Containing medicines costs in the private sector--the example of a medical benefit scheme

Despite a pre-existing cost-containment programme, expenditure on medicines was identified as a source of further cost savings in a medical benefit scheme faced with increasing divergence between income and benefit expenditure. Analysis of medicines utilisation trends showed that a relatively small number of pharmaceutical products accounted for a high percentage of total medicines expenditure, and that a small number of pharmacies were dispensing a very high proportion of prescriptions. On the basis of these findings, a revised cost-containment programme for medicines was implemented. It consisted of a recommended medicines list, designed to rationalise selection and utilisation of medicines, and a 'preferred provider pharmacy' network that allowed further savings to be achieved. In its first 12 months, the programme allowed for savings of R305,000, or 37% of anticipated expenditure on medicines for that year. This represents a decrease over 1988 expenditure notwithstanding an increase in membership and medicine prices over the same period. There are therefore significant savings to be obtained by medical schemes through implementation of cost-containment programmes for medicines.