In recent months the South African government has accused U.S. manufacturers of
HIV/AIDS drugs of price gouging. But are they?
Not according to a new report be the National Center for Policy Analysis (NCPA
SM), which notes that South Africa already pays some of the lowest prices found
anywhere in the world.
"Far from being the victims of price gouging, South Africa is paying a fraction
of the price the U.S. pays for drugs manufactured by American companies," said
NCPA senior scholar Dorman Cordell. According to the report:
-- While U.S. consumers pay $10.12 for AZT, South Africans pay $2.16.
-- U.S. consumers pay $7.25 for Didanosine, while South Africans pay only $2.80.
Although drug manufacturer prices in South Africa are among the lowest in the
world, its retailers' markups in the private sector are among the highest. This
is due in part to a cartel-like non-competitive retail market protected by
government policy. For example:
-- Just over half (55 percent) of the price of drugs (net of tax) in South
Africa goes to the manufacturer.
-- By comparison, the manufacturers receive 65 percent of the price in Germany
and 88 percent in Sweden.
"The South African private sector pays twice as much because its government
discourages competition," said Cordell. "South Africa should reexamine its own
policies before blaming others for its problems."
Note: The NCPA is a research and educational organization operating under
Section 501(c)(3) of the Internal Revenue Code.