paying some of the highest prices in both the developed and developing world for medicines. According to the Department of Trade and Industry’s figures, we know that the bulk of the expenditure on medicines goes towards expensive branded versions from the USA, Germany and France, despite the majority of medicines, in terms of quantity, actually being imported in generic form from India. Each rand that is spent on procuring unnecessary branded medicines is money that is diverted from spending in the wider health sector. At a time when South Africa is facing miserable health conditions in many areas of the country – major staff shortages, poor hospital and clinic conditions, regular medicine stock outs, to mention just a few issues – the government must use all its powers to ensure that everyone has access to appropriate, efficient and quality health services.

Furthermore, the Department of Trade and Industry has noted the contribution of imported medicines to the trade deficit as a major area of concern – pharmaceuticals are the fifth largest contributor to South Africa’s trade deficit. With this knowledge, it is unbelievable that a lack of policy cohesion across government departments could threaten our ability to fix the patent laws in favour of the public purse and, ultimately, patients on the ground.

So what are the circumstances behind the purchase of unnecessary branded medicines? Currently, South Africa blindly hands out medicine patents without examining them to determine if they meet the country’s (already low) quality standards. The pharmaceutical industry takes full advantage of this failing. By continuously making obvious minor improvements or modifications to existing drugs, or filing patents for new uses of old medicines, they are able to continually extend their 20-year patent monopolies. As such an excessive number of patents have been granted. In 2008 alone, South Africa granted 2 442 drug patents. In contrast, from 2003-2008 Brazil only granted 273. By blocking other competitors from the market, pharmaceutical companies can charge whatever prices they want for their branded products, which are often excessively high.

The international legal framework on patents provides countries with the flexibility to take legislative steps to control the issuing of patents. For instance, South Africa could set higher criteria for what is deserving of a patent, allow thirdparty opposition to dubious applications, and ensure flexibility in accessing entirely new drugs that offer a public health benefit. By allowing fewer patents to be granted, South Africa would ensure that generic competitors were able to enter the market sooner – proven to be the only effective way to push prices down to truly affordable levels, as seen in the massive drop from around R100 000 to R1 080 per patient per year for a standard first-line ARV regimen. Yet despite the legality in terms of international law and the obvious good sense of adopting these safeguards, not to mention the cost savings, this process is facing endless delays.

Patents and subsequently high medicine prices have a major impact on universal health coverage in many parts of the world. Globally, even a developed country like the UK has rejected certain medicines based on a lack of affordability for their National Health Service (NHS). Since 2011 the UK health cost watchdog – National Institute for Health and Care Excellence (NICE) – rejected the inclusion of at least eight cancer drugs for use within the UK’s NHS, as they were priced too high to be cost effective in the public sector. If these are unaffordable in even the developed world, they will remain inaccessible in South Africa for many years to come.

The success of South Africa’s proposed NHI depends greatly on a patent system that actively reduces the cost to the government of procuring medicines and medical tools. Without major reform of the existing patent system, a publicly financed NHI will be unaffordable to implement, and healthcare will remain inadequate, inaccessible, and inequitable across the country. Healthcare is not a privilege for the few. The government must do all in its power to actively realise the right to health in line with their Constitutional obligations by rapidly reforming the patent system without further delay.

Rutter is a senior researcher with the Treatment Action Campaign