National Health Insurance and Medicines Explained

National Health Insurance (NHI) represents a major proposed reform for South Africa's healthcare system, aimed at achieving universal health coverage (UHC). Under a UHC framework, the goal is to ensure that all citizens can access the health services they need without suffering financial hardship. A critical component of any health system reform is how it handles medicines, from how they are selected and priced to how they are ultimately delivered to patients. While the specifics of implementation are still unfolding globally and locally, examining how single-payer and national insurance models approach medicines helps clarify the potential shifts in the pharmaceutical landscape.

## The goals of National Health Insurance

At its core, NHI is designed to pool healthcare funds into a single, publicly administered fund. In South Africa, the NHI Act outlines a system intended to bridge the divide between the public and private healthcare sectors by purchasing services on behalf of the entire population. This shift is intended to create a more equitable system where access to care, including medicines, is based on need rather than an individual's ability to pay. From a medicines perspective, this means moving towards a system where a central authority is responsible for deciding which treatments are covered, how much is paid for them, and how they are distributed across both public facilities and contracted private providers. By consolidating purchasing power, a national insurance system aims to negotiate better prices and ensure a more consistent supply of essential health products.

## Medicine selection and the Essential Medicines List

A cornerstone of managing medicines in any national health system is the use of an Essential Medicines List (EML). The World Health Organization (WHO) maintains a global model EML, which serves as a guide for countries in developing their own customised national lists based on local disease burdens and healthcare priorities. South Africa already uses a National Essential Medicines List (NEML) for its public sector, which dictates the medications available at state facilities and aligns with Standard Treatment Guidelines (STGs). Under an NHI framework, the role of the NEML would likely expand, acting as the primary formulary or list of approved medicines for the entire system. This approach ensures that medicine selection is based on clinical evidence, public health needs, and cost-effectiveness, prioritising treatments that offer the greatest therapeutic benefit to the population while discouraging the irrational use of medicines.

## Procurement, pricing and the Single Exit Price

How a national health system buys medicines significantly impacts access and overall cost. Currently, South Africa uses a Single Exit Price (SEP) mechanism, which mandates that a specific medicine must be sold at the same price by all manufacturers and distributors, eliminating price competition at the pharmacy level. If NHI centralises procurement, it would likely build upon this existing framework through national tendering processes. By purchasing medicines in bulk for the entire country, a single-payer system can leverage its significant market power to negotiate lower prices than individual providers could achieve alone. Throughout this process, all procured medicines would still need to be registered with the South African Health Products Regulatory Authority (SAHPRA). This ensures that any medicine entering the NHI system, whether an originator brand or a generic equivalent, meets strict quality, safety, and efficacy standards before it reaches patients.

## Health Technology Assessment in funding decisions

Because healthcare budgets are finite, national insurance systems must make difficult choices about which new and expensive medicines to include in their formularies. Health Technology Assessment (HTA) is a structured, multidisciplinary method used to evaluate the properties and effects of a health technology, most commonly medicines. HTA looks not only at clinical effectiveness and safety but also at the cost-effectiveness and broader economic impact of a treatment. Under NHI, HTA bodies are generally tasked with determining whether a new medicine offers sufficient value for money to be added to the national formulary. This evidence-based approach helps ensure that limited pooled funds are directed towards treatments that provide the most meaningful health benefits, rather than simply the newest or most heavily marketed options that may not justify their high costs.

## Navigating medicine information under reform

As South Africa navigates its NHI implementation, transparency in medicine registration and pricing remains vital. Tools like HealthSA allow patients, healthcare providers, and researchers to search for registered medicines and view their Single Exit Prices. While NHI will shape how these prices are negotiated at a central level, the underlying regulatory framework overseen by SAHPRA ensures that all medicines, regardless of how they are procured, remain subject to the same rigorous standards. Understanding these interconnected systems—registration, pricing, and essential medicines selection—provides a clearer picture of how a national health insurance model functions in practice and how it influences access to medicines.