User fees and drug pricing policies: A study at harare central hospital, Zimbabwe

In 1991, Zimbabwe introduced cost recovery measures as part of its programme of economic reforms, following a course taken by many developing countries. The system of user fees in public health care, aimed to 'protect and support the vulnerable groups' by exemption or incremental fees based on 4 income brackets. Drugs were charged at a percentage of the recommended retail price in the private sector. This study of 488 outpatients at a referral hospital in Harare examined how the new fee system functioned 6 months after its introduction.Patients were interviewed and their prescription records examined. Mean charges were determined for each fee category and revenue from drug charges was analyzed in relation to purchase cost to determine the gross profit.31% of patients were exempted from all fees upon proof of monthly earnings of less than Z$150 (Z$5 US$1). The remainder were classified into three fee-paying categories. The mean purchase cost for drug items was Z$3.89 per outpatient prescription. Outpatients paid a mean drug charge of Z$9.75 after exemption or discount. This was 2.5 times the cost price. The number of drug items obtained differed according to fee status: the fee-exempt category received a mean of 2.9 drug items compared with 1.9 drug items in the fee-paying categories. This difference originated at the point of prescribing. A number of practical problems in fee collection were noted.The drug pricing system generated high profit even after re-distribution to low-income users. This was attributed to economical and rationalized public sector drug procurement. Observation indicated that a proportion of the vulnerable were not effectively protected due to stringent requirements for proof of income. Appraisal of the fee policy indicated the need for more effective cross-subsidy and better administrative procedures; fee revenue should be directed towards improvement in quality of service.