Pharmaceutical Pricing
This article was originally published in SRA
Executive Summary
South African government to appeal against pricing judgment
South African government to appeal against pricing judgment
The South African government has announced its intention to appeal against the Supreme Court of Appeal's judgment that regulations governing the pricing of pharmaceutical products are illegal1,2. The regulations aim to make medicines more accessible and affordable to the consumer by mandating a single exit price (SEP) for manufacturers and a capped dispensing fee for pharmacists. The court ruled that the regulations did not pass the test of legality and went beyond the power of the Enabling Act.
The regulations say that pharmacists’ mark-up should be limited to 16% of the product exit price up to a R16 maximum for non-prescription drugs and 26% of the product price up to a R26 maximum for prescription drugs. The appeals court found that the dispensing fees were inappropriate as they did not take into account the viability of the pharmacy industry and the introduction of an SEP constituted a price control mechanism. The health minister was ordered to pay the costs in both courts.
Not all institutions have challenged the proposals. On 24 January 2005, Innovative Medicine SA and the National Association of Pharmaceutical Manufacturers announced a decision to comply with the pricing regulations. Furthermore, on 8 February 2005, New Clicks, one of the original appellants against the regulations and the owner of a chain of pharmacies across the country, announced that all its pharmacies would comply with the regulations.
The Constitutional Court was expected to hear the Department of Health's application for leave to appeal on 15 March 2005.
References
1. Press release, Department of Health, 20 January 2005, http://196.36.153.56/doh/mediaroom/index.html
2. Pharmaceutical Society of South Africa and others: New Clicks South Africa (Pty) Limited v Minister of Health and another: Tshabalala-Msimany NO and another, Supreme Court of Appeal - 542/04, 20 December 2004
3. Press release, Department of Health, 24 January 2005, http://196.36.153.56/doh/mediaroom/index.html
4. Press release, Department of Health, 8 February 2005, http://196.36.153.56/doh/mediaroom/index.html