Evaluating the effect of a proposed logistics fee cap on pharmaceuticals in South Africa--a pre and post analysis

South Africa has proposed the implementation of a maximum logistics fee paid by pharmaceutical manufacturers to wholesalers and distributors. However very little knowledge exists of the effects, unintended or otherwise, of the implementation of these proposed regulations, which are required to guide further policy development and implementation. The objectives of this study was to therefore evaluate the effects of the proposed logistics fee cap on different pharmaceuticals and different dosage forms, as well as to observe the logistics fee contribution to the Single Exit Price.

Private sector medicine prices were sourced from the South African Medicine Price Registry as at 20 December 2013. For each medicine the maximum logistics fee was calculated based on the 2012 proposed government guidelines. The logistics fee as a percentage of the final Single Exit Price was calculated, as part of the analysis of results.

Out of the 47 medicines in the overall sample from the current study, only 16 medicines showed a decrease in the Single Exit Price with the application of the maximum logistics fee cap.

This study reveals the need for greater transparency of the mark ups along the distribution chain as well as further research with regards to the costing of logistics fees of similar pharmaceuticals.