Downgrade will increase price of medicine (but Health Department will intervene)

Department of Health chief director of sector wide procurement, Gavin Steel, explains how the weakening economy as a result of downgrade will affect the price of medicine and people's right to quality healthcare.

South Africa's economic outlook downgrade to a junk status by international rating agencies, Standard and Poor's and Fitch, has raised concerns over the high cost of medicine.

Steel says there will be a proportion of a cost of medicine that will be affected by the exchange rate.

Read: What being downgraded to junk status really means

What measures will the public sector apply to ensure medicine is accessible to the poor?

In the contracts when we award a tender, there is a formula used which allows on a monthly basis or quarterly, depending on type of medicine, an adjustment in terms of rate of exchange. The whole idea is to make sure the manufacturer is not affected by rate of exchange and can still make goods available to the public.

Gavin Steel, Department of Health chief director of sector wide procurement

He says government also intervenes in the private sector.

The price of medicines are adjusted on an annual basis. That adjustment looks at rate of exchange as well as CPI, which is the domestic inflation. On an annual basis, we publish for comment and once we have received comment from the public, we then make a determination then as to the inflator.

Gavin Steel, Department of Health chief director of sector wide procurement

In instances where we see the rate of exchange has been extraordinary, we make provisions for interim adjustments.

Gavin Steel, Department of Health chief director of sector wide procurement

Listen to Gavin Steel below for more details...


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