South Africa’s pharmaceutical sector is reaching a boiling point. The country’s umbrella body for manufacturers is now pressuring the National Department of Health for answers. At the heart of the dispute is the recent 1.47% hike in medicine prices for the private sector. Industry leaders warn that without full disclosure on how this figure was reached, legal action is inevitable.
The Controversy Surrounding the Medicine Price Increase
The Pharmaceutical Task Group (PTG) represents the heavyweights of the local industry. This includes organisations like Ipasa and Generic and Biosimilar Medicines of Southern Africa. They are questioning the methodology used by the Pricing Committee. For years, the calculation of the annual Single Exit Price (SEP) adjustment has been a source of friction.
The industry argues that the current medicine price increase is dangerously low. It sits well below the national consumer inflation rate of 3.6%. It also fails to keep pace with sectoral salary increases, which average around 6%. Even the Council for Medical Schemes suggested a higher tariff guidance of 3.3% for 2026. This disconnect has left manufacturers wondering how the Department of Health arrived at such a meagre figure.
Economic Pressure on Pharmaceutical Manufacturers
The global landscape is not making things easier. Ongoing conflict in the Middle East has sent shockwaves through the supply chain. Drug manufacturers are facing a "perfect storm" of rising costs. Since the start of the war, the Rand has depreciated by nearly 6% against the US Dollar.
For an industry that relies heavily on imports, this is a major blow. Local manufacturers are not spared either. They are currently battling surging costs for electricity, labour, and raw materials. Freight volatility and rising oil prices further complicate the logistics of keeping pharmacies stocked. Industry leaders argue that the 1.47% adjustment does not reflect these harsh economic realities.
Urgent Call To Revise the Medicine Price Increase
In response to these pressures, the PTG is not just asking for transparency. They are demanding a formal adjustment. The group has requested an additional 1.73 percentage point increase. This would bring the total increase for 2026 to 3.2%.
Stavros Nicolaou, Chair of the Task Group, emphasised that a functional healthcare system relies on a sustainable supply of medicines. He noted that leaving these rising input costs unaddressed places the entire system under significant stress. The goal is to align the SEP with the inflation rate seen before the recent geopolitical turmoil. Without this correction, the sustainability of the private healthcare supply chain remains at risk.
Transparency Concerns and Legal Implications
The lack of clarity from the Department of Health may have legal consequences. The PTG asserts that the current opacity regarding the Pricing Committee’s work is a problem. They believe it contravenes the Promotion of Administrative Justice Act (PAJA).
Industry players have repeatedly asked for the methodology behind the 1.47% figure, but their requests have been ignored. Jasvanti Bhana, CEO of Ipasa, warned that currency fluctuations and oil prices must be factored into pricing models. If the government fails to provide a clear explanation or a revised adjustment, the industry appears ready to take the matter to court. For now, the healthcare sector waits for a response that could determine the future of affordable and accessible medicine in the country.
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