To get doctors to use their medicines, companies give them free drugs, which the doctors sell at huge profits. Hazel Friedman reports on the practices which have made our drugs the most expensive in the world
MANY of South Africa’s 6 000 dispensing doctors receive free bonus drugs which they sell to consumers at high prices.
These drugs serve as incentives for doctors to keep selling the same medicines, enabling pharmaceutical companies to exert a stranglehold on supplies and making the cost of South African medicines the highest in the world.
The Mail & Guardian has in its possession several invoices sent to doctors by drug companies, as well as prescriptions from different dispensing doctors to pharmacies. The invoices list expensive antibiotics which sell at retail pharmacies for hundreds of rand, plus additional free “bonus” medicines amounting to the sum of R600.
If 1 000 doctors were to receive similar bonus drugs, and these were sold at the full price, approximately
R600 000 profit in “freebies ” would be made by these dispensing doctors. Medical sources estimate that prescribing for profit amounts to millions of rands a year.
A spokesperson from the Pretoria-based Pharmacy Council reports that investigations are under way into allegations of pharmaceutical company sales representatives bribing doctors with holiday packages and “free gifts”.
” This practice has been going on for some time but is reaching a crisis level, and the the Pharmacy Council is powerless to do much about it,” he says. Reports have also reached the council of doctors who have allegedly claimed from medical aid, after providing free medication to indigent patients.
The South African Medical and Dental Council’s Ethical Rules of Medicine prohibit doctors from engaging in or advocating the preferential use of prescribed medicines for profit.
Last year, the SAMDC investigated Garec Holdings, the marketing wing of PTMC (Pharmacy Trade Mark Company), which had allegedly sold shares to doctors. PTMC allegedly supplied these doctors — who in 1994 comprised the majority of the company’s 550 shareholders — with discounted medicines in proportion to the value of their shares.
Marketing Manager of Garec, Stavros Nicolai, insists that this was done, not in order to reap extra profits, but to provide consumers with less expensive medicines. According to a SAMDC spokesperson: “We were unable to find direct proof that the doctor-shareholders had contravened the Ethical Rules on Medicine. But there are still unanswered questions regarding this matter.”
Pharmacists are also up in arms over what they describe as the drug companies’ “unlimited licence to loot the industry”. David Pleaner, director of the Association of Community Pharmacists, complains that 76 outlets have been forced to close in the past 12 months due to “unfair pricing structures implemeted by the pharmaceutical companies combined with slow payments by medical schemes”. Pharmacists, unlike doctors, are legally compelled to give discounts to medical aid societies, yet they are not entitled to receive reductions from the drug manufacturers.
“South Africa’s drug companies are a law unto themselves,” says Lip Fine, owner of a Pretoria pharmacy. “They set prices arbitrarily and justify their actions because they do state tenders which allow the government to purchase drugs at approximately one tenth of prices paid for medicines in the private sector.”
He adds: “Doctors who dispense drugs pay no overheads and obviously stand to get the highest margins from prescribing and distributing the most expensive products. That’s why it’s not in their interests to promote the use of generic drugs. And consumers aren’t any the wiser.”
Currently, South African medicine costs are the highest in the world. Of the R8,7-billion paid out in benefits by medical aid schemes in 1992, a whopping 35 percent (approximaely R3-billion) was paid out for medicines. The current prescription market totals R2,37-billion and it is estimated that it will reach R4-billion by 1997. In the United Sates, less than 15 percent of medical aid benefits are paid out for drugs. Due to the exorbitant costs involved, medical aid societies are urging doctors to prescribe cheaper generics to consumers.
But dispensing doctors are allegedly reaping handsome profits from incentives given to them by drug companies intent on keeping the costs of medicine as high as possible. And South African consumers are being forced to pay the price.
In the US, generic drugs comprise 75 percent of all medicines sold to consumers. But in South Africa they account for a mere 19 % of the total prescription market. Even when generics are sold at pharmacies, the cost difference with the more expensive “ethical” drug is often negligible because of huge retail markups.
The government has responded to this imbalance by releasing the Broomberg/Shisana Report on regulating the drug industry in South Africa . In terms of the report, control of drug supplies will be achieved through an Essential Drug List, whch will reduce the estimated 3 000 drugs curently available in the public sector to about 120.
According to Director General of Health Dr Olive Shisana, “this will eliminate fraud and bribery in the private and public sectors and achieve a larger economy of scale by excluding more expensive drugs”. The essential drug list will also be made available to private-sector patients at the same cost plus a handling fee. In addition, the government is planning to introduce parallel imports, which will eliminate resrictions on imported cheap drugs.
Local drug companies are outraged by the proposals. Says a member of the National Association of Pharmaceutical Manufacturers: “An essential drug list is potentially hazardous because it wil severely undermine the pharmaceutical maufacturers’ ability to recoup profits in the private sector”.