Country Report: South Africa - Pharmaceutical Executive


Country Report: South Africa
Leading the Pharma Model

Pharmaceutical Executive


The Department of Health in South Africa is committed to completely transforming the country's healthcare system. Launched in 2010 by the ruling party, the African National Congress (ANC), the national health insurance program aims to ensure healthcare coverage for all South African citizens.

Under the current system, South Africans rely heavily on private insurance to access health services. In fact, the country has one of the highest rates of private insurance reliance in the world at 44%. However, only a fraction of the population can afford private insurance, resulting in what the government is calling a 'two-tiered health system.'

Val Beaumont, executive director of IMSA
The government calls the reform necessary given the country's consistently poor health outcomes despite its relatively high proportion of health spending. Compared to other BRICS countries, South Africa's health contribution, more than 9% of its total budget to public health, is second only to China, which spends 10%.

Health Minister Dr. Aaron Motsoaledi says the problem is systemic. "The problem is how the Gross Domestic Product (GDP) is distributed. In South Africa, 5% of the GDP out of the 8.5% spent goes to 16% of the population, while only 3.5% goes to the other 84% of the population. Now, this 16% is the elite, the well-to-do, the employed, the powerful, and the healthy. The remaining 84% of the population are mostly very poor, unemployed, very sick, and carrying the biggest burden of diseases."

Luciano Marques, CEO and country president of Novartis South Africa (Pty) Ltd
The reform is scheduled to be implemented in phases over a 14-year period and is said to involve changes in the service delivery structures, administrative and management systems. The government has worked out a roadmap to boost public healthcare quality before the introduction of the NHI fund.

Chief Director of the National Department of Health, Dr. Anban Pillay, says, "The focus is to improve the system so that when the NHI is ready, even those who are in the private market can use the public health system and be confident about it."

Aspen Pharmacare, East London, South Africa
The government will create a fund derived from tax incomes through which private and public providers will be contracted, and patients will access services that will be paid through the fund. However, from a macro-economic perspective, there are concerns related to the modalities of financing. Critics say that the country's small middle class and 25% unemployment rate will make raising sufficient funds through the proposed tax scheme a major challenge.

However, Pillay refutes these concerns. "Our costing had taken account of the worst case scenario. To assess what is the country's capacity to finance the NHI, we have looked at what the government is currently spending on healthcare as well as how much South Africans are spending on private medical insurance. Combining these two funding streams allows us to achieve efficiency in our purchasing."


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Source: Pharmaceutical Executive,
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