Chief Directorate: Health Products Procurement


For most healthcare, the providers use a range of ‘health products’ in the provision of benefits to users.  These ‘health products’ include medicines, diagnostics, and devices, as well as consumables. The Bill provides for an ‘Office of Health Products Procurement’ that will procure all the desirable and necessary products for the health system which the Fund will pay for.

This Office must describe the product and go to market to set the price. This is already practice in the NDoH through the Affordable Medicines Directorate and the Pharmaceutical Economic Evaluation Directorate (where single exit prices are set in terms of Section 22G of the Medicines Act).

The methods of fixing prices around the world are different and South Africa uses bids and various benchmarking methods but there are other alternative methods available. The Fund will not buy anything, other than for its own operations.  It will be up to the accredited provider to purchase off the procured Formulary those products necessary to provide the benefits that they are accredited to provide to users.

This is a moving environment as new products become available and technologies change. Furthermore, patents end and pricing changes, so altering the environment. To ensure that the optimal products are available on the Formulary the Fund will develop a Health Technology Assessment (HTA) system and unit. The Bill provides for this unit to be established but separated to an independent entity in time.

This is a complex and changing environment that will require NHI Act Regulations but also amendments to the Medicines Act (and others) and a change in the participation in transversal government procurement processes. The committees, technical groups and operational matters will need to be transparent on the Fund’s website and the users and providers must know what products are available from the Formulary.