A better life for lawyers

Radical change is difficult to manage at the best of times — as anybody working in the civil service over the past 10 years will know. When it means separating people from their money, and tackling vested interests, the fallout can be really messy.

So it is with the regulation of medicines. For the better part of two decades, certain facts dominated the medicines scene.

The past was clearly dominated by unjustifiably high prices.
The private sector was the multinational pharmaceutical companies’ profit centre in the local market, although it only accounted for 20% of the population. Doctors, particularly dispensing doctors, were the cash cow.

The deals were accomplished by means of a system of discounts, samples and bonuses, some formal and others informal and not admitted to, which involved many doctors in ethically dubious practices

The distribution chain added an enormous chunk to the retail expense. Retail pharmacists added 50% to the wholesale price

The percentage profit system meant the more expensive the drug, the more likely it was to be prescribed and dispensed. This ensured that, unlike Europe, the United States and Canada, for example, a greater proportion of brand-name medicines, as opposed to generics, were prescribed here.

There were, and still are, almost no pharmacies in black townships, ensuring the growth of the dispensing doctor industry. Black dispensing doctors in these areas did not enjoy the fruits of these unethical deals anyway, and are unclear why they are seen through the same prism as those in wealthier and whiter areas.

General practitioners are badly paid, and this incentivises dispensing for profit. Many doctors in rural areas and poorer urban areas deliver the service when public clinics should do so.

Then there is the fact that each constituency wants to keep its slice of the cake and takes legal action whenever change is mooted.

As a result, a third of each rand spent on health care in the private sector is spent on medicines — more than most other countries.

This was in part what drove the government to put in place the new Medicines Act. Private health care consumers should have reacted with relief — if they had not swallowed the propaganda that generics were inferior, and if they could ignore the fact that their medical schemes found the growing system of discounts a good way to increase surpluses (or profits, if an administrator was involved).

Alas, the promised relief was not to be. The multinational drug companies delayed the legislation, in the infamous court case against the government, which they lost.

Then negotiations over the pricing regulations — needed to give effect to the Act — took years longer than they should have. During that time many stakeholders were like rabbit caught in a spotlight: spellbound and motionless. 

Dispensing doctors went on dispensing, hoping life would continue as before. Drug companies continued as usual with one interesting exception: generics companies spotted the gap and those prices rose.

Pharmacies also hoped nothing would change — but it did. Another legal amendment brought large discount retailers like Clicks and Pick ‘n Pay into the picture, eating into their profits.

By contrast, the medical schemes industry underwent major legislative changes, which steered them towards contractual arrangements with doctors and retail pharmacies in order to reduce costs.

And of course, each set of stakeholders has either threatened or taken legal action against the Minister of Health, Manto Tshabalala-Msimang, in a desperate bid to maintain the status quo. As this article was being written, the wholesalers also joined the fray.

The latest set of challenges has been prompted by last-minute changes to the regulations by that most powerful of lobbies — multinational pharmaceutical companies — on pain of leaving South Africa and halting their contribution to research.

Only consumers with actuarial degrees and legal training will understand the “transparent” pricing system introduced by the latest regulations. 

Meanwhile, serious problems are looming for medical schemes and their members: many doctors, including oncologists, base their fees on an all- in-one price that includes medicines. For oncologists, the “chemo” is part of the price. Scheme members are often frequently reimbursed on this basis.

Such practitioners, unable to profit from drugs, are now threatening to raise fees for professional services, which may mean large co-payments for members. Where contractual arrangements exist between schemes and providers, schemes may have to bear additional costs they cannot afford.

The latest set of changes, as they affect pharmacists, may also mean increased costs for scheme members — if anybody understands them.

Inevitably, there will be consequences. Doctors will continue to leave South Africa, while some multi- national pharmaceutical companies will also up sticks. Thousands of patients will continue to rely on dispensing doctors.

Eventually a greater sense of coherence will emerge from the confusion, as the sheer weight of the problems forces all interests to the table.

Consumers, however, are unlikely to feel relief in the near future. The only group really assured of a “better life” is the legal profession.

Pat Sidley is the head of communications at the Council for Medical Schemes. She writes in her personal capacity

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