Department of Health to appeal against the Supreme Court of appeal of South Africa's Ruling in favour of the Pharmaceucals

20 December 2004

The Department of Health will appeal against the Supreme Court of Appeal of South Africa's judgment in favour of the Pharmaceutical Society of South Africa (PSSA) and others.

The state attorneys have already drafted an application for an appeal in this regard in the Constitutional Court to suspend today's decision of the Supreme Court of Appeal of South Africa.

This is after the Supreme Court of Appeal judge, Justice LTC Harms granted leave to appeal to, and simultaneously allowed the appeals of, the PSSA and New Clicks SA (Pty) Ltd against the Minister of Health and the Chairperson of the pricing committee on whose recommendation the minister promulgated the Regulations relating to a Transparent Pricing System for Medicines and Related Substances.

Justice Harms dealt with the PSSA's application to appeal as well as the merits of the application, and ordered the Minister of Health to pay the costs, including the costs of two counsels in each matter.

In upholding the appeal from the Cape High Court, the Supreme Court of Appeal set aside the regulations on the ground that they did not pass the test of legality and were consequently "of no force and effect".

"We, as the Department of Health, feel that the Bloemfontein Supreme Appeal Court had no jurisdiction on this matter," said Dr Humphrey Zokufa, head of Pharmaceutical Policy and Planning in the National Department of Health.

"The court's findings that the pricing committee and the Minister of Health exceeded their powers were also wrong," he continued.

"Therefore, the judgment delivered today (Monday, 20 December 2004) was wrong, and we will take this matter to another court," Dr Zokufa, said.

"We will file a notice of appeal against this judgment in the Constitutional Court tomorrow (Tuesday, 21 December 2004), the effect of which would be to suspend the judgment of the Supreme Court of Appeal," Dr Zokufa, added.

The main objectives of the regulations are:

  1. To make medicines in South Africa more affordable and accessible to the consumer. This entails making the entire pricing system on medicines more transparent and capping the prices where necessary.
  2. To remove the incentive to prescribers and dispensers of medicines to consider using very expensive medicines, which add no benefit to the patients' illness if compared to a cheaper medicine.
  3. To remove marketing practices of volume of discounts, bonuses and rebates in the supply of medicines, that leads to huge perversities without significant gains to the consumer.

In pursuit of these objectives, the regulations provide for the following:

  1. All manufacturers of medicines must set up a Single Exit Price (SEP) for medicines. The SEP will be the price at which any person will buy a medicine. This price should be the same throughout the country. This price should include a logistics fee, which is a fee that should cater for the expenses of transporting the medicine from the manufacturer's premises to the health provider facilities from which the consumer will get the medicines.
  2. Health providers can add to the SEP a dispensing fee, which is capped at R26 for items on prescription, whose price is greater than R100 and 26% if the price is lower than R100. The provision for dispensing all medicines of R16 and 16% is applicable to health personnel who are not pharmacists, who should have a dispensing licence.

The regulations, specifically the SEP and dispensing fee provisions, are regarded by some international experts as very reasonable, practical and rational to the benefit of the consumer, without significantly compromising the activities of health providers, nor the quality and safety of medicines.

Therefore, as the Department of Health, we feel that the actions of the PSSA, Netcare Group and New Clicks are aimed at preserving and maintaining the practices that ensure their profitability at the expense of the consumer.

Issued by: Department of Health

Contact:

Charity Bhengu,
Communication Unit
073 268 7132

or

Dr Humphrey Zokufa
Head of Pharmaceutical Policy and Planning
082 570 6416