What’s been in the News lately?
20 to 24 September 2004
Contents
1. Pharmacists to resume court battle over dispensing fees
If this request is turned down, the Pharmaceutical Society will apply directly to the Supreme Court of Appeal in Bloemfontein for permission to appeal
2. Schemes keep contribution increases below 10 percent
Four large open medical schemes have announced contribution increases for next year ranging from 2.6 percent to 8.7 percent
3. Regulation 'may kill off herbal remedies'
Industry supports regulations, but believes applying the same strictures, as those used for conventional medicines is inappropriate
4. Protector Health appeals against end-of-contract ruling
Protector Health has lodged an appeal against a decision that could have resulted in the medical scheme paying damages for terminating a contract with its former administrator
5. MUST READ: Petes Weekly: Government & Small Business # 1
6. Pharmacists battle on
Judgment on the application to appeal the earlier court decision on drug pricing regulations is reserved in the Cape High Court
7. Minister open to 'revising' drug pricing
Reprieve offered to ailing pharmacies
8. Roche pins hope for sales growth on cancer drug
Pharmaceuticals division on track to meet its full-year target of above-market sales growth
9. Most complaints are about non-payment of medical accounts
Medical scheme members made more than 2 000 complaints - most of which were valid - to the Council for Medical Schemes between April 2003 and March this year
10. High hospital costs unhealthy for you
Registrar says government intervention is required to curb soaring private hospital costs, which are threatening the otherwise strong financial position of medical schemes
11. State must also target medical aids and 'Big Pharma'
Just as the state appears reluctant to get involved in an altercation with Big Pharma, it also appears reluctant to put the screws on inflationary practices of medical aid societies
12. Courts settle spats between trustees
The governance of medical schemes continues to present the Council for Medical Schemes "serious problems"
13. Council cracks down on bad governance of schemes
Curatorship order obtained after an investigation revealed that trustees had spent "exhorbitant" amounts totalling millions on an annual general meeting, legal fees and offices
14. Health minister's bitter pills provoke grimaces of distaste from all quarters
With an industry as complex and crucial as healthcare, perhaps a little more care should be taken to consider each player and their concerns - provided each player is prepared to be accommodating
15. Medical aid schemes, insurers agree on turf
New guidelines define health insurance as a product that provides cover for contingencies other than medical expenses, which are the business of medical schemes
16. Healthy instinct
In its 12 years Discovery has revolutionised the medical aid industry, but new challenges await
17. An alternative treatment
While Discovery Health steals the limelight, its largest rival, Medscheme has undergone extensive restructuring to try to keep pace
18. A black day in court
A political tussle has broken out within the legal fraternity over the medicine pricing wars
19. Pills without frills
Nawaal Deane spoke to Dr Anban Pillay, the Department of Health's director for pharmaceutical economic evaluation, about implications of the new pricing regulations for consumers
20. Sickening blow for alternative medicines
The Medicines Control Council says there is little science behind many alternative remedies and that thorough checks on the safety of untested cures should be carried out
1. Pharmacists to resume court battle over dispensing fees
PHARMACISTS and New Clicks will today attempt to relaunch their legal battle against the government's capping of dispensing fees. The Pharmaceutical Society and New Clicks say they will ask this morning for leave to appeal against the recent Cape High Court verdict that dismissed their cases. If this request is turned down, the Pharmaceutical Society will apply directly to the Supreme Court of Appeal in Bloemfontein for permission to appeal. Last month the Cape High Court ruled in favour of the government and dismissed the cases brought by pharmacist groupings, which claim that the new dispensing rules would put most pharmacists out of business. The Cape High Court dismissed the case with costs last month after Judge President John Hlophe and Judge James Yekiso ruled in favour of the health department. Deputy Judge President Janet Traverso had ruled in favour of the Pharmaceutical Society. Since the beginning of the month pharmacists have been adding an "administration fee" of between 10% and 15% of the drug cost onto every customer's bill. They have also been charging customers for phone calls and faxes to medical aids, deliveries and other extra services in an attempt, they say, to cover costs.
Jo-Anne Smetherham: The Cape Times, 20 September 2004
2. Schemes keep contribution increases below 10 percent
FOUR large open medical schemes have announced contribution increases for next year ranging from 2.6 percent to 8.7 percent - in line with predictions that contribution increases for 2005 would be lower than those introduced for this year. Of the four schemes, Medshield announced the lowest weighted average increase of 2.6 percent. Sizwe says its average increase will be six percent. Liberty Medical Scheme says its average increase will be 8.2 percent, while Oxygen has announced an average increase of 8.7 percent. The announcements by the four schemes follow an announcement by Discovery Health, the country's largest open medical scheme, that it would raise its contributions by an average of 5.4 percent next year. Discovery set the scene for next year's contribution increases by announcing a 2005 increase that is far below the increases most schemes implemented for 2004. This time last year, Discovery announced a 13.3 percent increase, while the overall average increase across all schemes was 11.5 percent. Discovery, and three of the four schemes that have now announced their 2005 increases, say one of the reasons they are able to introduce lower increases for next year than they did for 2004 is because they either have or expect to have built up their reserve levels. Oxygen had reached the 25 percent level by the end of last year. Sizwe and Medshield say they have now also reached the target mark. Discovery says it will reach the 25 percent level by the end of this year. Liberty Medical Scheme's reserves were at 10 percent at the end of 2003 and the scheme hopes to reach 15 percent by the end of this year, Stephen Maasch, the chairman of the scheme, says. He says this is in line with a business plan approved by the Registrar of Medical Schemes. Linda Gabela, the principal officer of Sizwe, says besides the improved reserve level, the other reason for the low increase is that medical inflation is expected to be lower in 2005. Oxygen, the medical scheme marketed and administered by Old Mutual Healthcare, says for principal members, the 8.7 percent average increase could translate into anything from 4.2 percent to 13.2 percent, depending on the option they have joined. Oxygen also announced that it is introducing a voluntary excess on hospitalisation on some of its options. Members on these options can reduce their contributions if they pay an excess of R2 500 for hospitalisation, unless the admission is for emergency medical treatment or trauma. Members can save up to 10 percent of their contributions if they pay the excess, David O'Brien, Oxygen's sales director, says. O'Brien says Oxygen has modelled its excess on those used in the short-term insurance industry. Members will be able to pay the excess from their medical savings accounts or their day-to-day benefits, he says. Last year, Discovery Health launched an option with a R1 000 co-payment for certain elective hospital procedures, such as joint replacements, tonsillectomies, hysterectomies and cataract surgery. This co-payment is compulsory for members who belong to that option. Gabela says the increases on all Sizwe's options and in all income categories will be within the six percent range. She says the scheme has also "generously" increased its benefits for next year. Gabela warned members not to be misled by medical schemes offering lower percentage increases, when these increases will come off an already high rand base, and, in some cases, will apply only to certain options or income categories. John Rollason, the chairman of Medshield's board of trustees, says increases on different Medshield options will range from between one and nine percent, but the weighted average will be 2.6 percent. At the same time, Medshield has increased its day-to-day benefits by, on average, 38 percent, he says. Rollason says the scheme was able to implement lower increases for 2005 because it has built up sufficient reserves, which are generating substantial income. Rollason says the dark clouds on the horizon are private hospitals, which are asking for increases as a result of having lost revenue on medicines dispensed in-hospital. Medical schemes are resisting the hospitals' demand for increases, but fear that the three hospital groups that dominate the market have the upper hand in negotiations. But Rollason says should Medshield fail to contain hospital costs within the limits for which it has budgeted, this will not cause the scheme to implement interim increases later next year, because the reserves will cushion the scheme. Stephen Maasch, the chairman of Liberty Medical Scheme, says the 8.2 percent average increase in contributions will translate into an increase of between 5.9 percent and 24 percent, depending on which option a member has joined. He says the highest increase will affect the 524 members enrolled on the scheme's extended chronic benefit option.
Laura du Preez: Personal Finance, 18 September 2004
3. Regulation 'may kill off herbal remedies'
AN INDUSTRY group has warned that government's plans to regulate complementary and traditional medicines could threaten the supply of these products and may drive most suppliers out of business. The health department published draft regulations to the Medicines and Related Substances Act in July, expanding the definition of medicines to include the R2,2bn complementary and traditional medicines market. This means producers will have to register their medicines with the Medicines Control Council, which will require proof of safety and efficacy. The expanded definition includes homeopathic, Chinese, herbal and African medicines. But the Complementary and Traditional Medicines Stakeholders Committee said that only the largest players in the industry had the capacity to comply with the regulations. The industry supported the regulations, but believed applying the same strictures, as those used for conventional medicines was inappropriate, said committee spokeswoman Janet Whelam. This was because complementary medicines were based on belief systems that could not necessarily be assessed with the same scientific tests used for conventional medicines, she said. The industry was also worried about the department's plans to control who may sell complementary medicines. Their definition as medicines will place these products under the auspices of the Pharmacy Act, which says medicines that are schedule 1 or higher may only be dispensed by a pharmacist. The Health Shop Association's Denise Maidment said between 50% and 60% of complementary medicines in health shops would have to be sold by a pharmacist if the draft regulations were implemented as they stood. The industry was also concerned about the implications of the regulations' marketing code, said Whelam, which restricted advertising of complementary health products and services. The committee is circulating a petition, urging the department to draft separate regulations for complementary medicines. Public comment on the draft regulations closes on October 16.
Tamar Kahn: Business Day, 20 September 2004
4. Protector Health appeals against end-of-contract ruling
PROTECTOR Health has lodged an appeal against a decision that could have resulted in the medical scheme paying damages for terminating a contract with its former administrator. In July this year, the scheme moved its administration from the Protector Group to Medscheme, alleging that the Protector Group had breached the administration contract. Protector Group, which has since been placed under provisional liquidation, lodged an urgent application with the Transvaal High Court. The matter was referred to arbitration as provided for in the contract. The arbitrator found that the relationship between the scheme and its administrator had broken down, but ruled that Protector Health had unlawfully cancelled its administration contract, because it had not given Protector Group the required notice of its intention to end the contract. To minimise inconvenience to the scheme's 34 000 members, the arbitrator ruled that the administration contract should not be returned to the Protector Group. But, he said the Protector Group and its subsidiaries were entitled to damages from the scheme, and that the amount should be determined at a later hearing. Last week, Protector Health lodged an appeal in the High Court seeking to overturn the ruling that the cancellation of the administration contract was unlawful, according to Willem Britz, the scheme's legal representative. The scheme wants the arbitrator to consider evidence on the matter. Gerhard van Emmenis, the scheme's principal officer, says the scheme ended the contract because service levels were inadequate and members were unhappy. He says the Protector Group tried to increase the scheme's administration fees to a level that the scheme's board felt was acceptable. Van Emmenis says forensic auditors are looking into anomalies in the scheme's claim patterns. Protector Health ended last year with a solvency ratio of 4.05 percent, down from 7.42 percent at the end of 2002, and way below the required solvency level for 2003 of 22 percent.
Laura du Preez: Personal Finance, 18 September 2004
5. Government & Small Business # 1
Imagine that you spent 5 years at university, learning all the intricate technology and detail of your proposed profession - without a single business course. What does 5 years at university cost these days?
And imagine that you then set up a small retail store to ply your trade, with sureties to your landlord, and a huge overdraft to buy stock and shop fittings with sureties to the bank.
And imagine that you then employed about 7 staff members to help you in the store because it is a 7 day a week operation.
What would happen if the government intervened and limited your gross profit on any individual sale to just R26-00 - no matter how big that sale was? Which means that if I purchase a R1000 item from you, the transaction would work like this: