TAC Welcomes the Implementation of the Medicines Amendment Act
- Detailed TAC Statement and Q&A on the Medicines Amendment Act
- Criminalisation of HIV is Wrong by Jonathan Berger and Fatima Hassan (first published in ThisDay, 25 May 2004)
Ensuring Doctors and Pharmacists Support it Requires Government Leadership and Negotiations
- The TAC welcomes the full and final coming into effect of the Medicines Amendment Act.
- The pricing regulations are imperfect, but for the most part will be to the benefit of poor consumers.
- Doctors and their patients have genuine concerns regarding dispensing regulations.
- Pharmacists and their customers have genuine concerns regarding dispensing fees.
- Government leadership, particularly from the Ministry of Health, and a willingness to negotiate in good faith are necessary to ensure that the regulations work in the public interest.
Many poor people, especially in rural areas, use the private health sector
in South Africa because they do not live near adequate public health
facilities. And although most people use the public sector most of the time
to obtain their medicines, nearly everyone makes occasional medicine
purchases in the private sector. Frequently however, poor people cannot
access essential medicines in the private sector, because prices are too
high and many patients, both well-off and poor are often prescribed
inappropriate medicines because of perverse incentives. The Medicines and
Related Substances Control Amendment Act, 90 of 1997 (the Medicines
Amendment Act) was introduced to address these and other problems. By
making medicines more accessible in the private sector, some of the burden
on the public sector is also removed.
The Medicines Amendment Act removes perverse incentives in the supply
chain of drug companies, pharmacies and doctors, one of which is by
compelling drug companies to sell a medicine at the same price throughout
the private sector. [This is because the SEP is but one of a number of
mechanisms to remove perverse incentives - the bans on rebates, sampling,
bonuses, etc also remove perverse incentives] This is known as the single
exit price. This price will have to be printed on the packaging of all
medicines, thereby assisting patients to determine if they are being
charged reasonable prices by the pharmacist. In addition, pharmacists will
now charge a set dispensing fee instead of a markup on medicines. The
Medicines Amendment Act also limits the practice of non-pharmacists
dispensing medicines, so that there is no perverse incentive for such
health practitioners to incorrectly or over-prescribe. Health
practitioners can apply for a license to dispense. But this must be to
provide dispensing services that pharmacists in their area are not
Free market fundamentalists might object to the above mechanisms, but their
objections are misguided for two reasons: (1) essential medicines are not
like other products and everyone should have access to them - a principle
not consistent with a free market in medicines and (2) the current
unregulated medicine market is substantially unfree in any case because
when it comes to the prescription and purchase of medicines, there is an
asymmetry of information; consumers generally know much less about the
pricing, availability and efficacy of medicines than pharmacists and
doctors; they can therefore easily be exploited.
After many years, the provisions of the Medicines Amendment Act are finally
coming into full force. But legal disputes between pharmacists and the
Minister of Health, as well as doctors and the Minister of Health threaten
to further delay the introduction of some of the key regulations that give
full effect to the Medicines Amendment Act. These disputes are founded on
genuine concerns by both doctors and pharmacists. Resolving them will
require leadership from the Ministry of Health and a willingness to
negotiate the finer details of the regulations.
The Medicines Amendment Act is a vital piece of legislation that affects
many consumers, but it is complex and the media has not explained it
sufficiently. Therefore we have produced a set of Questions and Answers
that we hope will help journalists and members of the public to understand
the legislation, its benefits and its shortcomings.
Questions and Answers About the Medicines Amendment Act
What is the history of the Medicines Amendment Act and why has it taken so long to come into force?
The Medicines Amendment Act was passed by Parliament in 1997. The brakes
were first put on it in early 1998 when the Pharmaceutical Manufacturers'
Association (PMA) and most of its members took government to court. In
that application, which was finally abandoned in April 2001 following civil
society intervention and international outrage, the PMA had sought to
prevent the law from coming into force.
It took a further two years before most of the law, by now slightly amended
by the Medicines and Related Substances Amendment Act, 59 of 2002, came
into force. On 2 May 2003, most provisions of the new legislation came
into effect, as did the regulations that flesh out much of the detail of
the legislative provisions.
There were a number of reasons why the full regulatory framework did not
come into effect last year. First, Act 59 of 2002 expressly delayed the
coming into effect of certain provisions of the law until 2 May 2004.
Second, a further set of regulations dealing with medicine prices could not
be drafted until the Pricing Committee had made recommendations to the
Minister in this regard, and the committee could only be established once
certain provisions of the 1997 Medicines Amendment Act had come into
While all the relevant statutes (and most of the regulations) have finally
come into force, the complete package of regulatory reform is still not
fully operational. While certain aspects of the pricing regulations came
into force immediately, some provisions took a month to come into force,
with other taking a further two months to become operational.
What is a regulation as opposed to the Medicines Amendment Act itself?
Often, laws do not contain the full details of their implementation. In
these cases, they make provisions for regulations to be developed by the
Ministry responsible for the law. Regulations do not have to be approved by
Parliament and are therefore easier to change than the laws they regulate.
For example the Medicines Amendment Act itself enforces the concept of a
single exit price, but it is the regulations that determine exactly how the
single exit price is calculated.
What is contained in the regulations?
The Medicines Amendment Act makes provisions for regulations in a number of
areas. Of relevance here are the regulations pertaining to the pricing of
medicines and the dispensing of medicines by health practitioners,
including doctors. The former deals with the single exit price, the
dispensing fees for pharmacists and the prohibition of perverse incentives.
The latter deals with the conditions under which doctors and other
non-pharmacists may be granted licenses to dispense medicines.
What are the important aspects of the regulations dealing with the pricing of medicines?
Removing Perverse Incentives
These regulations outlaw bonus systems (whereby pharmacists and
prescribing doctors are rewarded for selling more of a particular
medicine), rebate systems and any other incentive scheme. Doctors and
pharmacists may also not be given samples for a particular medicine which
effectively create a discount on the rest of their purchase of that
medicine. These regulations ensure that bulk purchase discounts are a thing
of the past. These regulations came into force on 2 May 2004.
Single Exit Price
The pricing regulations also enforce a single exit price. This means that
pharmaceutical companies must sell a medicine at the same price to everyone
in the private and not-for-profit sector. Simply put, manufacturers and
importers may not sell medicines to anyone other than the state at prices
higher or lower than the relevant single exit price. This single exit price
must be printed on the medicine package or the container in which the
medicine is sold. The single exit price came into effect on 2 June 2004.
From 2 August 2004, pharmacists will no longer be able to put a markup on
medicines in the way this currently happens. Until then, pharmacists and
dispensing doctors can continue to sell medicines as they have done for
some time. From 2 August 2004, however, dispensers may no longer charge a
mark-up, but will be entitled to charge the following dispensing fees
(exclusive of VAT):
- For each schedule 1 and 2 medicine without a prescription - 16% of the single exit price up to a maximum of R16
- For each schedule 3,4,5,6,7 and 8 medicine (and schedule 1 and 2 medicine with a prescription) - 26% of the single exit price up to a maximum of R26
Why are pharmacists unhappy with the new dispensing fees?
- For all medicines regardless of scheduling, 16% of the single exit price with a maximum of R16
The Pharmaceutical Society of South Africa (PSSA) believes that the fees
are "inadequate to ensure the survival of pharmacy". It argues on the
basis of an independent audited actuarial assessment that the fees "will
not be sufficient to ensure that the department [of health] achieves its
objective of improving accessibility to pharmaceutical services", directly
resulting in the "unavoidable closure" of many pharmacies.
The PSSA has threatened legal action against the state if its concerns are
not adequately addressed. It believes that the regulations should be
amended to ensure the survival of existing pharmacies and the ability of
pharmacists to "extend pharmaceutical services into under-serviced areas",
whilst at the same time reducing the costs of medicines. It is unclear at
this point whether the PSSA's representations to government will be
The TAC is sympathetic with the concerns of the PSSA. The Medicine
Amendment Act established a Pricing Committee that was responsible for
making recommendations to the Minister of Health regarding the pricing
regulations, including the dispensing fees. However, the report of the
Pricing Committee, which may very well explain the basis for the setting of
the dispensing fees, has not been made publicly available. The Minister of
Health has responded to the PSSA by stating that it is their responsibility
to demonstrate why the fees are unreasonable (which they appear to have
done, incidentally). The TAC disagrees with the Minister. The Minister is,
with justification, limiting the rights of pharmacists and the Constitution
allows for this. But when it limits rights, the state must explain on what
basis it is doing so. The TAC therefore calls on government to release the
report of the Pricing Committee . We also believe that this issue can be
settled with leadership by the Minister of Health and a willingness to
negotiate in good faith.
A large pharmaceutical chain, New Clicks, filed an urgent legal application
against the Minister of Health, asking for all the regulations to be
declared unconstitutional. This is unreasonable; many of the regulations
will benefit consumers and it makes no sense to throw out all the
regulations. Nor is the matter urgent (from a legal perspective); there are
two months before the dispensing fee regulations come into effect.
How is the single exit price established?
The pricing regulations set out two mechanisms in terms of which the
manufacturer or importer of a medicine must determine a particular
medicine's single exit price:
The first mechanism, which came into effect on 2 June 2004, removes the
"cost" of incentive schemes such as bonuses, rebates and discounts. This
effectively averages prices out without making any significant difference
to the manufacturers' bottom lines.
The second mechanism is somewhat more complex. It involves the development
- by the Director-General of Health (DG) - of a "methodology for conforming
with international benchmarks". This is to ensure that medicine prices in
South Africa are in line with those in other countries where medicine
prices are regulated. Manufacturers and importers will have three months
to adjust their single exit prices once the DG has published the
"methodology". This process may very well result in a significant
reduction in medicine prices, particularly if comparisons are made with
developing countries like India. But until this happens - and it is
unclear when this will be - the first mechanism must continue to be used.
This means that in the short term, the average price of medicines sold in
the private sector should not change significantly as a result of the new
law. Prices for those who buy medicines from large pharmacies in major
cities may go up, whereas prices for those who buy from small pharmacies
outside of the major metropoles and cities may drop. This is because the
discounts and rebates offered in the past to some resulted in higher prices
Why regulate dispensing by doctors?
While most dispensing doctors play a crucial role in ensuring that people
access essential medicines, the right to dispense has - in many cases -
been abused. This has been possible because the linkage of prescribing and
dispensing creates perverse incentives, with the prescribing doctor having
a direct financial interest in what he or she dispenses. This is not so
when doctors prescribe and pharmacists dispense, as is the ordinary
There is thus a clear need to separate prescribing and dispensing wherever
possible, only permitting the practice where it can be shown that the
service is indeed required. This approach is endorsed by the World Health
Organisation and practiced in many countries internationally.
What are the important aspects of the regulations dealing with dispensing licenses for doctors?
Doctors (and other health professionals such as dentists and nurses
registered under the Health Professions Act) now have to apply for and be
granted licences before they can dispense medicines. There are in essence
six requirements that must be satisfied before a licence can be issued:
- Completing and submitting the application in the prescribed form to the DG
- Paying the application and licence fees
- Successfully completing a supplementary course determined by the South African Pharmacy Council
- Publishing an advert in a newspaper circulating in the area where the service is to be provided (for the purpose of soliciting written representations, either in support of or in opposition to the granting of the dispensing license) Demonstrating the need for the particular dispensing service to be provided
The TAC views the first three requirements as reasonable, but the last two
are problematic. The requirement to place a newspaper advert may be
costly and may potentially delay or prevent the granting of the licence.
It is unclear how objections will be handled by the Department of Health.
Most problematic is the requirement to demonstrate need. In specifying the
geographical area to be serviced, applicants must not only supply
information on its population size, but also "the disease patterns and
health status of the population". Further, the "names and addresses of
other similar existing services in the catchment area of the proposed new
service" must also be supplied, including those of pharmacies, hospitals
and clinics. It remains to be seen how the Department of Health will deal
with those applications that do not provide such information because it is
too difficult or expensive to obtain.
When do the regulations pertaining to licenses for dispensing doctors come into effect?
The constitutionality of the new law - which was scheduled to come into
effect on 2 May 2004 - is currently being challenged in court. Brought by
the Affordable Medicines Trust, the National Convention on Dispensing and
Dr Norman Mabasa, the case will resume in the Pretoria High Court on 31 May
2004 for two days. But in terms of an agreement between the parties that
was made an order of court on 30 April 2004, the law was scheduled to come
into effect on 2 June 2004. This deadline was extended for a further month
on 1 June 2004, meaning that doctors have a further month to apply for and
be granted dispensing licenses. The Pretoria High Court plans to hand down
its judgment on the constitutionality of the dispensing doctor regulations
before 2 July 2004.
Again, it is with leadership and a willingness to negotiate in good faith
that the Minister of Health can resolve the conflict this has created.
Criminalisation of HIV is Wrong
Published in ThisDay, 25 May 2004 as "The Wrong Move on HIV"
By Jonathan Berger and Fatima Hassan of the AIDS Law Project
More than 20 years into the epidemic, parliament is poised to criminalise intentional HIV transmission and exposure to the risk of infection.
In doing so, it will ignore the well-reasoned finding of the South African
Law Commission (SALC) that "statutory intervention is neither necessary nor
Societies have historically invoked coercive measures in response to public
health threats, so the call for criminalisation was not unexpected. In
August 1997 political parties called for the express criminalisation of
deliberate HIV transmission.
During parliamentary debate later that year, members of the justice
portfolio committee raised concerns "about actions other than rape by
persons with HIV/AIDS which endanger the public." Soon thereafter, Johnny
de Lange, now deputy justice minister, brought these concerns to the
attention of the justice minister.
In January 1998 the justice department informed the SALC of the committee's
recommendation to criminalise the conduct of persons "who deliberately or
negligently infect others". The SALC then began an inquiry into the need
for a statutory offence aimed at harmful HIV-related behaviour.
Within a year the commission published a discussion paper for public
comment. After a lengthy consultative process the SALC issued its report
in April 2001. In addition to rejecting the call for express
criminalisation, it proposed "the development of practical mechanisms by
government departments to utilise effectively the existing common law
crimes in cases of harmful HIV-related behaviour; and to encourage a
culture of responsibility regarding HIV status".
Despite noting that the issue of the transmission of and exposure to HIV
infection during non-consensual sexual acts alone would be considered by
the SALC's investigation, the project committee on sexual offences
recommended 20 months later that consensual acts of sexual penetration be
criminalised - as rape - if committed "under false pretences or by
"False pretences" and "fraudulent means" were defined to include the
intentional failure to disclose infection "by a life-threatening sexually
transmissible infection in circumstances in which there is a significant
risk of transmission of such infection to that person."
Tabled in parliament late last year, the Criminal Laws (Sexual Offences)
Amendment Bill criminalises the intentional failure to disclose one's HIV
status in circumstances where there is a significant risk of exposure to
infection. After rushed public hearings and heated media debate, the
offence was removed from the ambit of rape and re-framed as a separate
statutory offence of intentional exposure to HIV transmission.
To address concerns that express criminalisation will unjustly target
vulnerable women who are unable to negotiate safer sex, certain procedural
safeguards were included. So instead of being a defence to the crime, the
inability to disclose one's positive status or to negotiate safer sex
becomes a factor to be considered by the state in deciding whether to
The argument in favour of express criminalisation goes something like this.
People with HIV should not be allowed to infect others. If they do, they
should be punished. This will act as a deterrent and the public will be
The argument conveniently ignores the existence of common law offences that
already criminalise wilful transmission and intentional exposure to the
risk of HIV transmission. Other than reinforcing negative perceptions
about people living with HIV-Aids and hampering prevention efforts, what
else can a statutory crime do?
It could, for example, make it easier to secure convictions by dispensing
with the requirement of intention and criminalising negligence. This means
criminalising the conduct of those who have unsafe sex and do not know -
but should reasonably have suspected - their HIV positive status.
Though significantly broadening the reach of the new offence and further
rendering it constitutionally vulnerable, such a move would not resolve the
difficulty of proving that the accused was indeed HIV-positive at the time
of the alleged act. Nothing short of an actual HIV test would provide
Other than make legislators feel good about "doing something", new laws on
criminalisation do little more than mislead us into believing that the
state will protect us from infection. Most of our sexual partners do not
know their HIV status. Neither do most of us. And for as long as that
remains true, what we need to hear more and more is that we need to protect