Lawyers for the South African Pharmaceutical Society claim the Department of Health has embarked on a campaign to discredit pharmacists and marshal public sentiment before the Constitutional Court hears the society’s appeal against new drug pricing regulations.
The accusation came last week after the department alleged pharmacists were charging three times more than regulations allowed for medicines that cost less than R50. The department said this information came from a medicine pricing model sent by the society to its members, calculating dispensing fees for a range of medicines as an alternative to the department’s regulations.
But industry experts say the root of the tension is an ideological battle between the two sides. The health department does not believe pharmacists should make profits from selling medicine whereas pharmacists say the new regulations will force pharmacies to close, resulting in limited access to medicines.
”What we are doing is trying to stop pharmacists from demanding unreasonable fees from medical aids by coercion and also to inform the public of exactly what is going on,” said Anban Pillay, medicine pricing committee member at the Department of Health .
Martin Verveld, legal representative for the pharmacy society and other appellants said: ”Contrary to what has been suggested by the department, pharmacists have not been making more profits [during this interim period].”
The draft regulations allow pharmacists to add only a dispensing fee — up to 26%, with a R26 cap on a single exit price set by manufacturers — to all drugs.
Managed Healthcare Systems (MHS), a company contracted by six pharmaceutical organisations, drew up the dispensing fee guidelines quoted by the health department. CEO David Boyce said his company found ”a significant number of pharmacies would be placed at risk of business failure by the 26% dispensing fee promulgated by the Department of Health” and devised the guidelines ”in the absence of a regulated dispensing fee”.
The two sides disagree on the status of the regulations, with the department saying pharmacists are acting illegally by not implementing them and the society, in view of the ruling by the Supreme Court of Appeal, saying that the regulations are invalid. The society holds that the regulations are not applicable, pending the Constitutional Court’s decision on whether to hear the case.
The health department applied the MHS guidelines to the pain killer Stopayne to highlight its claim that pharmacists can charge three times more than the regulations would allow for products less than R50. Pillay said the MHS system calculates that a manufacturer could sell a packet of 20 Stopayne tablets at about R31,45. Pharmacists will add a fixed fee of R5,50, putting the price at R36,95 before charging another 50% (in other words R18,48) of this amount. The medicine will sell at R55,42.
He said pharmacists will make a return of 76% (R23,97) on a medicine bought from the manufacturer at R31,45. In comparison Pillay said under the new regulations this medication would cost R39,62.
According to Pillay 70% to 80% of medicines fall below R100 — ”the MHS model is trying to score on those low-cost items. They rarely dispense items that are over R200 — hence the lower fee does not matter.”
But Boyce said the department uses the example of one product whereas the guidelines have calculated the fee according to an average across all products. In the MHS model R30, plus a 20% dispensing fee, is added to a medicine priced between R120 and R200. He said the department’s calculations ignore the administration fee charged by pharmacies even under the new regulations.
Industry experts say the root of the tension is an ideological attitude towards the sale of medicines. ”It is simply whether you are a socialist or capitalist,” said one pharmacist based in Cape Town who preferred to remain anonymous. He said the government does not believe pharmacists should make a profit or run a business from selling medication. ”The VAT charged on medicine is more than the 26% fee set out by the government for payment of a professional providing a service. Why don’t they drop VAT if they want to make drugs more affordable?”