South African Pharmacies Facing Collapse, Survey Claims
As the country awaits a final Constitutional Court ruling on controversial government pricing regulations, South Africa's pharmacy lobby has claimed its industry is facing collapse. However, the government has dismissed a new survey as an attempt to "gain sympathy" from judges.
The poll of 400 pharmacies, carried out by the Pharmaceutical Society of SA (PSSA), indicates that drug retailers have seen an average revenue decline of 77.6% since the new regulations' introduction last year. The PSSA added that "havoc" surrounding the new law's introduction has also led nearly 90% of those questioned to consider closing down. Government officials reply that a poll of just 400 retailers is "insufficient evidence" of the sector's impending demise.
Under the new, significantly more transparent regulations, dispensing fees for prescription drugs are set at a maximum ZAR26, or 26% of cost, while fees on OTC medicines are capped at ZAR16, or 16% of cost. This is calculated according to the so-called Single Exit Price, a combination of the manufacturer's selling price, value-added tax and a disputed "logistics fee."
Authorities hope the new framework will reduce average drug prices by 19%, creating savings of roughly ZAR2.3bn (US$338mn), and much of the research-based pharmaceutical sector has cautiously welcomed the measure.
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