Subsidised vaccine rollout to cost medical schemes as much as R7bn


Discovery Health anticipates that it will cost an upper limit of R7bn for medical schemes to fund Covid-19 vaccines for 7.1-million of their own members as well as to subsidise an equal number of non-members in the public sector.

Discovery Health CEO Ryan Noach said in an interview with Business Day on Wednesday that the funding model under consideration would entail medical scheme members paying double the price for the vaccine with the scheme donating 50% of the cost to a funding vehicle, such as the Solidarity Fund. Medical scheme members would receive the vaccine as a prescribed minimum benefit.

There are 7.1-million members of schemes above the age of 15. While there are many factors that will affect the cost of vaccines — including the brand, the number of doses required and the storage requirements — the cost for about 14.2-million people would range between R4bn and R7bn. This includes the distribution and logistics of the exercise.

A cost of R7-billion would be less than 2% of gross annual medical scheme contributions, said Noach.

It is not unusual for the private sector to pay significantly higher prices than the public sector for drugs. This could be done by the department of health setting a single exit price for each vaccine. Though medical schemes have massive reserves — R87bn as at the end of quarter two in 2020 — these reserves belong to members and cannot be tapped by schemes.

“Schemes cannot use reserves except for the benefit of members. By setting a single exit price at above cost or maybe even double, we would not be breaking any rules. This is not unprecedented in Africa and is no different to what has been done with other drugs,” said Noach.

The private sector would be involved in the logistics and administration, and was already engaged in developing a digital “Covid passport” to track who has been vaccinated and the follow-up of second doses.

“SA has a very good vaccination capacity and we will build on that existing strength,” said Noach.

The distribution of vaccines to medical scheme members will follow the same priority order as that in the public sector. This includes health workers first, followed by essential workers and workers in large institutions as well as the elderly and those with co-morbidities. Last in line will be healthy people below the age of 60.

“It would be ethically untenable for a young, healthy person to get a vaccine before someone who is vulnerable,” said Noach.

The cross-subsidy arrangement, which has been brokered by the department of health, has not been commented on by the Treasury, where there has been some debate over whether it is appropriate for big business to provide a social good — which, it is argued, the government should provide to all citizens itself.

Asked on Wednesday by Business Day whether the Treasury had deemed the overall cost of vaccinating the entire country as “unaffordable”, the Treasury said it would be making an announcement soon on vaccine acquisition.


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