Newsletter
 

6 June 2004

Contents


  • 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)

TAC Welcomes the Implementation of the Medicines Amendment Act

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 providing.

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 effect.

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.

Dispensing Fees

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):

Pharmacists:

  • 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

Dispensing doctors:

  • For all medicines regardless of scheduling, 16% of the single exit price with a maximum of R16

Why are pharmacists unhappy with the new dispensing fees?

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 successful.

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 for others.

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 practice.

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 desirable."

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 fraudulent means".

"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 prosecute.

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 protected.

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 proof.

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 ourselves. Always.

[ENDS]