Medical aid members in Namibia are increasingly coming under pressure from rising medicine costs, with concerns growing that pharmacies are charging higher prices for medicines claimed through medical aid than for the same products purchased with cash.
The issue has come under renewed scrutiny as the Namibia Association of Medical Aid Funds (Namaf) moves to introduce a medicine pricing benchmark aimed at improving transparency in a pharmaceutical market worth more than N$3 billion annually.
The pricing disparity has become a major concern for medical aid members, many of whom report exhausting their annual medicine benefits long before the end of the year despite purchasing routine prescription medication.
Namaf Stakeholder Relations and Communication Manager Uatavi Mbai told The Brief that medicine expenditure remains one of the largest healthcare costs in the country.
According to Namaf, the Ministry of Health and Social Services spends at least N$1.2 billion annually on medicines for 80% of the population through public procurement channels, excluding medical devices.
Registered medical aid funds spend a further N$800 million annually on medicines for about 8% of the population, while the Public Service Employees Medical Aid Scheme (PSEMAS) spends at least N$1 billion on medicines for another 12% of Namibians.
“However, the cost of medicines represents the second-largest component of healthcare expenditure in Namibia at about N$3 billion annually,” Mbai said.
The concerns stem from long-standing complaints by medical aid members who say medicines often cost substantially more when processed through medical aid than when purchased directly with cash at pharmacies.
Higher claim values mean medical aid benefits are depleted more rapidly, leaving some members having to pay for medicines out of their own pockets once annual limits are reached.
In response, Namaf is implementing the Namibian NAPPI Benchmark Price File, which is intended to establish a standard benchmark tariff for medicines and medical consumables.
“This is how Namaf ensures that a transparent and fair process is followed for medicines and consumables,” Mbai said.
She said the proposed framework draws on South Africa’s Single Exit Price model while being adapted to Namibia’s healthcare and regulatory environment.
The Namibia Financial Institutions Supervisory Authority (NAMFISA) said it does not regulate pharmacy tariffs directly but oversees the conduct of medical aid funds and reimbursement practices.
NAMFISA Chief Executive Officer Kenneth Matomola, in response to an inquiry from The Brief, said the introduction of the Financial Institutions and Markets Act (FIMA), 2021, strengthens the regulator’s ability to intervene where reimbursement outcomes unfairly affect consumers.
“Although tariffs themselves are not directly regulated, NAMFISA will be better positioned to intervene where pricing practices or reimbursement outcomes result in consumer detriment,” Matomola said.
The Namibian Competition Commission (NaCC), however, said it has not received any complaints relating to anti-competitive practices involving pharmacy claims.
NaCC Corporate Communications Practitioner Dina //Gowases said the commission’s mandate includes investigating anti-competitive conduct such as price-fixing and imposing sanctions where necessary.
“The role of the Commission is enshrined in its mandate of investigating anti-competitive practices, including price-fixing, and imposing penalties and relevant sanctions,” she said.
The commission is also considering its next steps following the Supreme Court ruling in the Pharmaceutical Society of Namibia matter, which centred on medicine pricing.
The Pharmaceutical Society of Namibia, when contacted regarding the concerns, declined to comment.
