CRA Insights

South Africa price benchmarking

July 9, 2008

The Pharmaceutical Industry Association of South Africa, PIASA, along with three other trade bodies asked CRA to independently review the government’s proposals for using international benchmarking to set medicine prices in the private market.*
In the government’s proposals, originator medicines were to be benchmarked against a basket of five countries (Australia, Canada, New Zealand, Spain and South Africa) under proposals set out by the government’s pricing committee. The lowest price from the five countries was to be used to obtain the benchmarked price (if the South African price was the lowest, then the price would remain the same). In addition, the pricing committee had proposed that generic products would be at least 40% lower than the internationally benchmarked price of the originator medicine.
CRA was asked to assess whether the chosen comparator countries and the method for calculating benchmark prices are consistent with the government’s objectives, make sense from an economic perspective, reflect international best practice and whether they would, if implemented as proposed, result in unintended consequences for the South African healthcare market.

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