National Health Insurance (NHI) Bill: public hearings day 10
29 June 2021
Documents:
Meeting Summary
Video: Portfolio Committee on Health, 29 June 2021
NHI: Tracking the bill through Parliament
In this virtual meeting, the Committee held public hearings on the National Health Insurance Bill. Six organisations presented oral submissions.
All the entities welcomed initiatives to improve access to quality health care services to all South Africans, although not all supported national health insurance (NHI) as the best solution. Several proposed amendments to the Bill. The presenters were all in favour of the public and private sectors working collaboratively in the provision of health care. There was a concern expressed, however about unintended consequences of Parliament passing the Bill in its current form.
Two presenters, linked to the Innovative Pharmaceutical Association of South Africa, stated that the Bill – as presently worded - prevents the private healthcare sector from providing its current services. This was said to constitute “regressive legislation that is not aligned with the Constitution.”
The Free Market Foundation argued that NHI is not the appropriate vehicle for South Africa to attain better universal health coverage.
The Committee asked whether comparable evidence-based research from other countries could be provided. The concerns around higher expenditure on health in the country was noted, as well as the diminishing quality of health systems and services. Could the Foundation suggest ways to improve health outcomes outside of additional funding? Clarity was sought regarding health expenditure in Cuba and whether their low gross domestic product could account for the high health expenditure ratio. Members asked about the Foundation’s overarching recommendations on the Bill, as well as its stance on social solidarity. Examples of countries that used voucher systems was requested. How could the introduction of low cost schemes materially increase health coverage of the population and reduce out-of-pocket medical expenditure?
Business Unity South Africa (BUSA) supported the implementation of national health insurance but proposed that a multi-funder dispensation be permitted in providing a minimum package of healthcare services for all South Africans. They outlined specific drafting recommendations for the Bill.
The Committee asked whether national health insurance would create an environment of equitable healthcare, especially between rural and urban areas. Members raised what the consequences of a monopolistic system would be, where there was no competition, incentives or innovation. Did BUSA think that NHI would speed up transformation in the sector? Did inequality in healthcare relate to access or quality? Should Parliament or the executive oversee the appointment and progress of the boards? Members asked if the phased implementation plan as referred to in the Memorandum of the Objects of the National Health Insurance Bill would cover the concerns of BUSA. Were there any examples of countries outlawing private sector health cover? Did BUSA suggest that the single payer system did not allow for strategic purchasing?
Icon Oncology is the largest provider of cancer management services in South Africa. In addition to providing specific comments on the Bill they argued that top-up insurance, via medical schemes, was essential in oncology, due to the high cost of medicines.
The Committee asked whether Icon Oncology could suggest specific recommendations that would help lower the cost of oncology medicine to allow for improved access to cancer treatment under National Health Insurance. The recommendations about outcome-based reimbursement and risk sharing with pharmaceutical providers were welcomed in terms of the need for greater efficiency. Were issues of inequality related to access to healthcare or to its quality? Might partnerships with the pharmaceutical industry exacerbate the dilemma of possible over-servicing?
SANOFI-Aventis, a multinational pharmaceutical company, provided detailed commentary on the NHI system and on the provisions of the Bill, drawing on international and French experiences. Recommendations relating to definitions in the Bill were indicated.
The Committee noted that SANOFI proposed a two-tier multi-layer healthcare system. Members asked whether this was a proposal that the status quo should be maintained. Members asked which aspects of the NHI Fund should incorporate the public-private partnerships recommended by SANOFI. Clarity was requested regarding how national health insurance would impact SANOFI specifically, and whether this in-turn would impact pricing of essential medicines. Did SANOFI support the principles of equity, justice and social solidarity? Did SANOFI advocate that there should be freedom for the NHI to procure medicines that were not registered by the South African Health Products Regulatory Authority? Should the pharmaceutical industry be represented on the Benefits Advisory Committee? To what extent was it possible to drive down costs through economies of scale? Should the NHI Fund operate outside of the Public Finance Management Act? Did SANOFI suggest that there be an independent Health Technology Assessment agency? Were there examples of this globally?
The Innovative Pharmaceutical Association of South Africa outlined the value of innovative medicine and vaccines. Six key areas were proposed in terms of achieving universal healthcare coverage in the Bill. The Association included comprehensive and detailed proposals for amending the Bill, on behalf of its members.
The Committee asked whether the introduction of national health insurance would help lower the cost of drugs and make them affordable. Did the Bill allow room to support innovation in health? Clarity was requested regarding the view of the Association on the allocation of powers to the Minister in the Bill. What impact might legal costs associated with medical negligence have on the Fund? How flexible was the Association in reducing the time period associated with the development of new medicine - especially in light of emergency situations like COVID-19. The Association’s proposal that an independent Health Technology Assessment agency be established was questioned. Members asked whether the Association was concerned that the NHI Fund would only procure generic medicines.
Abbott Laboratories, a multinational medical products company, outlined their concerns and recommendations. The role of the Health Technology Assessment Agency was highlighted and it was proposed that this be independent of the NHI Fund.
Abbott Laboratories agreed to provide written information in response to Members’ questions on how Abbott Laboratories worked with other countries when it came to national health insurance. It also agreed to provide its views in writing on intellectual property issues – although the majority of Abbott Laboratories medicines were off-patent pharmaceuticals. Members asked how the NHI would impact the business model of Abbott Laboratories, particularly on the pricing of drugs and medical equipment. Was Abbott open to voluntary licensing and patent pooling mechanisms? How would Abbott assist with innovative ways to make medicines available at cost effective prices. Did Abbott concede that the competitive advantage of the private sector providers was their ability to negotiate prices with pharmaceutical companies, which were kept to themselves? Would non-competitive and non-transparent prices be removed to the ultimate benefit of the recipients of the medications under national health insurance, as contained in the Bill?
Meeting report
In this virtual meeting, the Committee held public hearings on the National Health Insurance (NHI) Bill. Six organisations presented oral submissions
Submission by the Free Market Foundation (FMF)
Mr Chris Hattingh, Deputy Director, FMF, spoke to the Committee from a set of slides headed “NHI - Why It Won’t Work and Alternatives That Will”.
SA’s current state of play
• State does not have sufficient technical expertise – and is running out of funding. The inefficiencies – and tragedies – associated with the public sector are becoming all too common.
• Eskom’s debt – not to mention that of the other State Owned Entities (SOEs)
• Won’t solve increasing health misspend – for this refer to the latest report from the Auditor- General
Over-involvement of the state leads to less desirable outcomes:
• No objective reason to believe that NHI will perform better than other SOEs
• Great room for improvement in public sector – and private sector – but no reason to presume that nationalising the management of all healthcare in the hands of state bureaucracy will solve problems. This is, in effect, what the NHI would require.
FMF alternatives & alleviating measures
• Financing health care for the poor – preferably via state-sponsored vouchers, which the indigent can spend where they choose
• Encouraging more private hospitals by deregulating the industry and eliminating Certificates of Need
• Reducing prices and increasing healthcare quality through increased competition
• Allowing the private sector to train doctors and nurses
• Encouraging income-producing medical tourism
• Retaining skilled South Africans and attracting others by removing the limit on skilled foreign doctors
• Deregulating medical schemes so they can offer their clients exactly what they want
• Deregulating pharmacies
• Removing price controls, which send mixed messages to the industry
• Speeding up registration of clinical trials
• Giving those who pay for their own healthcare a tax deduction
• Strengthening IP rights that encourage innovation, better products & ultimately cost savings
• Allowing low-cost insurance options
Corruption Concerns
• Not solely directed at the current government – no Minister or Government should have the level of power that the NHI will grant
• Eastern Cape and Gauteng healthcare in various states of disarray due to years of corrupt behaviour – Also points to problems of increased centralisation
• Special Investigations Unit (SIU) investigations into Personal Protective Equipment (PPE) misspend – not even a global pandemic prevented looting behaviour
• Human nature and incentives
• If we continue to mix the state with the economy, we increase the chances for unscrupulous actors in both government and the private sector to try and corrupt processes and set up things to their benefit
Not the kind of structural reform SA needs
• SA should not pursue policies & plans that could add to the growing debt-to-Goss Domestic Product (GDP) ratio – placing burden on future generations
• NHI will not alleviate the problems in the public healthcare sector – nor in the private sector
• Will not solve current corruption-associated hurdles
• SA needs policies that unlock & encourage economic activity, job creation and progress
• We need dynamism – not stagnation
• The NHI is not the appropriate vehicle for SA to attain better universal health coverage (UHC)
Mr Michael Settas, Chairman: FMF Health Policy Unit, presented a set of slides entitled: The National Health Insurance Bill of 2019 [B11-2019]
Summary of problem statements versus reality
• SA does not have UHC – SA does have UHC
• Health system is inequitable – 20% fund 68% of Budget
• Public health sector is under-resourced
• Financially 28% increase in real per capita budget
• Human Resources 42% increase from 2006 to 2016
• Wages increased by 55% in real terms (2006 to 2016)
Universal health coverage
International Labour Organisation World Social Protection Report of 2017
• No Coverage Gaps in SA from an Inability to Pay or a Lack of Access
• Health Market Inquiry: “South Africa already provides near-universal access to healthcare to its citizens through a combination of publicly available services and in regulated private markets”
• World Health Organization (WHO) & World Bank: Service Coverage Index = 0.67
NHI Socio Economic Impact Assessment (SEIA) June 2019
• Assumes, without evidence or research, that NHI will yield the promised results.
• Discounts objections by referring to the principles of NHI (e.g., a single payer fund will bring about cost reductions).
• There has been no evaluation of alternatives to NHI!
• SEIA requires an evaluation of alternative proposals!!
Only the 2017 SEIA touched on this briefly:
• Complete Privatisation, or
• Retain the Status Quo
Public Participation
There is no way for the public and affected stakeholders to know any of the following important issues:
• How much the NHI will cost
• What taxes will be raised and by how much to fund NHI
• Only one developing economy (Cuba) has ever built an equivalent to NHI (i.e. a monopoly single payer system):
• So why is the NHI being pursued if we know Cuba’s total health spend = 13% of GDP
• Why are warnings by Treasury and Davis Tax Committee on the lack of affordability of NHI are being ignored?
• Alternatives to the NHI
• Why the role of medical schemes is being relegated to complementary (globally unprecedented)
• How the NHI proposal will strengthen public health facilities to a point where they are delivering quality care
• (Policy assumes that more money will rectify quality)
• (Previous slides show that more money was available yet quality has deteriorated)
Refer to presentation for graphs and additional information.
Discussion
Ms H Ismail (DA) asked how well the NHI Bill focused on disease prevention, in order to lower healthcare costs. Since COVID-19, there was a completely different economic climate, how would this impact the successful implementation of the NHI? Should the implementation of NHI fail, how would the average person’s access to healthcare services be affected? What consequences did FMF foresee and what alternative choice would be people have? In the presentation, FMF said that the NHI Fund required 80 percent plus compliance. If the majority of healthcare facilities did not meet this, how would this affect equitable access to healthcare services? Would it create a further divide between rural and urban areas? What implications did FMF anticipate? How would the implementation of NHI impact foreign investment?
Dr S Thembekwayo (EFF) asked whether FMF had comparable evidence-based research findings from other countries that they could cite to support their statements and arguments.
Ms E Wilson (DA) noted the concerns raised by FMF about the higher expenditure on health in the country, as well as the diminishing quality of health systems and services. This was highlighted by the Auditor General (AG) in reports of failure in governance, leadership and accountability. There would also be a budget cut in the next short period in infrastructure, human resources and primary healthcare. Given this, how did FMF think the NHI could improve health outcomes outside of more funding? Given the overall cost of the Cuban health system, at more than 13 percent of GDP, did the NHI have structural features to avoid such a high cost of GDP? The monopolistic nature of NHI had been discussed. The government assumed the cost of delivering healthcare to all citizens. What would be the advantages of a monopolised approach, as opposed to a multi-layer system that combined public and privately funded healthcare providers? If South Africa could not raise the dedicated healthcare taxes to 2.9 percent of GDP to fund NHI, was there any point in proceeding? This was seen with a number of bills that went through Parliament, where the bill proposals were reasonable, however as a result of insufficient funds to make the bills practicable they were rejected. Many of the previous presentations had highlighted their objections to the power given to the Minister to appoint boards and people in entities associated with those boards. This would be problematic. The proposal from previous presenters was that the board members should be appointed by Parliament as opposed to the Minister. Those boards would then be accountable to Parliament; would FMF agree with that proposal? Did FMF think that the Bill, as it stood, would pass constitutional muster?
Dr K Jacobs (ANC) asked whether FMF appreciated the difference between a schedule 3A entity and a state-owned enterprise as the NHI Fund was proposed to be schedule 3A entity. Were FMF suggesting that corruption was undermining the sector and that it had nothing to do with under-funding? FMF’s critique of the Cuban health expenditure omits positive health outcomes and the performance of the health system. According to the Organisation for Economic Co-operation and Development (OECD), the United States of America (USA) had the highest health spending, with one of the worst performing health systems. Cuba spent 11.2 percent of their GDP and 15.2 percent of general expenditure (on health). Was it not feasible that the low GDP in Cuba accounted for the high percentage of health expenditure? Was the FMF in agreement with the findings of the Health Market Inquiry, that health care costs in the private sector had spiralled out of the affordability of South Africans? What would deregulation do to the spiralling costs?
Ms S Gwarube (DA) stated that the big predicament in South Africa was the deep inequality that existed around access, specifically access to quality care. As highlighted by FMF, there were a number of reasons why this was the case. How would FMF advise law makers to design legislation that met all the governance issues and matters of constitutionality that had been raised? How did the country design a health system that did not decimate one industry over another but that ensured that anyone in the country could access quality care? If funding was not the issue, and if other countries were spending just as much or more in terms of healthcare, what needed to be done to overhaul the system in this legislation? What was the central question that the Committee needed to consider to fix what was broken and not exacerbate the problem? What were the three key things that needed to be included in the legislation that the Bill currently did not include?
Mr T Munyai (ANC) asked whether FMF supported health as a public good not as a free-market tradable commodity. Did FMF agree that South Africans should get the health services they needed, per section 27 of the Constitution, keeping in mind that it called on government ‘to take reasonable legislative and other measures’ to achieve this. What was FMF’s understanding of universal health coverage? Did this mean diverse health benefits for different income groups, could coverage be different amongst the poor, middle income groups etc? FMF stated that there had not been public participation. Were they suggesting that the NHI Bill process had not followed the regulated procedures of legislative development? What was FMF’s opinion on the Green Paper, White Paper and NHI Bill process that started in 2011? FMF put forward the graph of the Office of Health Standards Compliance. Was their assessment relevant in the context of the two-tier system? If one considered the two-tier system, for instance, it was dominated by those who had medical scheme coverage, such as Infiniti Insurance Limited, that benefitted significantly from the public purse and the public in general. Given this, was the assessment by the Office of Health Standards Compliance not irrelevant in the context of what the NHI Bill seeks to achieve?
Ms M Hlengwa (IFP) stated that FMF appeared to oppose NHI by highlighting various reasons why it would not work in South Africa. The reality was that there was an increasing gap between those who could afford private healthcare and those who could not. There was a need for NHI, so that everyone had the same access. Did FMF believe that its alternative proposal would bring about the level of equality in access to healthcare that was proposed by the NHI or did FMF not believe in such equality at all?
Ms A Gela (ANC) asked what FMF’s view was on the principle of equality, justice and social solidarity. What was the position of the FMF on the redress of past injustices that the Bill sought to address? Which countries had completely unfettered markets? Would this work in a country where inequality was as high as in South Africa? Did FMF take into consideration who represented the market in South Africa?
Mr M Sokatsha (ANC) asked how the Committee could ensure a more equitable distribution of health workers and service availability when the prices and wages paid in the private sector were so much higher than in the public sector. He asked whether FMF could indicate which countries achieved universal health coverage through vouchers. Did FMF support the current total health spending of 8.5 percent of GDP as appropriate?
Ms X Havard (ANC) asked if FMF believed that inequality in healthcare should depend on patients’ medical need or on their ability to pay for services. Could FMF explain where they got the figure that 8.5 percent of GDP was proposed for total health expenditure for the NHI?
Chairperson Dr Dhlomo referred to the report of the Health Market Inquiry, which indicated the health costs in the country. The primary healthcare sector was at a level where it would soon not be affordable. The Report made strong suggestions. What was FMF’s view? There was universal evidence, in China, the USA etc, that fee for service medicines drove up costs astronomically. If one conducted male circumcision in a public hospital, for example, all the consumables, including the doctor and anaesthetist, was estimated to be R1 000. If one conducted it in a private health facility, it was R7 000. Thus, it induced unnecessary service fees. All public hospitals strove to keep the caesarean sector rate at 35 percent, if it went up to 40 percent it would be problematic and the cause would be looked into. Some of the tertiary hospitals would state that this was because they received referees from the districts. On average all private hospitals were happy to have a caesarean section rate of 80 percent. Was that in the name of quality? There were no incentives in the private sector to have higher vaginal delivery rates. He wanted to compare apples with apples.
In terms of the definition of universal health coverage as proposed by the former Director General (DG) of the World Health Organization, FMF’s definition of universal health coverage differed significantly from that of Dr Margaret Chan, who was motivating for universal health coverage and asking countries to consider this route. She explained the implications of universal health coverage. On slide eight, FMF spoke of ‘near universal health access.’ Being a medical doctor himself, he was not familiar with such terminology. One was either pregnant or not pregnant; one could not be ‘near’ pregnant. He requested clarity regarding ‘near universal health access.’
Dr Jacobs referred to the out-of-pocket expenditure. In South Africa it was a redressing funding mechanism, it imposed greater hardship or burdens on household income, proxied by household consumption and expenditure on the poorest households. Medical scheme members, who were mainly amongst the richest percent of the population, made large out-of-pocket payments, which translated into a higher burden of out of pocket payments for the group and for their total expenditure on healthcare. For the middle 20 percent of households, out-of-pocket costs needed to be factored in. Out-of-pocket expenditure was quite astronomical for those who were on medical aid – and was a burden for them. How would the introduction of low cost schemes materially increase the health coverage of the population? It was said that there would be a 9 to 50 million increase in coverage achieved by adding the low cost schemes. It would imply that 45 million people would still need to be covered by the public health system, which in itself was not sustainable.
Responses
Mr Michael Settas said a focus on primary care would assist in disease prevention. It was a fairly-widely accepted approach in health systems that prevention was better than cure. Many systems were spending more on prevention. The obvious issue about building a system like the NHI, where it was a monopoly system, meant that it was the only system that a person could rely upon. Its weakness was that if it failed, there were no alternatives, as the alternatives had been legislated out. That was a concern. He responded to the question about the Office of Health Standards Compliance and what would be done to get facilities to comply. That spoke to the issues in the public sector that needed to be addressed. If one improved the quality of care, one would improve those scores, and those facilities would then be able to contract with the NHI. The nature of the NHI would deter foreign investment, as nationalising the public health sector was a concern.
Corruption was one of the biggest causes of failure within the public sector. If that was addressed, the public sector would be performing much better than it currently was. He agreed that the private sector was expensive; the Health Market Inquiry was quite detailed on that. The private sector could do much better with the proposals in the NHI. Out-of-pocket expenditure was regressive, many national health systems attempted to create means tests within the system so that benefits were not necessarily equitable as they were minimised for the lowest income groups within the system. That was how many of the systems addressed issues of equitability. The wealthier population generally paid higher out-of-pocket costs and lower income groups would pay lower or no out-of-pocket costs.
FMF believed in equality of care to citizens. Countries would generally build a basic package of care and that would be delivered to all citizens on an equal footing. It did not necessarily have to be through a monopoly single-payer structure. It could be with multiple payer structures at a national level, the package was defined and that was the basic package that needed to be delivered across the country to all citizens. In many cases it could be privately funded by persons willing to pay for care for themselves or it could be publicly funded on various levels. Even within a structure like that, the level of co-payments could be structured to be reduced for lower income members so as to improve access.
Separating the executive from the administration would be a big step in the public sector, so that there were people who were appointed, not according to political affiliation, but rather based on skill. Removal of corruption would have a massive impact on the public sector. Implementation of the recommendations of the Health Market Inquiry could assist the private sector substantially. The monopolised structure of the NHI was of particular concern to FMF. Monopolies increased costs and reduced quality, this was the case all over the world.
FMF believed in equality to a basic standard package that the country could implement across the public and private sectors. The percentage of GDP was the same through the Green and White Papers – that number was carried through from the beginning. Most health systems structured their benefits or their contributions on an ability to pay basis. It was a more progressive system where the high-income earners contributed more, either through general taxes or dedicated taxes, through a system like NHI. The Health Market Inquiry highlighted the high private sector costs, it was very expensive. The private sector had a number of structural weaknesses and problems that could be addressed through the recommendations made by the Health Market Inquiry. Fee for service systems were renowned for pushing up costs. Doctors’ behaviour changed as a result, in that their focus became about getting as many treatments through as possible – as opposed to focusing on the quality of the outcomes.
The caesarean section rates in the private sector were very high. South Africa’s private sector might be unique in the world. The country’s rates might be the highest in the world – he would need to check that – it was obviously a concern. Universal health coverage was usually defined as access to a universal basic package of care that countries developed and established according to their needs and affordability. FMF’s reference to ‘near’ universal health coverage was quoted from the Health Market Inquiry, meaning that the vast majority of citizens had access to care.
FMF supported health as a public good. FMF proposed that the country should define a basic package of care that all South Africans could access. Section 27 of the Constitution stated that the country should make available health services on a progressive basis. It emphasised that it should be done within the available resources – that was the part that the NHI did not align to. The NHI structure looked to increase expenditure in the public sector substantially.
Submission by Business Unity South Africa (BUSA)
Mr Cas Coovadia, CEO of BUSA, Mr Stavros Nicolaou, BUSA Board Member, Dr Ayanda Ntsaluba, BUSA Member, and Mr Martin Kingston, BUSA Vice Chair, presented to the Committee.
Please refer to the presentation for the graphs and infographics
Introductory Remarks
BUSA supports government’s policy objectives of:
• Progressive universalism to address inequality
• Mandatory membership and prepayment for sustainability
• Financial risk protection to ensure access to needed care
• BUSA supports the implementation of the NHI Fund and our inputs aim to highlight risks of execution, that may ultimately undermine these policy objectives
• Policy needs to be implemented in a way that is inclusive, affordable and sustainable
BUSA believes that this should include:
• A multi-funder dispensation
• Access to a minimum package of healthcare services for all South Africans
• Sharing the operational load of providing the care between the public and private health sector
• Phased implementation to avoid concentration of operational risk and unintended consequences
• As Business we recognise that the principles underpinning the proposed NHI give expression to the policy objective of equitable access to health care as a socioeconomic right under our Constitution.
• We are mindful of the contribution of universal access to health care to fairness, human dignity and economic productivity.
• This objective can be advanced in various ways, and involves health service delivery and standards of care, investment in infrastructure, human resource mobilisation and financing arrangements, amongst others.
• A founding assumption of our commitment to NHI is that society agrees to share the costs of providing universal access to necessary and appropriate health services, essential to the wellbeing and dignity of all. This forms part of our broader commitment to advancing comprehensive social protection.
• The lack of an accompanying paper from National Treasury on the fiscal implications as well as the associated Money Bill is a cause of serious concern.
• In adopting NHI as the organising framework for financing health care, we believe that South Africa has the opportunity to incorporate its entire health infrastructure and build on the strengths, assets and capabilities of both the public and private sectors.
• Government has also not yet responded to the recommendations of the Health Market Inquiry (HMI), regarding the proposed operational reforms which were developed through an extensive and robust process and have the potential to enhance efficiencies with immediate benefits in healthcare funding and delivery.
• We support the NHI Bill in principle, however we have identified certain serious concerns and risks that may potentially impede successful implementation and achievement of Government’s health policy objectives. We submit several constructive drafting considerations in this regard, for the Committee’s review
BUSA’s independent research findings
Single payer approach:
• Both high income (Germany, Netherlands, Switzerland) and middle income (Chile, Mexico) countries, have multi-fund partnerships between the public and private sectors.
• South Africa is well-suited to a multi-fund NHI, given its existing systems and capacity.
• No countries with large “single fund” approaches have legislative restrictions on private cover
Key risk:
• Drawing on international evidence, there is a clear risk that the NHI as proposed will be underfunded, leading to unintended rationing and discrimination against the vulnerable
Proposed solution:
• A multi-fund partnership approach is still consistent with policy objectives
• If the infrastructure investment needs of the public sector (>R190 billion) are to be addressed, both public and private funding sources should be mobilised
• Expanded training and provision of health professionals is needed, supported by both public and private funding streams.
Main points
Phased implementation – Section 57:
• Phases should be defined by milestones achieved rather than dates
• A progressive realisation of cover should target the most vulnerable with an incremental approach to tax-based funding within the construct of our national social protection floor.
• This includes the development of referral pathways to optimise the utilisation of resources
Legislative changes – Section 58:
• Legislative changes are premature and inconsistent with progressive phased approach
• Risk of legislative uncertainty which will limit investment in the sector
The single payer approach – Section 2:
• A single payer, single purchaser system does not ensure optimal outcomes for price or supply and is not conducive to strategic purchasing
• Optimal scale and diversified supply ensures best outcomes, limits systemic risk and unintended narrowing of the supply side
Specific Recommendations
• The NHI Bill requires review to ensure that there is a clear framework for implementing the NHI Fund and that the scope for uncertainty is limited.
This includes:
• Clear definitions and consistent use of terminology throughout the Bill
• Amendments to section 6 and 8 of the Bill to ensure that the supplementary role of medical schemes is clear
• The role of medical schemes, as set out in section 33 of the NHI Bill should be amended to allow for the coexistence of the NHI and medical schemes.
• Revision of the governance framework including the process for appointments being based on required qualifications, skills and experience
• Revision of the definition of the implementation phases to incorporate clear and objectively measured metrics
• Amendments to legislation should be proposed as required to accommodate phased implementation and reduce unintended consequences
• Specific drafting recommendations respectfully submitted
Central considerations
• Health policy needs to be considered within the context of priorities for the country as a whole
• This includes social inclusion, affordability, sustainability and investment in services and manufacturing
• Health is a fundamental necessity for business productivity and growth in the same way that it is a very personal priority for individuals
• Optimal investment and innovation in the health sector is the product of vision, skill, competition, policy and regulatory certainty and a diversity of views. NHI as a single fund will not promote such an outcome.
• We therefore support National Health Insurance as a necessary component of the broader social security system on an incremental, integrated multi-fund basis
• We support the funding of NHI within the parameters of affordability to the fiscus
We highlight four major concerns noted above:
1. Governance
2. The right of persons to insure their health risks in addition to their mandatory membership of the Fund
3. Risk of policy and regulatory uncertainty during the transition period, if the meaning of “fully implemented” is not clarified in the Bill
4. The economic and financing impact of the NHI Fund as framed misconstrues the virtues of a public good with the necessary dynamic of investment in the sector
• Policy should promote expansion of the health sector as a whole to promote coverage and quality of care
• Policy should co-opt and support the private sector as a partner, to provide inclusionary coverage
• Policy should be aimed at attracting investment in South Africa and creating employment opportunities
• We support a strong partnership and effective NHI to the benefit of all South Africans
Drafting considerations: governance
• Section 12: The appointment of the Board should include assurances of independence, transparency and relevant technical expertise independently adjudicated. The sheer size and significance of this fund once fully implemented warrants dual accountability to both the Minister of Health and Minister of Finance. Both Ministers should have a representative on the Board.
• Section 14: The Chair of the Board should be appointed by its members
• Section 25(6): The chairperson of the Benefits Advisory Committee must be appointed by the members of the Committee and not by the Minister
• Section 26 (1): too much relies on the discretion of the Minister in the appointment of the Benefits Pricing Committee
• Section 26(3): The singular view of a committee in determining price outcomes for the sector is vulnerable to skewed or narrow development of the health sector. The cost of capital associated with an investment should be duly considered in a price determination. National Treasury should be represented on this committee.
• Section 27: there is no clear mechanism on how the deliberations of the Stakeholder Advisory Committee will be incorporated into the processes of the NHI. The intended purpose and function of the Committee is similarly omitted from the Bill as well as the influence, if any, of the representatives of the Committee on the decisions of the Board.
• Section 31 (1 & 2): See section 12 comment above. (2) is inappropriate as an ongoing empowerment of the Minister. The policy intention here would be better captured as a specific obligation in section 57(4)(h), i.e., a duty on the Minister to propose legislation regarding the re-allocation of functions/duties in order to get NHI set up. The Minister cannot have an indefinite empowerment to propose such re-allocations of powers that are constitutionally conferred.
• Section 32(1)(d): contemplates the enactment of section 36 (certificate of need) of the National Health Act (NHA). There are currently no regulations supporting section 36 of the NHA. Such regulations would have to be brought into effect through an appropriate public participation process and the constitutionality of section 36 would have to be determined: in so far as section 36 may cause healthcare providers to be unable to render services in a particular area where such a determination is made, pursuant to the provisions of section 36. This will, in turn, have implications pursuant to section 22 of the Constitution in respect of "the rights [of medical practitioners] to choose their trade, occupation or profession freely."
Drafting considerations: the role of medical schemes
Section 33 raises several constitutional concerns:
• When read with section 6 and section 8, it appears to reduce/abolish the existing right of citizens to acquire healthcare services from private providers, which may infringe sections 12(2)(b) and 27(2) and 28(1)(c) of the Constitution;
• When read with section 6 and section 8, it appears to reduce/abolish the existing right of citizens to insure themselves against the risk of non-coverage by the Fund, potentially infringing the same sections of the Constitution;
• It may, for reasons related to the two preceding concerns, unreasonably restrict healthcare providers’ and healthcare funders’ freedom of trade, occupation and profession in addition to the right to acquire healthcare services from private providers;
• “fully implemented” is neither defined nor clear which makes the Act vague. Further, the Minister should not have the power to “determine” when NHI is fully implemented, as there is no basis stipulated in the Bill against which to measure the legitimacy of the Minister’s determination. The Minister should have the power to “notify” or “declare” the objective achievement of that state, subject to a definition in the Bill for what constitutes that state.
Drafting considerations: strategic purchasing
• Sections 35-38: The term “strategic purchasing” has not been defined. This needs to be linked to sustainability and quality outcomes and not just the “lowest possible price” per section 11(e). Clarity is sought with regards to the nature of legal entity the CUPCs will be at district level as they are yet to be established in terms of the NHA. These entities will need to have the appropriate expertise and accountability framework to receive and manage allocations of funds as well as to implement and monitor contracting requirements.
• Section 39: The proposed amendment in the NHI Bill to the Health Professions Act will prohibit registered practitioners from providing services covered by the NHI Fund if they are not accredited by and contracted to the Fund. This seems Constitutionally unjustifiable considering s12(2)(b) and 22 of the Constitution. Suggest: the limitation of rights imposed by s33 and s39 infringe on the freedoms of both patients and health professionals under the Constitution.
• Section 39(8): The Fund may withdraw or refuse to renew accreditation of a provider/establishment “if it is proven that” there have been one or more failings as listed. It suggests that the Fund would need to go through a legal process (otherwise, to whom must it be “proven”?), which may frustrate legitimate striking-off of failing providers. Suggest the words “if it is proven that” be replaced with “if the [provider] …has failed”.
• Section 40(3): provides that the Fund “may” use personal data for six listed functions. Proposed the wording change either to “may only” or “must” so that there is no suggestion that the Fund may use such data otherwise in its discretion. General privacy concerns need to be reviewed in section 40.
Drafting considerations: funding and financing
• Section 48(d): Whether or not money was “paid erroneously” is a question of law, which could only be determined by the judiciary; whether or not such money is capable of being refunded is a matter that the Bill leaves to the opinion of the Minister. Since the Minister can only exercise that opinion in respect of a matter that requires a prior legal determination, it makes sense to leave the Minister’s discretion out of the section entirely. Paragraph (d) should be deleted; although the Fund may end up acquiring assets, especially money, it receives erroneously, this cannot be characterised as a “revenue source”.
• Section 49(2): these provisions are the subject of tax policy and belong in a money bill
• Section 49(2)(a)(ii): this statement is factually incorrect as no medical scheme tax credits are paid to medical schemes but rather impact the amount of personal income tax paid by individual medical scheme members
• Section 55(1)(m)-(n): delegates regulation of the relationships between private and state healthcare provision and state and private health funding / insurance to the Minister. Matters that are so central to the constitutionality of the Bill and the feasibility of the UHC project should be contained explicitly in the Bill itself.
• Section 55(3)(b): provides for a truncated pre-regulation public consultation process if the Minister deems it to be in the public interest. The Minister is obliged first to consult with the Board. Suggest that this consultation should be with the Stakeholder Advisory Committee as well as the Board.
Drafting considerations: phasing
Section 57: Implementation phases should not be defined based on fixed dates but should be clarified through objective milestones, such as:
• Expansion of priority services (towards the package of comprehensive health services)
• Population coverage
• Reduction in out-of-pocket expenditure
Broadly these include the following possible steps:
• Establishment of an institutional framework, including a governance framework
• Defining initial benefits and an incremental approach (affected by affordability)
• Information framework – records to facilitate delivery of care and monitoring
• Accessible delivery – existence of resources accessible to the population, appropriate ratios
• Effective delivery – people are able to access care when they need it
• Outcome measures – quality and clinical effectiveness as well as preventative coverage
• We suggest that legislative reform should only be considered once the NHI fund is practically established
• We recommend further engagement on appropriate metrics for transparent monitoring and reporting as part of implementation
• Caution on liabilities being transferred to taxpayers during transition
Drafting considerations: legislative amendments
• Repeal and amendment of related legislation included in the schedule: The Bill should not serve as an omnibus bill to compress the legislative process. There are too many contingencies that yet have to be worked through. Related legislation should be amended at the relevant stage of NHI implementation.
The immediate effects of the proposed changes include:
• Coverage for advice and medication for pregnancy and terminations is no longer the business of a medical scheme under the Medical Schemes Act (MSA);
• “compensation” as defined in the Compensation for Occupational Injuries and Diseases Act (COIDA) will exclude “medical aid or payment of the cost of such medical aid”;
• The cost of a medical examination under the Occupational Diseases in Mines and Works Act (ODMWA) “shall be purchased and be paid for by the NHI Fund” (not the mine owner or Director General as currently stipulated);
• The RAF’s tariff structure will be replaced by “the reimbursement strategy for health care services contemplated in the NHI Act”.
• An appropriate incremental approach should involve assessment of experience and determining legislative amendments as required.
• The legislative changes should be revised and limited only to those required for the establishment of the NHI Fund.
Discussion
Ms Ismail asked whether BUSA believed that the NHI would create an environment of equitable healthcare, especially between rural and urban areas. In what ways would the NHI impact investment? In the presentation, it was stated that the monopoly would create an environment where there was no competition, therefore stifling incentives for innovation – what consequences would this bring? What measures were put in place, and in what ways would the NHI prevent corruption and looting.
Ms Hlengwa asked whether NHI would increase the speed of transformation in business. If so, which aspect of the NHI Bill could be looked at to achieve meaningful transformation for businesses working in the healthcare sector?
Ms Wilson stated that one of the major concerns in the health sector presently was the high expenditure on health, the quality of health and poor health services across the country. The AG reported on a number of occasions that there had been a severe failure in governance, leadership and accountability in the health sector. How would this impact NHI going forward? What would BUSA propose needed to be done? There was a lot of discussion about the inequality in healthcare, did BUSA see inequality of healthcare as inequality to access healthcare or inequality in the quality of healthcare? Alternatively, was it both aspects? What should be done in the NHI to make sure this was addressed? Until such time as it was addressed and there was equality of access to proper healthcare facilities, the NHI would always be compromised. There was a lot of discussion in the NHI about a single purchaser, the Department being the single purchaser of services, in light of the corruption in the country and the Department of Health specifically, what was BUSA’s comment on this? There had been a lot of comments about the appointment of the Board; at the moment the NHI gave the Minister the sole responsibility of appointment of the boards and delegates to the boards. Would BUSA be happier if the Board was appointed by another entity? A lot of suggestions had been made, it was suggested that appointments should be done through Parliament, that they boards must be answerable to Parliament and not to the Minister. This would ensure that some of the cronyism, opportunities for corruption and mismanagement would be prevented. Would BUSA support this?
Dr Jacobs said he wanted to draw BUSA’s attention to clause 25 of the Bill, which spoke about the Benefits Advisory Committee. Would that section, when read with clause 33, cover the role of medical schemes in the future sufficiently? Did clause 57 of the Bill, which outlined the transitional arrangements including the phased implementation of the NHI, not address BUSA’s concerns? BUSA had suggested that the phased implementation should be defined in terms of milestones. The Memorandum on the Objects of the NHI Bill explained that some of the ‘granular’ details about the NHI would be included in the implementation plan. Did this clarify things? In terms of the virtual central purchaser model, how did BUSA link clause 33 of the Bill to the pooling of minimum benefits? How would this offer the minimum benefits package as proposed in slide 17? In looking at Section 27 of the Bill of Rights and other constitutional imperatives – whose rights should be prioritised?
Mr Sokatsha asked whether BUSA claimed that no country had outlawed private sector cover. The NHI Bill did not outlaw private cover or medical schemes. It made provision for the role of private health insurance under the NHI single payer dispensation. Like other countries, such as Canada, the NHI Bill allowed private health insurance to cover services, excluded under universal health coverage or NHI. Did BUSA think that it was important for a country, like South Africa, to overcome the two-tier health system that sustained a fragmented inefficient multi-payer system? Was BUSA suggesting that Government Employees Medical Scheme (GEMS) be viewed differently from other schemes regulated under the Council for Medical Schemes (CMS)? Where in BUSA’s proposal on slide 17, did BUSA position schemes such as Parmed?
Mr Munyai asked whether BUSA’s view was that a single payer, single purchaser system did not ensure optimal outcomes for the price or supply and was not conducive for strategic purchasing? Clause 2 of the Bill stated that the single payer, single purchaser system, would ensure equitable and fair distribution, as well as the use of healthcare services, ensuring the sustainability of funding of healthcare services. Would this not ensure optimal health outcomes for all? The Memorandum on the Objects of the NHI stated that the main problem was fragmentation of healthcare fund pools in South African healthcare systems. Did the NHI not aim to create integrated pools, in order to achieve universal health coverage by establishing a single purchaser provider split. He asked that BUSA explain how this did not address their concern. Could the concept of the virtual central purchaser be further clarified? Where did the accountability lie in such a situation? The suggestion that government would not support other sectors under NHI, was not correct. During the COVID-19 pandemic, which presented unanticipated challenges, the government provided tax relief, participated in vaccine supply and the distribution of funds from the Treasury for big business. Why did BUSA think that business would not have a role in the future?
Dr Havard asked whether BUSA was proposing that each of the schemes, as proposed under a multi-funded environment, should be administered separately. Was BUSA suggesting that the single payer system did not allow for strategic purchasing? If so, could BUSA please explain this.
Chairperson Dr Dhlomo stated that the presentation that BUSA gave was in relation to the Health Market Inquiry Report. BUSA made a statement that it did not think much had been done about it. Was BUSA suggesting that the Report must be attended to and completed before there was any discussion or embarkment on NHI? Was it not possible to implement the recommendations of the Health Market Inquiry Report at the same time as universal health coverage? One of the principles of NHI was the creation of social solidarity. BUSA had mentioned that NHI might prejudice the vulnerable – he requested clarity on this. Considering that medical schemes had many different plans, depending on affordability, how did BUSA see a multi-fund NHI system continuing to be able to provide healthcare to people. Depending on which medical scheme one chose, one could land up using public sector health services, when private benefits ran out.
Responses
Mr Nicolaou stated that when people could afford to pay for healthcare cover, or out-of-pocket expenditure, outside of the NHI system, that revenue stream would be lost, so to speak. That would be to the prejudice of the poor or the vulnerable.
Dr Tebogo Phaleng, BUSA Member, responded to the question regarding the impact on inequality. When BUSA spoke to the issues of equitable access, it included both cost and quality. The main thrust of BUSA’s presentation was about unintended consequences. The point was made that this would be an unprecedented legislative move - if the private sector was limited to such an extent. As BUSA had demonstrated, the systems could be expensive; exclusivity had limitations on innovation which impacted access as a result. There were some operational risks. From a financing point of view, there was a lost opportunity for employers to be more involved in the formal sector, in terms of the contribution of funds to healthcare.
Single fund models risked a lack of innovation due to no competition at the level of the Fund. What typically happened when something was not adequately covered under a medical scheme, was that people could choose to access care through a different fund or entity, including the public sector. Once one had a concentration, there could be a situation where the Fund ran out of funds and had to propose a schedule based on what could be afforded. This had been the case when he was a young Community Health Officer. The patients would have no other access points or ability to access care elsewhere. This typically happened in outlying towns and rural areas, where there was a dilution of priorities. The ideal circumstance would be if the NHI Fund pooled funds while specifically prioritising the poor and indigent. Once everyone was in the same risk pool, the rules that would apply to the Fund would have to apply equally, one would have an unintended dilution of priorities. There was a concentration of operational risk when a R460 billion entity failed operationally, for whatever reason – it would become a national failure. The first people that would be affected would be the poor. The energy sector was one that came to mind as well, as an example of this. Administrative and operational considerations within a single fund model posed a very big risk that the impact would be on the poor and indigent. As a result, access and quality would be impacted.
Prof Roseanne Harris, BUSA Member, stated that given the escalating expenditure in the medical scheme environment, as the Health Market Inquiry had noted, the situation could be addressed by improving efficiency in the private sector. This was one of the recommendations of the Health Market Inquiry. It was important that these recommendations got applied in parallel with implementing a multi-fund model. In terms of access and quality of care, this model was aiming to address these issues.
In terms of the future role of medical schemes, clause 25 outlined information about the advisory committees providing input, it did not provide information about the medical schemes being able to provide cover for services. One of the immediate consequences, of the proposed legislative changes, was that maternity benefits would be removed from medical schemes immediately. An overburdened health system would not necessarily be able to accommodate that immediately. This was why a phased transition, while removing dates from clause 57, would be appropriate. Those phases should be considered in the form of milestones. A virtual central purchaser would allow for a set of benefits or package of services to be pooled. The responsibility could lie with government to regulate this, as was currently the case in the social solidarity framework that underpinned medical scheme regulations. In prioritizing rights to ensure that there was a mechanism to ensure that one could continue to provide for oneself, it meant that the rights of vulnerable people could be prioritised. BUSA was not suggesting that the GEMS was treated any differently to medical schemes regulated under the CMS. Currently GEMS was a medical scheme, like the others, it would continue to exist in a multi-fund context. The virtual pooling, as was seen in a number of other countries, created an integrated pool but ensured that the risk of unintended consequences was mitigated.
Mr Kingston responded to the question about corruption and how BUSA proposed it should be addressed. It was clear that a comprehensive complex system was needed to ensure that there were appropriate governance systems and controls in place that were fit for purpose. BUSA would rather advocate that the appointment of the Board be done through a Parliamentary process, rather than via ministerial discretion. The abuse that the country saw the previous year, with the procurement of Personal Protective Equipment was something that needed to be guarded against in the establishment of such a fund, that had such significant purchasing power. Transformation was a cornerstone of economic growth on an inclusive basis. BUSA believed that it was possible to broaden the base of transformation in relation to longer term objectives by building these considerations into the design. NHI both structurally and strategically could act as a lightning rod to either attract or repel investment mobilising it domestically or internationally. The country needed to be cautious about the way it was taken forward.
Mr Coovadia responded to the question regarding inequality in healthcare. There was both inequality in access and inequality in the quality of healthcare. One of the purposes of the NHI was to address both access and quality. BUSA proposed a collaborative approach to NHI, bringing in both the public and private sectors to provide resources and capacity which could allow the country to achieve that.
Mr Nicolaou stated that the recommendations of the Health Market Inquiry Report could be dealt with in parallel to the implementation of NHI. In terms of the prioritising of rights, BUSA recognised the need to prioritise all rights in the Country.
Submission by Icon Oncology
Mr Anthony Pedersen, Group Chief Executive Officer (CEO) of Icon Oncology, and Dr Ernst Marais, Group Chief Operating Officer (COO) of Icon Oncology, presented to the Committee.
Please refer to the presentation for the graphs and infographics
• Although Icon’s primary focus is chemotherapy and radiotherapy, it is important to acknowledge that the continuum of oncology care includes primary, secondary (surgical), and tertiary care as it relates to chemotherapy and radiotherapy. Palliative care and post treatment survivorship complete the full spectrum of cancer care.
Cost coverage is defined in Section 8 (2): “A person or user, as the case may be, must pay for health care services rendered directly, through a voluntary medical insurance scheme or through any other private insurance scheme, if that person or user—
- is not entitled to health care services purchased by the Fund in terms of the provisions of this Act; (b) fails to comply with referral pathways prescribed by a health care service provider or health establishment; (c) seeks services that are not deemed medically necessary by the Benefits Advisory Committee; or (d) seeks treatment that is not included in the Formulary.”
- Clarity around these seemingly contradictory issues should be provided, as well as the role of insurance products not regulated by the Medical Schemes Act.
Governance
• In Section 7, the administration, management, budgeting and governance of central hospitals must be made a competence of national government and in Section 13, the Minister is responsible for governance of the national health system. The establishment of governance structures is a phase 1 objective to be completed by 2020.
• It is suggested that consideration be given specifying clinical governance as part of the broader national health system beyond the central hospitals.
• It might complement the Office of Health Standards and Compliance (OHSC) to provide clinical oversight and make recommendations through structures which ultimately report to the Minister.
• The domains in which clinical governance might operate include clinical services, health personnel skills, the development and use of evidence based clinical protocols and clinical risk management.
• It is noted that the constitution of the Board of Directors is ultimately the responsibility of the Minister. The Bill gives the impression that the Minister has ultimate control over the Fund and in the interest of good governance consideration should be given to allow multi-ministerial input in the constitution of the Board. The Board must then take ownership and accountability for its decisions.
Procurement & Accreditation
• The NHI Fund will purchase and procure comprehensive health care services, medicines, health goods and health-related products from contracted and accredited (and certified) health care service providers, health establishments and suppliers based on the health care needs of users (patients).
• In order to be accredited and reimbursed by the Fund, health care providers and health establishments must, amongst others, be able to submit extensive information as prescribed, comply with treatment guidelines, formularies and performance measures. Icon fully supports the accreditation of service providers and has been working tirelessly to ready itself for NHI.
• In collaboration with the public sector and inspired by the OHSC, international trends in quality assurance and conscious of the move towards greater efficiency in all aspects of cancer care, Icon has developed an oncology specific accreditation process.
• The NHI should strategically purchase and procure health services i.e. the NHI should purchase better care at lower costs.
• Value based contracting and outcomes reporting should become mandatory.
• Focus should be placed on capacity planning and there must be a clear understanding of resources available in the public and private sectors.
• NHI should control capacity, ensure access in under-serviced areas by optimally utilising public and private infrastructure.
Sustainable Finance
- The purpose of this Act is to establish and maintain a National Health Insurance Fund in the Republic funded through mandatory prepayment that aims to achieve sustainable and affordable universal access to quality health care services by—
• serving as the single purchaser and single payer of health care services in order to ensure the equitable and fair distribution and use of health care services”
• ensuring the sustainability of funding for health care services within the Republic; and
• providing for equity and efficiency in funding by pooling of funds and strategic purchasing of heath care services, medicines, health goods and health related products from accredited and contracted health service providers.
Recommendations
• Icon would recommend that under NHI, current HPCSA rules that limit reimbursement for multidisciplinary teams be reviewed.
• Outcomes based reimbursement or risk sharing with pharmaceutical providers is currently prohibited by Single Exit Price regulations and this should be reviewed with the implementation of NHI. Oncology medicines are prohibitively expensive, and we should strike a balance between ensuring ongoing innovation and affordability. Performance based reimbursement of medicines offers such a solution.
• Top up insurance by Medical Schemes is essential in oncology, specifically when it comes to the funding of high cost medicines – clarity of the role of private funders is still required.
Dr Jacobs took over the chair as Acting Chairperson
Discussion
Ms Hlengwa noted the questions by Icon Oncology on how NHI could help to improve cancer treatment, specifically about the cost of oncology medicine. Did Icon Oncology have recommendations on how NHI legislation could help to lower the cost of oncology medicine to help everyone have access to adequate cancer treatment under NHI?
Mr Sokatsha noted that Icon Oncology had made recommendations relating to outcome-based reimbursement, or risk sharing, with pharmaceutical providers. It was good that Icon Oncology was interested in this payment approach, given the need for efficiency. Would that not be considered by the Healthcare Benefit Pricing Committee, as outlined in clause 26 of the Bill? Please advise the Committee.
Mr Munyai stated that Icon Oncology had asked for clarity on the future role of medical schemes. Clause 25 outlined the functions and compositions of the Benefits Advisory Committee that would define the package of services. It was not clear what complementary services, medical schemes would provide. This was supported by clauses 4, 7 and 33 of the Bill, which dealt with the future role of medical schemes. Including this in the Bill would cause Parliament to keep revising the Act, whenever they got advice from the Benefits Advisory Committee. Would that be sufficient? The Bill clarified the role of medical aids and the Benefits Advisory Committee.
Ms Wilson stated that there had been a lot of discussion about inequality in healthcare in South Africa. This was a two-way street; there was inequality in access to health facilities, particularly in rural communities, and inequality in the quality of healthcare. Concerns were raised that while the cost of health was increasing, there was also a backward trend in terms of the quality of health. There were only ten public hospitals in South Africa that offered healthcare for cancer patients, particularly oncology, radiation and aftercare. This was serious, given the increase in the incidents of cancer, across the board, in South Africa. How should the NHI Bill deal with this? Given the costs of oncology, radiation and chemotherapy, how would single purchaser model of health effect the oncology sector? The appointment of the Board and entities became the sole mandate of the Minister of Health. Suggestions had been made that this was incorrect and no such power should be given to the Minister – particularly given what the Country was exposed to recently. Did Icon Oncology believe that the appointment of the board should be done differently? Should it be done through Parliament? Should the boards become answerable to Parliament and not to the Minister?
Ms Gela noted that oncology services involved high costs, what was Icon Oncology’s proposal on how funding should be provided for.
Acting Chairperson Dr Jacobs asked a question about supplier induced over-servicing. The Committee understood the importance of the drugs required for oncology services and chemotherapy. He realised these were expensive drugs and treatment. He was aware that this posed constraints in terms of people being able to receive surgical chemo or radiotherapy treatment for cancer. Would the suggestion of a partnership with the pharmaceutical industry not exacerbate the dilemma of possible over-servicing?
Responses
Dr Marais stated that originator medicines that came from multi-national companies were excessively expensive. Icon Oncology was considering new immunotherapies that cost in excess of R1 million per treatment per patient. There were ongoing debates about how one found a balance between ensuring that there was enough innovation for such companies and at the same time balance the cost of treatment. The performance-based reimbursement models that Icon Oncology suggested were in the realm of precision medicine. One needed to ensure that patient selection became better and better over time. When one provided access to treatment that was so expensive, one needed to ensure that one selected the right patient. If patients did not respond to the treatments, some of the risk was being absorbed by the pharmaceutical companies. It was not a form of perverse incentive for supplier induced demand that would occur in this situation, because of the risk absorbed by the pharmaceutical companies. There was evidence that this had been implemented successfully in other countries, particularly in Italy, where risk sharing between central government and pharmaceutical companies was implemented with success. There were real opportunities in South Africa to do something similar. The other aspect was generic medication. There was a lot that could be done. There were pharmaceuticals companies that could develop generic medicines and were already doing so. By doing good formulary management and ensuring that there was protocol adherence, one ensured that the right patients received the right care. That was based on appropriate patient selection, which would reduce the cost of oncology treatment – specifically chemotherapy.
In terms of outcomes-based reimbursement, all of these alternative reimbursement models, whether it was risk sharing with pharmaceutical companies or very specific value-based models, it would take into account the specific criteria that was decided upon on how outcomes were measured and how one would incorporate that into a value-based payment. These would be considered by the Pricing Committee that would be constituted under NHI. It was their recommendation that the Pricing Committee take heed of learnings that already existed. Icon Oncology had demonstrated that when one implemented models where patient selection was done appropriately, protocol compliance was high and the formulary management was appropriate; one could hold doctors accountable and there were reductions in the cost of treatment.
Mr Pedersen responded to the question about the role of medical schemes. He agreed that the Bill broadly indicated that medical schemes were proposed as complementary top-up benefits that were not covered by NHI. Often with these matters, the ‘devil was in the detail.’ If one had a look at different modalities of treatment for cancer, particularly in the use of high cost drugs, the detail could become complicated when making a broad reference to being a complementary product to the NHI. For example, under the end benefit package, if that specifically included which drugs were covered and which were not, that could potentially clarify the role that a medical scheme could fulfil. Similarly in radiation treatments, there were simple modalities of treatment and there were more complex modalities of treatment. If the benefit package went down to that level of detail, it would be adequately addressed. If, for example, the NHI or the benefit package was not clear on which modalities of radiation, or which techniques of radiation treatment were included or not, that could be problematic.
In terms of the appointment of the Board, Icon Oncology’s view was that the appointment of the Board needed to prevent cronyism and corruption, which had become prevalent in such boards of late. Icon Oncology would support the suggestion that Parliament appoint the Board and that the Board be answerable to Parliament. Icon Oncology’s concern was around those negative elements which needed to be addressed.
Members were correct that the number of facilities that offered oncology treatment in South Africa is limited. There were however centres of excellence in the public sector that had significant infrastructure for the treatment of patients. The biggest problem was the lack of human resources rather than a lack of infrastructure. That was a clear example of how, under NHI, it was critical that the public and private sectors worked collaboratively in the provision of care.
Dr Marais stated that the bulk of oncologists practiced in the private sector, there were very few that remained in the public sector. There was opportunity to create collaboration between the public and private sectors. Infrastructure in rural areas needed to be used efficiently – which would be in everybody’s interest.
The points raised by Mr Munyai were valid. Icon Oncology had not suggested that the Bill was completely unclear about the role of medical schemes. Icon Oncology wanted clarity on some aspects that were unclear. Given the Committee’s questions and statements, the role of medical schemes was made clear. If the Act addressed these issues, as the need arose, it would be sufficient.
Submission by SANOFI-Aventis
Mr Thibault Crosnier-Leconte, SANOFI General Manager GENMED South Africa, Ms Prudence Selani, Communications Head at SANOFI, and Mr Gavin Bauer, Market Access Head at SANOFI, presented to the Committee. [Sanofi S.A. is a multinational pharmaceutical company headquartered in Paris, which has been in South Africa for over 40 years, supplying and manufacturing medicines].
Please refer to the presentation for the full submission and its guiding sub-headings.
- SANOFI is a member of three pharmaceutical industry associations:
• The Innovative Pharmaceutical Association South Africa (IPASA)
• Pharmaceuticals Made in South Africa (PHARMISA)
• Self-Care Association of South Africa (SCASA)
- As such SANOFI supports the NHI submissions of these trade associations. SANOFI additionally supports the NHI Submission of the Pharmaceutical Task Group (PTG)
Proposals
• SANOFI proposes that the NHI Fund be subject to schedule 3A of the PFMA regulations like other entities such as the South African Revenue Service (SARS), the Road Accident Fund (RAF), the Unemployment Insurance Fund (UIF), the Council for Medical Schemes, The Competition Commission etc.
• SANOFI proposes that “affordable” universal access be defined within the legal mandate of the Fund.
• SANOFI proposes an explicit description of the process to be followed in establishing the Comprehensive Benefit Package, in order to ensure that the package is all inclusive and factors the current Burden of Disease that exists within our current SA environment and at the same time does not limit the number of benefits that qualify for cover by the additional complementary insurance cover (offered by private insurers).
• We accept that the Fund, as a schedule 3A public entity, will be bound to procuring healthcare services and medicines in accordance with the provisions of the Constitution, and that it must do so in terms of a procurement process that is equitable, fair, transparent, cost-effective and competitive.
• It is our concern that the procurement process set out in the Public Finance Management Act (PFMA), National Treasury Regulations and the Preferential Procurement Policy Framework Act (PPPFA) Regulations, being an exclusionary tender-based system, may be inappropriate to the procurement of medicines by the Fund, as it may undermine (not only the achievement of value for money), but the long-term goals of the Bill.
• As such, we advocate for National Treasury to: (i) exempt the Fund from procuring medicines in terms of this system; and (ii) to set out in regulations a procurement system applicable to the procurement of medicines by the Fund, which is not only compliant with section 217 of the Constitution, but which seeks to support the sustainability of the pharmaceutical industry.
• The NHI Bill should not close the door on Public-Private Partnerships (PPPs). SANOFI proposes that the NHI Fund be empowered, through the addition of a sub-section under clause 5(1), as subsection (1)(t): “enter into any public-private partnership, within applicable legal and policy frameworks, which partnership assists in the achievement of the objectives, duties and/or functions of the Fund.
• SANOFI believes that the National Industrial Participation Programme (NIPP), may make participation at the “lowest possible price”, as is required by clause 6(2)(e), difficult.
• In order to be successful, it is essential that the universal healthcare coverage system contemplated in the Bill is backed by a sustainable healthcare sector, i.e. the businesses involved in the provision of medical and related goods and services. As such, many of the queries and recommendations raised in this submission seek to address the common goals of improved universal access to healthcare while allowing a robust and sustainable supply chain.
• We respectfully submit that the implementation of the NHI scheme should be linked to the completion of the interventions set out in the Health Compact, in respect of each Pillar, and not the dates specified in the Bill. As such, the Bill should not make use of the aforesaid dates as hallmarks for the implementation of the NHI; but, instead should make use of the achievement of these interventions as implementation milestones.
• SANOFI proposes that the proposals made by the Competition Commission’s Health Market Inquiry (HMI) be included into the development and implementation of NHI. Specifically, SANOFI supports the HMI proposals be adopted to enable NHI in a way that addresses the current system issues in the healthcare sector
Policy alignment with the HMI findings and outcomes
SANOFI supports the following HMI proposals be adopted to enable NHI in a manner in which addresses the current system issues in the healthcare sector:
• 49. For effective and efficient regulatory oversight of the supply-side of the healthcare market, we recommend the establishment of a dedicated healthcare regulatory authority, referred to here as the Supply Side Regulator for Healthcare (SSRH). The role of the SSRH will include regulation of suppliers of healthcare services, which includes health facilities and practitioners. The SSRH will have four main functions: healthcare facility planning (which includes licensing); economic value assessments; health services monitoring; and health services pricing.
• 50.6 Conduct or contract out health technology assessments to guide cost-effective practice.
• 50.7 Liaise with the proposed Outcomes Measurement and Reporting Organisation to ensure that practitioners report on health outcomes and use these data for Health Technology Assessment (HTA) where appropriate
• 52.We recommend the creation of an Outcomes Monitoring and Reporting Organisation (OMRO) as a platform for providers, patients and all other stakeholders in the provision of healthcare to generate patient-centred and scientifically robust information on outcomes of healthcare. The OMRO will be an independent, private organisation in which key actors such as providers (doctors and hospitals) and patients co-operate to generate relevant and standardised outcome information for two purposes: to provide practitioners and hospitals with relevant outcome information and ways to improve clinical quality, and, secondly, to provide patients and funders with relevant choice information on health outcomes
• 58. To increase comparability between schemes and to increase competition in the funders market, we recommend, the introduction of a single, comprehensive, standardised base benefit option, which must be offered by all schemes. It will enable consumers to compare products, reward those funders which are able to innovate to offer lower prices and/or higher quality, and, thereby, both discipline and reward the market.
• 59. We recommend the introduction of a risk adjustment mechanism linked to the single, comprehensive, standardised base benefit option to remove any incentive by schemes to compete on risk. Schemes should compete on metrics designed to attract new members, irrespective of their age, health, or risk profile. Regionally-based medical schemes should be allowed through a temporary reinsurance facility to mitigate their exposure to demographic and claims risk”
Proposals on the NHI Fund: Health Technology Assessment (HTA)
• SANOFI proposes that the use of HTA be specifically defined in terms of who will conduct the assessment, what will be assessed in the HTA, at what level will be the HTA be conducted and how will the outcomes of the assessment will be binding on the Fund.
• The goal and scope of the HTA should be explicit and relevant to its use. HTA should be an unbiased and transparent exercise. HTA should include all relevant technologies (Medicines/devices/machines/interventions etc). A clear system for setting priorities for HTA should exist. HTA should incorporate appropriate methods for assessing costs and benefits. The HTA agency should consider a wide range of evidence and outcomes. A full societal perspective should be considered when undertaking HTAs. HTAs should explicitly characterise uncertainty surrounding estimates. HTAs should consider and address issues of generalisability and transferability.
- The HTA agency should actively engage all key stakeholder groups. The HTA agency should actively seek all available information. The implementation of HTA findings needs to be monitored. HTA should be timely. HTA findings need to be communicated appropriately to different decision makers. The link between HTA findings and all other decision-making processes needs to be transparent and clearly defined.
Proposals on the NHI Fund
• SANOFI proposes a centralised authority within the NHI Fund which would be responsible for coordinating all functions related to the procurement of health-related products including medicines, devices, and equipment within the NHI environment in a transparent predictable manner.
• SANOFI proposes that multiple medicine purchasing models and pricing mechanism be adopted by the NHI Fund in line with the type of medicine being procured including price negotiation with the fund based on a specific classification of medicines identified for NHI Fund procurement. SANOFI would like to jointly develop and implement these purchasing models in a transparent process that ensures patient access, value for money for the NHI fund while balancing the long term sustainability of the pharmaceutical industry in South Africa.
• SANOFI proposes that the price of a medicine not be the exclusive determinant of medicine purchases by the NHI Fund but that outcomes and evidenced based medicine be included in the decision making process leading to procurement.
NHI Medicine Procurement and Supply Process
• In general, the model of procurement and supply should ensure that the pharmaceutical industry remains viable, sustainable, and competitive. In line with South African industrial and trade policies, smaller- and niche-market players should also be able to participate and remain viable.
• For this reason, SANOFI does not support a centralised “winner takes all” procurement system and believes that the same efficiencies and better responsiveness to local and geographical needs, can be achieved through a range of procurement models
• Pricing of medicines should not be pre-determined by the NHI Fund.
• The price offered to a health establishment or group of health establishments, should depend on such as the specific geographical area, volume uptake (the details of which should be available on the basis of the Diagnosis-related groups (DRGs) or global budget calculations made by the NHI Fund), or value offered.
• Prices should therefore be negotiated with the District Health Management Offices (DHMOs), or the management of a facility DRG funding, global budgets and/or being paid an “all-inclusive” fee by the NHI Fund.
• If medicines are provided to the private sector as part of a capitated fee, or as part of a global fee, such medicines, when used for the NHI, should be exempted from the Single Exit Price (SEP), so as to allow the pharmaceutical industry to also participate in the risk-sharing nature of such funding models.
Proposals on the Ministerial Committees
• SANOFI proposes that the Benefit Advisory Committee (BAC) must develop a transparent public participation process to determine which benefits should be included in the comprehensive health services benefit package, and which should be excluded.
• SANOFI proposes that BAC be explicit and transparent in the decision criteria for inclusion in the benefits package based on potential funds available in terms of process followed and outcome determined.
• SANOFI proposes that the BAC develop a definition and criteria for deeming a service or medicine as medically unnecessary.
• SANOFI proposes the inclusion of one representative from the Pharmaceutical industry to be a member of the BAC.
Benefits and treatment guidelines
SANOFI recommends that the following criteria be inserted under the mandate of the BAC in clause 25, namely:
• Benefits must be set on the basis of evidence-based medicine, considering also the care required by non-responders to various lines of care, adverse events, co-morbidities and patient profiles (e.g. ease of administration).
• Regular reviews of these benefits at legislated time intervals, is necessary.
• Providers and facilities should be able to give effect to benefits in a manner that makes sense from the point of view of their resources (whether a DRG, a budget, a global fee or capitation), while treatment guidelines should remain “guidelines”.
• Cost-effectiveness should not taint what would be treatment guidelines set on the principle of evidence-based medicine. Each facility or provider should address what would be effective and efficient in their sphere of influence, utilising treatment guidelines and HTA results, should they become available.
NHI Alignment and Definitions
• SANOFI recommends that the definitions relating to “health product” and “health related products”, be reviewed and redrafted, so as to align with the definitions afforded to such goods in applicable legislation, namely the Medicines and Related Substances Act, 1965, on the definitions of medicines, medical devices and in vitro diagnostic medical device (IVDs); the Hazardous Substances Act 1973, and the Foodstuffs, Cosmetics and Disinfectants Act, 1972, where there is reference to such products.
• SANOFI proposes that the definition causes, and the other laws to be amended, be reviewed for relevance. The review should also consider whether there are no further amendments required to such laws. Some of these amendments or implementations must precede the NHI, and cannot be done in conjunction with and/or as part of the NHI Bill.
• SANOFI proposes that an assessment of other public entities fulfilling social security functions, such as the South African Social Security Agency (SASSA), the Compensation Fund and the RAF, be undertaken to inform policy and legislation on the NHI.
Right to healthcare
• SANOFI proposes that any proposal to establish and operationalise the NHI Fund does not impede on South Africa patients’ rights to access healthcare in a manner in which denies the patient choice of provider, treatment or ability to purchase additional healthcare coverage and does not ration access to care to below the current level of the patients existing treatment.
• SANOFI supports the right of a user to purchase complementary benefits through a voluntary medical insurance scheme and allowing out of pockets payments for specific healthcare benefits including medicines.
Closing remarks
• SANOFI has offered a number of substantive recommendations on the content of the NHI Bill and made specific proposals which are intended to assist in the finalisation of the legislation which are aligned to the pharmaceutical industries submissions.
• SANOFI suggests the need for a tiered or multi-layered healthcare system, as proposed in the parliamentary high-level report, which advocates the complementary role of the private medical schemes alongside the public sector and an NHI fund for the unemployed.
• Whatever NHI model is chosen, the importance of recognising the delicate balance between the different funding pools and the supply of medicines into those – which is the only example of UHC in the current system - is vital. Medicines are supplied to the state sector on the basis of differential pricing, with investment and overhead costs covered in the private sector. This ensures sustainability of supply and across the board access to medicines of current research, while allowing the state sector to enjoy internationally competitive pricing for medicines.
• The pharmaceutical sector is a well-established partner to government as a supplier of medicines and other health products and is one of a few industries that currently provides goods and services to both the public and private healthcare sectors of South Africa.
• SANOFI looks forward to partnering with Government to create sustainable NHI business models that can appropriately support and assist efforts to ensure a secure, affordable and accessible medicines supply as part of a viable, sustainable and workable NHI system.
Discussion
Mr Munyai stated that SANOFI had suggested a two-tier multi-layer healthcare system. Was SANOFI suggesting that status quo be maintained? How did SANOFI suggest that risk equalisation be implemented, as the NHI Fund provided for this through risk cross-subsidisation? How did SANOFI expect NHI to achieve this objective as a single supplier?
Mr Sokatsha asked which aspects of the NHI Fund were SANOFI proposing should incorporate public-private partnerships.
Ms Hlengwa asked what impact SANOFI anticipated the NHI would have on its business in South Africa. How would this effect the pricing of essential medication?
Dr Havard asked whether SANOFI supported the objective of the Bill to redress the injustice of the past using the principle of equity, justice and social solidarity?
Mr Sokatsha asked whether it was SANOFI’s understanding that the NHI Fund would have the freedom to procure medicines that were not registered by the South African Health Products Regulatory Authority (SAHPRA).
Mr Munyai asked whether, as a multi-national organisation originating from the European Union, SANOFI jointly developed and implemented purchasing models anywhere in Europe. Did SANOFI think that the pharmaceutical industry should be represented on the Benefits Advisory Committee?
Acting Chairperson Dr Jacobs referred to the provisions of clause 8(1). He asked what was SANOFI’s proposal to drive down costs through economies of scale and whether the Fund should operate outside of the PFMA, National Treasury and the Preferential Procurement Policy Framework Act (PPPFA). The Bill was explicit that the Health Technology Assessment (HTA) would initially be located in the Fund, was it their suggestion that there should be an explicitly defined independent HTA. He asked that SANOFI provide examples of countries that implemented this independently of their funds. Was there no option in SANOFI’s proposal for progressive realisation of this capability? From SANOFI’s presentation, it was understood that there was a belief that certain illnesses would be excluded from the benefits – which conditions was SANOFI concerned about? Did SANOFI think that the Benefits Advisory Committee, that was supposed to base their decisions on evidence and clinical appropriateness, would not be in a position to exercise this responsibly?
Mr Munyai asked whether SANOFI was willing to subject itself to the international benchmarking of its products.
Responses
Mr Bauer stated that SANOFI presently was subject to international benchmark pricing in the private sector for all its new molecules. SANOFI declared their international prices for new introductory medicines since 2005, post the introduction of the Summit Pharmaceuticals Europe (SPE) regulations. SANOFI knew that their public sector prices were below private sector prices. The evolution of new medicine was evolving, with new treatments for cancer every day. SANOFI believed that those new medicines should have a role to play if they provided significant value. The Benefits Advisory Committee needed to react to that introduction in a structured way. The implication was not that the Benefits Advisory Committee would not apply evidence based medicine; SANOFI believed that the introduction of new alternatives had to drive the participation of the pharmaceutical industry in the Benefits Advisory Committee, but did not imply that the BAC would specifically exclude new treatments or treatment alternatives. SANOFI believed that the speed at which decision making needed to happen in healthcare necessitated a very responsive BAC.
In terms of PFMA, SANOFI saw potential contradiction in the complementary health insurance environment, where medicines were procured at different price points or by different mechanisms. How would that support the NHI Fund? Should SANOFI leave it at a single exit price which was separate from government procurement currently – or did SANOFI need to procure it in a different way? SANOFI’s concern was around where the PFMA started and ended for the whole healthcare system. The National institute for Health and Care Excellence (NICE) in the United Kingdom (UK) was not part of their Fund, they advised the healthcare system in the UK. In Germany there was the Institute for Quality and Efficiency in Health Care (IQWiG) which advised multiple funds in Germany as to whether they should procure specific technology and medicine. There were international precedents for HTA. SANOFI participated in many countries in Europe. In Europe there were many hybrid ways of purchasing medicines, whether via tender, negotiation or evidence-based procurement. There were many international precedents for a hybrid system in terms of medicine procurement. SANOFI believed in social solidarity. SANOFI believed that the introduction of NHI would increase the social solidarity from a funding perspective and once the comprehensive benefits were defined, that social solidarity would be built into the benefits on offer under NHI.
If one took the view that the Fund would be strong enough to absorb any financial risk based on the disease burden, that might be problematic. If one took KwaZulu-Natal (KZN), for example, the province had one of the highest communicable and non-communicable disease burdens. If the NHI Fund took the view to pay a per-capita fee to KZN, knowing that the province had a higher burden of disease, there would be a situation where the KZN funding subset would run at a loss. This would have resulted from the disease burden and the difference in their case mix. SANOFI recommended that case mix adjusted capitation fees should be a requirement under NHI. It would lead to a very easy Risk Equalisation Fund (REF) calculation whereby if the Eastern Cape had a lower disease burden than KZN, there would be risk equalisation between provinces or between diseases within the Fund. As a high-level recommendation, SANOFI suggested the implementation of REF as a practicable example.
Mr Crosnier-Leconte stated that when one considered the Bill, there were a lot of opportunities for business. There was opportunity to create affordable and extended access to medicine – which would benefit the whole industry. In terms of expanding access to medicines and creating better outcomes overall, it would be beneficial to both patients and the whole industry. It was important to not only focus on price, as this was only one component of what made a business sustainable. One needed to consider outcomes, how the industry and NHI system could work together to have different performance indicators which focused on patient outcome and not necessarily on price. Patient outcomes could be measured economically as well. When it came to securing supply to the country, given the high disease burden, it was important that there was a long-term perspective from a demand standpoint, so that it could be sustainable. It was important to have a procurement system that went beyond price and the duration of two years, which was the case today. If one considered a long-term approach, this would be beneficial for patients, the system and industry. The keys words were sustainability and predictability, so that investments could be planned. Key medicines were being produced locally, addressing specific disease burdens in the country, this was central to a sustainable model.
In terms of pricing, SANOFI was providing affordable prices to the public sector. It offered one of the most affordable prices in the world. SANOFI was capable of operating with low prices, nonetheless there was a close link with the private sector in order to manage the costs overall.
Ms Selani said SANOFI did not want to retain the status quo. It was important to have national health insurance, to have universal health for all but one could not do one over the other. Thus, there needed to be a public and private sector. It was important to bring innovative medicines into the public sector. All patients should be able to access medicines, irrespective of their financial background. The majority of patients accessing healthcare in the public sector should also be able to access innovative medicines in the public sector.
Mr Bauer responded to the question as to whether the NHI Fund should purchase unregistered medicines. There were very specific disease areas where there was an unmet need, where the Fund would be required to purchase unregistered medicines while those medicines were undergoing a review. The review process in South Africa was quite long compared to international benchmarks. There would be a requirement, if that did not change, to purchase unregistered medicines in line with what was in the comprehensive benefit package per the recommendations of the Benefits Advisory Committee.
Mr Munyai asked how SANOFI proposed that the NHI Fund could be sustainable without an element of rationing. Could SANOFI provide an example of a country that had a system such as NHI that was not rationing? The private sector through the medical schemes was also using rationing for sustainability. In France, did the multi-national corporations and big pharmaceutical companies that were based there participate in major policy influence, such as NHI?
Chairperson Dr Jacobs stated that as far as he knew NICE was introduced about 30 years after the introduction of the National Health Service (NHS). Would SANOFI have any comment on that? SANOFI had said a lot in relation to international benchmarking, the Committee understood this in the context of what was being said, but why was that only happening in the private sector and not that much in the public sector?
Responses
Mr Bauer stated that SANOFI had been benchmarked in the public sector previously, when specific tenders had taken place - there were specific benchmark prices set. SANOFI was measured against international benchmarks when presenting public sector prices. Did it happen as a standard process? – probably not. Had SANOFI experienced it before? – yes, they had dealt with the National Department on specific benchmark exercises for specific tenders. In terms of rationing, this was from the position of two things, SANOFI agreed that there was no health system in the world that could not ration. The comment made was that patients could not be rationed away from what they currently had access to. If one had a well-treated, well-controlled patient in either the public or private sector, if one rationed them below what they presently received, that would cause major concerns around progressive realisation of healthcare and access to healthcare.
Mr Crosnier-Leconte outlined what worked in France, noting that one should not believe that things were perfect in terms of access in those countries. One of the things that really stood out was the collaboration between the government, Parliament and the industry, specific conditions were shared amongst many different stakeholders. This was where the industry was playing a big role. Oncology and the development of specific excellence centres accelerated access to innovative medicines in France so that products could be distributed to the patients in need. The policies enabled collaboration amongst different stakeholders. One example of a good case study in Europe, which related to one of the points made in SANOFI’s submission [see slide 17], was the rare disease policy focusing on patients who had rare conditions, which was made available to those countries 20 year prior. This resulted from close collaboration with industry and policy makers at a European level to expedite access to lifesaving medicines. These were specific examples where the close collaboration between the industry and the government could achieve better patient outcome and care.
Submission by Innovative Pharmaceutical Association of South Africa (IPASA)
Mr Bada Pharasi, Chief Operating Officer (COO) of IPASA, presented to the Committee
Please refer to the presentation for the infographics and background details.
The value of innovative medicine and vaccines
• IPASA members research and develop innovative medicines and vaccines
• Innovative medicines and vaccines cut overall healthcare costs by speeding up recovering times.
• They often reduce the need for surgery and hospitalisation.
• COVID-19 highlighted the importance of investment in innovation.
• There is a need for innovative social partnerships.
To achieve sustainable UHC, the NHI Bill needs to be amended in six key areas
1. The Bill does not provide adequate reassurance that health rights will be realised progressively. The current Bill prevents the private healthcare sector from providing its current services. This constitutes regressive legislation that is not aligned with the Constitution.
2. The NHI needs to motivate providers to exceed outcome targets. To achieve this, the Bill needs to be amended to ensure value based care and access to evidence-based medicine
3. Specific provision needs to be made for alternative reimbursement models and the proposed extension of the single exit price (SEP) to the public sector needs to be removed.
4. We call for procurement models that will contribute to the sustainability of the private sector, including funders, service providers and treatment developers. Such models would also contribute to security of supply.
5. The current Bill places health technology assessments under control of the NHI and over-emphasises the role costs should play in adjudicating new medicines. Instead, the Bill needs to provide for the establishment by legislation of an independent Health Technology Assessment entity that undertakes assessments on the value-based nature of healthcare.
6. The current Bill dictates that the NHI will be implemented according to fixed timelines, rather than when the system has shown that it is ready. The Bill needs to determine that the NHI will be phased in according to benefits that are set and comprehensively provided, in line with the principles of evidence-based medicines and value-based care.
Proposed amendments
Please refer to the presentation for the specific, detailed changes proposed – and explained - by IPASA (including its members SANOFI and Abbott Laboratories).
Discussion
Ms Hlengwa asked whether IPASA thought that NHI would help to lower the cost of drugs and make them affordable. How would this affect the business model of IPASA’s members?
Ms Ismail highlighted that in the NHI public hearings, a lot of inputs mentioned that the NHI would stifle innovation. Being an innovative organisation, did they agree with this statement? If so, please explain and if not, why not? Did the NHI make room for support of innovation in health? With the number of Special Investigating Unit investigations in the Department of Health and government, what was IPASA’s view on the Bill giving the Minister the right to establish the Board and related entities? Would IPASA agree with this or proposed that the Board be elected and answerable to Parliament? What was IPASA’s view on the impact of approximately R104 billion in legal costs, due to medical negligence? How would the NHI be negatively impacted in the long run? What was IPASA’s view on the NHI pilot projects? Were the pilot projects successful, considering the pilot studies had very few features of the NHI?
Mr Sokatsha noted that IPASA had made a recommendation for alternative reimbursement models to be considered. His understanding was that this was attended to in the Bill. This would be considered by the Benefits Advisory Committee as outlined in clause 26 of the Bill. What was unregulated innovative medicine? What statements in the Bill drove the thinking that innovation would not be encouraged?
Dr Thembekwayo asked what IPASA’s contribution was toward the development and manufacturing of vaccines, more specifically the COVID-19 vaccines. In terms of the development of new medicine, which took an average of 10 to 15 years, how flexible was IPASA in shortening that period in order to accommodate the unforeseen emergency occurrences of health related mishaps – as was the case with COVID-19?
Mr Munyai said that IPASA argued that the Bill was regressive as it did not allow the private sector to provide its current services. His understanding was that NHI split functions between funding and service provision. Was IPASA aware that clause 7(3)(2) of the Bill outlined how all providers, including private providers, would be contracted across different levels of care? This section was supported by clauses 57(2)(b) and 57(4)(f) as well as in the Memorandum of the Objects of the NHI Bill of 2019. The Committee was interested in the clauses in the Bill that should guide the Committee when listening to IPASA’s presentation. Was IPASA aware that clause 10 of the Bill outlined the functions of the Fund? It stated that amongst other things ‘healthcare service providers, establishments and suppliers would be paid in accordance with the quality and value of the service provided at every level of care’. He noted that IPASA had requested ongoing consultation with all stakeholders, clause 27 pointed out that the Stakeholders Advisory Committee would be established comprising of representatives from statutory health professional councils, public health entities, organised labour, civil society organisations, associations of health professionals and providers as well as patient advocacy groups. Did this not address IPASA’s question?
Acting Chairperson Dr Jacobs asked whether IPASA’s question was not covered by clause 57(3)(c), which outlined the transitional arrangements of the Ministerial Advisory Committee on HTA, which would be established and serve as a pre-cursor to the health technology assessment agency. The Bill was explicit that the HTA would initially be located within the Fund. Was it IPASA’s suggestion that there should be an explicitly defined independent HTA concurrently with the establishment of the Fund? Could IPASA provide examples of countries that implemented this independent capacity concurrently with the implementation of the NHI Fund? Was there no option in IPASA’s proposal for progressive realisation of the HTA capability? The Committee was mindful that NICE in the United Kingdom (UK) and the Health Intervention and Technology Assessment Programme (HITAP) in Thailand were introduced as separate entities. When were they implemented in relation to the UK NHS and Thailand National Health Security Office (NHSO)? The Committee was under the impression that it took over 30 years for NICE to be established. It took more than 10 years, from 2007 for HITAP to be an independent stand-alone entity. He asked that IPASA provide some input about this.
In terms of the phased implementation of the NHI, was IPASA aware that parts of the Bill addressed this matter in clause 57, in particular, it outlined the transitional arrangements pointing out the phased implementation of the NHI. This was supported by the Memorandum on the Objects of the NHI Bill of 2019. Did IPASA have concerns that the NHI Fund for South Africa would only procure generic medicines? What was IPASA’s view on access to medicines that were protected under Intellectual Property (IP)?
Responses
Mr Aluwani Museisi, IPASA Member, responded to the question about NHI lowering prices and its effect on the business model of IPASA’s members. IPASA had definite concerns about aspects of the Bill. One of their concerns was that procurement was to be based on the lowest possible price. At times, the lowest possible price might not be the price that was sustainable. Access required availability, which in-turn relied on being able to supply. A business model had to be sound in order to be able to supply.
In terms of concerns raised about NHI stifling innovation, IPASA had highlighted that their SPEs needed to be empowered to have a broad formulary that allowed them to prescribe based on evidence-based medicine. For the most part, when IPASA read the Bill, it referred to formularies that were limited to looking at costs. That became a concern when the price of a medicine was not the lowest. Would innovative molecules be included in the NHI? No one had seen what the benefits package would look like. Some of the principles tended to go toward the lowest possible price, which concerned them as an industry.
Responding to the question on whether the NHI Bill made room for support of innovation in health, Mr Museisi said that, for the most part, the way the formulary was set and the principles around procurement did not give much room for how more innovative medicines would be dealt with.
IPASA’s understanding was that most of the pilot programmes [for the NHI] did not go as successfully as planned. There was not a lot of reflection after the pilot studies about the lessons learned and how they could be taken forward. The question around the powers of the Minister in relation to investigations by SIU was difficult to answer. It required everyone in society to think about what kind of accountability mechanisms could be put in place to ensure that the scourge of corruption was avoided at different levels. As a general principle, the idea would be that the more independent the institutions were, the better accountability there would be.
Over the years, a number of provinces struggled with medico-legal bills. Legal costs, due to medical negligence had tended to eat away at budgets that were allocated for care of patients. The system needed to move to a place where there was a new approach to measure outcomes in the healthcare system. One could look at the Health Market Inquiry, in terms of outcomes, measurement etc. With respect to alternative reimbursement models, IPASA did not think that the Bill made room for alternative reimbursement models. In the private sector currently, one had a single exit price which was a very rigid system that did not allow for alternative reimbursement models. In the current Bill, the proposal as far medicine pricing was concerned was that there needed to be a single exit price for the NHI, IPASA did not consider that as an alternative reimbursement model.
He explained that “innovative medicines” involved the discovery of a medicine that did not exist and the development thereof from beginning to end. Thus a generic would not be considered an innovative medicine as it was produced after the initial discovery was made and was based on existing medicine.
In terms of the industry’s contribution to vaccines, the industry was proud that over the years their investments in the space of vaccines had allowed them to be able to respond to the COVID-19 challenge. Most of IPASA’s member companies had engaged in research and development programmes to find vaccines for COVID-19. Many of IPASA’s member companies were also looking at therapeutics in relation COVID-19. During the current pandemic, regulators around the world had been very flexible about how molecules were approved for COVID-19 vaccines. Regulators had shown flexibility.
If a patient’s medication was not included in the formulary under NHI, how would that be dealt with? If it was not included, would that not be considered regressive? The NHI Bill did not guarantee that those receiving private healthcare currently would be able to receive the kinds of benefits they currently received, under the NHI system. Would NHI take away some of the benefits that patients were receiving? This could be linked to the clause 33 discussion around what would be the future role of the medical schemes. As it stood currently, they played a role in taking care of patients. Clause 33 stated that they would only be able to provide services that the NHI Fund would not provide for. IPASA welcomed stakeholder engagement, however they were concerned about how that representation would practically take place. There was concern that there might only be one representative responsible for the entire private sector (i.e. a hospital sector representative), that would not represent the views of the pharmaceutical industry. Thus, there needed to be consideration of how to broaden it so that it was inclusive of a variety of different voices.
Mr Museisi said that there was a question about the quality of care. The Bill stated that healthcare service providers would be paid or reimbursed based on the quality of care that they provided. He would contend that there were a number of areas in the Bill where the lowest possible price was proposed for services rendered. That needed to be juxtaposed with the kind of quality that patients would receive at the end of the day
IPASA thought it was very important for an HTA agency to be independent. An independent institution would be able to deal with different issues and balance all the different needs from different stakeholders. IPASA was not aware of the exact time it took to establish the different funds in the UK. Given that South Africa was establishing the system, having learnt from other countries, where there were now independent institutions, it would be incumbent on South Africa to learn from those best practices. The phased implementation was proposed according timelines in the NHI Bill. There were a number of questions that remained unanswered. One of these was the funding mechanism of the NHI. In this sense, the Davis Tax Committee did some work. Their recommendations stated that the NHI in its current form would be difficult to implement because the funding envelope would be a difficulty. Depending on the physical space they had in the country – the NHI could be phased accordingly.
IPASA was concerned about NHI, when one considered the state of the market and the public sector. The public sector was procuring more generic medicines. Innovative medicines were often not procured in the public sector, even where the value of those medicines far exceeded generics. Reference was made in the Bill to the lowest possible price – which concerned IPASA that the industry could be under pressure.
Mr Pharasi stated that IPASA did not find anything in the Bill that provided for value-based care to be assessed in a way that really ensured that the outcomes were considered rather than the service that was provided. The Health Market Inquiry recommended that there should be a body called the Outcomes Measurement Reporting Organisation that would ensure enhanced decision-making in the provision and funding of healthcare. Regardless of how much money was allocated to treat a certain ailment, the outcomes needed to matter in the health system. That was currently not happening. IPASA felt that it needed to be emphasised.
Mr Museisi spoke to the issues of value-based healthcare. IPASA proposed that the definitions should include ‘evidence based medicine’ and ‘value based healthcare.’ In clause 25(5), IPASA proposed that the Benefits Advisory Committee should determine and review in accordance with the principles of evidence-based medicine. These principles were not reflected. The questions around clauses 37 and 57 – IPASA was well-aware of the role the private sector would play in terms of what providers would do and what practitioners would do. However, IPASA noted that as far as clause 33 was concerned, it spoke to the idea that there would be a limit in the role of private health insurance. There were still a lot of gaps in how procurement would happen for medicines under the NHI moving forward. If a tender based system was applied, it would result in some businesses not being able to survive as a result of a lack of sustainability (should the tenders not be awarded in their favour). Currently, the industry was dependent on the private sector.
Submission by Abbott Laboratories
Ms Khululiwe Mabaso, Director of Government Affairs in Africa at Abbott Laboratories, Dr Abrie Hanekom, General Manager at Abbott Laboratories, Ms Robyn Howes, Regulatory Manger for Care Diagnostics at Abbott Laboratories and Ms Maxine Smith, Market Access Manager at Abbott Laboratories, presented to the Committee. [Abbott is a multinational health product company based in the United States with over 80 years presence in South Africa.]
Our priority: innovative for access and affordability
• Make access and affordability core to new product innovation
• Transform care for chronic disease, malnutrition and infectious diseases
• Advance health equity through partnership
NHI Deliverables
An Abbott perspective - the building blocks for a comprehensive healthcare system
• Comprehensive healthcare service - benefits
• Value based assessments & outcomes
• Access to health products in NHI
• Service delivery
• Governance
Comprehensive healthcare service benefits
Determined by quality and value: evidence based medicine (EBM)
A comprehensive service benefit informed by evidence-based medicine (EBM) and value-based care principles.
• Integration of clinical expertise
• Patient’s values
• Best available evidence in process of decision making related to patient’s health care.
Guidelines designed according to EBM:
• Ensure an on-going consultative approach with all stakeholders. Medical necessity
• The bill limits care to what is “medically necessary” – EBM, health promotion and prevention go beyond what is “necessary”.
Role of benefits advisory committee (BAC)
• BAC requires a clear mandate informed by EBM.
• EBM to be defined in the bill.
Value-based assessments and outcomes
Role of the HTA agency:
• We propose the establishment of an independent health technology assessment agency to ensure value- based assessments and quality outcomes to inform benefit design.
• This was also recommendation the HMI, in preparing the private sector for NHI - an independent entity tasked with Value Assessment and Outcomes Measurements.
Access to health products in NHI
Blended approach
• ensuring a blended way of pricing and procurement to stimulate competition, innovation, value and benefit.
• To not only base the benefit on price but ensure consideration of multiple factors that is MCDA.
Multi criteria decision analysis (MCDA)
• MCDA approach is suggested for helping purchasers in an evidence-based assessment of multi source pharmaceuticals - this mitigates potential adverse consequences of price-based decision only.
• A well designed and collaborative framework for MCDA based purchasing, will enable healthcare stakeholders to maximally benefit in terms of quality and effectiveness of care and access for patients.
• Provision of pathology services
• Pathology services need to be responsive to the needs of the population. Patient impact
• 60-70% of critical clinical decisions are influenced by diagnostic test results.
• We look to in-vitro diagnostics to promote preventative screening and monitoring of disease which could impact the overall cost to the healthcare system.
• Community health with point of care.
• Informed therapeutic choices.
• Additional consideration: There are further diagnostic challenges which could require unforeseen expenditure in terms of instrument service and maintenance.
• The diagnostic algorithms vary between screening, confirmatory and differentiating tests.
Governance
• Sustainability, transparency, accountability and Legal certainty across all organs of state from the Provinces to National Treasury.
• Build a healthcare system to meet its deliverables based on Governance best practice.
Discussion
Mr Munyai stated that since Abbott Laboratories was a multi-national company that was started in Chicago, could they provide input about Medicare for all in the USA and in the UK’s National Health Laboratory Service (NHLS)? Did Abbott Laboratories recommend that an independent technology assessment agency should undertake the functions of a value-based assessment and quality outcomes? Was the recommendation not covered under clause 57(3)(c), which outlined the transitional arrangements, where the Ministerial Advisory Committee on HTA would be established. It would serve as a precursor to the HTA agency that would regularly review the range of health interventions and technology by using the best available evidence.
Ms Hlengwa asked how Abbott Laboratories thought NHI would change its business model, particularly on the pricing of drugs and medical equipment.
Mr Sokatsha noted that Abbott Laboratories had requested an ongoing consultation with all stakeholders, clause 27 pointed out that the Stakeholder Advisory Committee would be established comprising of representatives from the statutory health professions councils, public health entities, organised labour, civil society organisations, associations of health professionals and providers as well as patient advocacy groups. Did this not address Abbott Laboratories’ recommendation?
Acting Chairperson Dr Jacobs asked a question in relation to Abbott Laboratories product list and the recommendations that it needed to be evidence-based medicine and must go beyond the essential medicines list in order to provide quality and value. Was their request not answered in clause 38(5), which stated that the Office of Health Products Procurement must support the review of the formulary annually or more regularly if required and take into account changes in the burden of disease, product availability, price changes and disease management for approval by the Minister. He asked what Abbott Laboratories view was on access to medicines which were protected by intellectual property (IP) rights. Was Abbott Laboratories open to voluntary licensing or patent pooling mechanisms? Did Abbott Laboratories believe that the NHI Bill would limit the quality of prescribing? Did Abbott Laboratories concede that the competitive advantage of the private sector providers was their ability to negotiate prices with pharmaceutical companies? Did Abbott Laboratories believe that this uncompetitive and non-transparent practice would be to the ultimate benefit of the recipients of medications under the NHI, as contained in the Bill? The NHI Fund envisaged going for the most cost effective price of medicines. How would Abbott Laboratories help with innovative ways to make medicines available at cost effective prices? There was a tendency to hold quality to ransom. Most of the previous presenters highlighted that innovation was one way of ensuring balance, affordability and quality in delivery.
Responses
Ms Mabaso said that Abbott Laboratories worked with their colleagues in different countries, in the USA and UK. There were some countries in Africa that had started implementing similar initiatives to the NHI. Abbott Laboratories could reach out to them and provide best practice learnings as well as outline how Abbott Laboratories worked with these countries when it came to national health insurance. Abbott Laboratories was happy to share this in writing for the Committee’s perusal in the next few days.
Ms Smith stated that in terms of clause 57 and the HTA, there was provision made for precursor transitional arrangements for an HTA to be established. Abbott Laboratories’ main point was that, as they navigated the landscape and structure of the Bill, they were not sure where it would fit in. It needed to be an independent established HTA agency that would not sit within the Fund but would be a stand-alone agency outside of the Fund to inform it. This would take away bias. IPASA [of which Abbott is a member] agreed that in terms of the essential medicines list, the enabling sections which spoke about cost effectiveness and the provisions for an evidence-based formulary were contained in the Bill. However, the ongoing consultative process, that was often in the Essential Drug List (EDL) and Licensed Drug List (LDL), required a more formalised process. Abbott Laboratories understood this would have to be developed in the National Health Act, and section 90 provided for regulations on the two lists. Abbott Laboratories wanted to see this more formalised. Abbott Laboratories saw the Stakeholder Advisory Committee having a vital role. In terms of Abbott Laboratories products and the impact of the implementation of NHI on pricing, it was noted that pricing was referred to in many different parts of the Bill, specifically the lowest price negotiated and single exit price. Abbott Laboratories noted that this would mean that prices would decrease. However, Abbott Laboratories wanted to reaffirm that it would not be like a tender where there was one service provider on the formulary. It would allow for multiple service providers to be there and increase the volumes and capacity in which they could deliver. The majority of Abbott Laboratories medicines were off-patent pharmaceuticals. Abbott Laboratories supported innovation in line with IPASA. Abbott Laboratories would be happy to get back to the Committee in writing regarding IP.
Closing Remarks
Acting Chairperson Dr Jacobs thanked Abbott Laboratories and stated that the Committee looked forward to receiving their additional responses in writing.
The meeting was adjourned.