1. Reducing the costs of medicine by dispensing generic medicine 25 September 2013 Presented by: Christo Rademan – Managing Director

2. 1.Where does the data come from? 2.Legislation regarding generic substitution 3.Generic utilisation trends in Namibia 4.Factors that drive generic utilisation 5.Measures to promote generic utilisation

3. Pharmaceutical Benefit Management Company Experienced – was established in 1989 and has been in business for more than 24 years An independent company with 119 staff members 85 Clients: medical schemes, insurance products, sick funds, price files More than 1.6 million lives Namibia: 4 open & closed schemes

4. Medicines and Related substances control Act, 2003 (Act 13 of 2003) Came into effect August 2008 “A pharmacist must inform all members of the public of the benefits of substituting the requested medicine with an interchangeable multi-source medicine” “And may dispense an interchangeable multi-source medicine instead of the medicine on the prescription”

5. Namibia31-45% RSA53% USA70%+

6. Generic utilisation trends

7. 73.2% 43.0% 53.4% 27.7% 19.8% 15.3% 26.8% 57.0%

9. 47.5% 44.9% 61.9% 61.1% Legislation had no impact

10. 61.1% 47.5% 44.9% 38.1% 16.2% 14.7% 38.9% 61.9%

11. % Expenditure % Volume

13. 1.58 (N$141.63) 1.48 (N$132.74) 1.00 (N$89.42) Originals - valid patent Originals - expired patent Generic equivalents Based on 2013 data

14. R1.00 R1.39 R2.52 N$1.00 N$1.51 N$1.72

15. NamibiaRSA SEP + 50% Mark-up + Dispensing fee (N$4.50) + Broken bulk SEP < R100: 28% SEP ≥ R100: R28 NB: Namibian fee structure rewards dispensing expensive products

16. Government Gazette, 19 November 2010 Single Exit Price (SEP) band (incl. VAT) Fixed fee (excl. VAT) % Mark-up on SEP (excl. VAT) <R75R646% ≥R75 to <R200R15.7533% ≥R200 to <R700R5115% ≥R700R1215%

17. Data: Namibian Medical Scheme Ingredient cost band % Items % Ingre- dient cost Ingre- dient cost per item (N$) Current mark-up fee structure Proposed 1: GG 33775, 19 Nov 2010 Fee per item (N$) % Mark- up Fee per item (N$) % Mark- up % Diff. in total cost % Diff. in fee per item Less than N$7567.226.036.0618.0350.025.8171.614.443.1 ≥ N$75 and < N$200 23.731.2122.7661.3850.064.2952.41.64.7 ≥ N$200 and < N$700 8.628.4306.04153.0250.0110.9836.3-9.2-27.5 ≥ N$7000.514.32 643.891 321.9550.0289.8511.0-26.0-78.1 Total100.0 93.0646.5350.043.6146.9-2.1-6.3

18. Availability of generic alternatives Mandatory generic substitution Prescriber and provider education / attitudes Provider incentives Procurement behaviour of providers Consumer education Funder rules / benefit design  Generic reference pricing  Formularies

19. Measures to promote generic utilisation

20. Success is achieved by engaging all the role players

21. Active pharmacy management Engaging roll players to promote generic utilisation Provider engagement – actively monitor pharmacy performance Applying management tools (Patient Experience Monitor) Monitoring co-payments at the point of service Engaging with pharmacy to change dispensing behaviour Specifying acceptable, cost-effective products during chronic authorisation

22. Member engagement – inform member of cost- effective generic alternatives Promote high-performing pharmacies by area Communicating these pharmacies via the authorization process SMS messaging to members regarding co- payments Communicating quarterly with pharmacies

24. Objectives: To actively work with Pharmacy to optimize dispensing behaviour To reduce member co-payments, driving the concept of a ‘wallet-free’ experience To drive generic substitution towards the use of Mediscor reference price (MRP) products To drive members towards network pharmacies Ensures cost-effective delivery of benefits

25. Measures the ideal behaviour per line  That can be rolled up by Option, Pharmacy, Group, etc.  Very powerful Enables meaningful engagement at Pharmacy level Enables network contracting and management Provides the ability to form preferred partnerships

28. Generic utilisation decreased over the past 4 years 16% of volume is from brands with patent expired Multiple factors influence generic utilisation Legislation had no impact! Behaviour change needs to be driven by:  Rewards & incentives  Education  Provider engagement Misalignment of provider and funder interests to be resolved

29. Thank you! Any Questions? Thank you! Any Questions?