Healthcare: 6 times Costlier
Healthcare: 6 times Costlier
The Federal Government has signed an Executive Order that removes tariffs, excise duties, and VAT on certain pharmaceutical equipment and raw materials, effective for two years.
The order aims to encourage local production of pharmaceuticals, lower production costs, and reduce the prices of locally produced drugs.
In the last 13 months, there has been a steady and substantial increase in the costs of pharmaceutical products, medical services, dental services, paramedical services, and hospital services.
Health inflation has risen by 3.6 points from 20.5% in May 2023 to 24.1% in May 2024, leading to higher costs of general medical services.
One of the factors contributing to the rising cost of pharmaceutical products is the devaluation of the naira and fluctuations in the foreign exchange market.
First, Nigeria relies on foreign sources for medicines and vaccines, with imports accounting for 70% of local drug consumption.
Second, most of the Active Pharmaceutical Ingredients (APIs) and excipients required for domestic drug production are imported.
Consequently, the cost of drugs and medicine becomes susceptible to foreign exchange fluctuations.
In the same period, two multinational pharmaceutical companies, GlaxoSmithKline (GSK) and Sanofi-Aventis left Nigeria, contributing to the hike in the cost of drugs.
These circumstances suggest that drug prices may keep increasing unless local alternatives are provided.
In 2023, health inflation hit an all-time high, surpassing the levels seen in the past 13 years.
Health inflation moved from 9.3 in 2011 to 21.5 in 2023.
Besides the Executive Order which could potentially alter barriers currently impeding local pharmaceutical manufacturing in Nigeria, the Nigerian government has introduced a few other policies aimed at boosting local pharmaceutical production.
One is the “5 plus 5” regulatory scheme “where a company that has been importing drugs that the local pharmaceutical industry can produce will get a five-year renewal. During the five-year renewal period, the importer must migrate to local manufacturing or partner with a local manufacturer” the Director General of the National Agency for Food and Drug Administration and Control (NAFDAC), Prof. Mojisola Adeyeye stated.
Costly Healthcare and Your Pocket!
After transport, healthcare constitutes the second-largest portion of Nigeria’s non-food expenditure pattern.
Nigerians now spend 5 times (4.9) more to access healthcare services compared to what it was in 2010, NBS Consumption Expenditure Pattern In Nigeria 2019/2020 showed.
This may be due to increased healthcare costs, resulting in people spending more to access the same services.
This aligns closely with the trend in health inflation and overall headline inflation rates over the same period.
In reality, there is no alternative to good healthcare services.
So, when healthcare services become increasingly costly for the average person to afford, it only suggests one thing: the need for innovative solutions to ensure accessible healthcare for all.
On the individual level, some pocket tips may help manage the rising costs of healthcare services.
Individuals with or without underlying health conditions need to prioritize a healthy lifestyle and maintain a work-life balance to help lower exposure to health complications that may warrant costly treatments.
People in formal workplaces may consider activating health insurance packages at their workplaces.
Individuals working in the informal sector can personally approach health insurance providers to purchase affordable premiums for themselves and their dependents.
Thank you for reading this edition of Pocket Science. It was written by Funmilayo Babatunde and edited by Oluseyi Olufemi.