State mud­dling drug-pric­ing is­sue

The Star Early Edition - - LETTERS - Jas­son Ur­bach

THE COM­PE­TI­TION Com­mis­sion’s in­ves­ti­ga­tion into sev­eral phar­ma­ceu­ti­cal com­pa­nies for al­leged “ex­ces­sive pric­ing, price dis­crim­i­na­tion and/or ex­clu­sion­ary con­duct” has many peo­ple scratch­ing their heads.

The in­ves­ti­ga­tion demon­strates that the prices de­ter­mined by one gov­ern­ment agency could po­ten­tially be found by another to be il­le­gal. In ad­di­tion, the hold­ing of a patent ap­proved by one arm of the gov­ern­ment in com­pli­ance with South Africa’s patent laws, could also po­ten­tially be found to be il­le­gal and pun­ish­able by another arm of the gov­ern­ment.

The De­part­ment of Health reg­u­lates the price of medicines sold in the pri­vate sec­tor through the Sin­gle Exit Price (SEP) mech­a­nism. The SEP com­pels all man­u­fac­tur­ers and im­porters to sell their prod­ucts at the same price to all their pri­vate sec­tor cus­tomers, re­gard­less of the size of the or­der, and pro­hibits them from of­fer­ing any dis­counts or do­nat­ing medicines. Not sub­ject to the SEP con­straints is the de­part­ment, which has a pric­ing com­mit­tee that, by us­ing a for­mula de­cides on, and stip­u­lates what the an­nual in­crease for the pri­vate sec­tor should be. The gov­ern­ment also has the free­dom to ne­go­ti­ate with man­u­fac­tur­ers. State ten­der prices re­veal that some medicines are avail­able to the gov­ern­ment at about a 10th of the cost to the pri­vate sec­tor.

To com­pound mat­ters, the com­mis­sion is in­ves­ti­gat­ing Pfizer for charg­ing “ex­ces­sive prices” for a cancer drug that is not reg­is­tered for sale in South Africa. A hand­ful of pa­tients have ac­cessed this drug us­ing a “Sec­tion 21 Per­mit” that al­lows them to pur­chase the drug over­seas and im­port it. Com­pe­ti­tion Com­mis­sion spokesper­son Sipho Ng­wenya states: “Whilst we ac­cept that the drug is not reg­is­tered in South Africa, how­ever, the con­duct has an ef­fect in the coun­try as there are pa­tients who use the drug here. These pa­tients are sub­jected to very high pric­ing. Fur­ther, our in­ves­ti­ga­tion will in any event probe why it is not reg­is­tered here.”

Ng­wenya need look no fur­ther than the Medicines Con­trol Coun­cil (MCC). Due to bu­reau­cratic bungling and an in­ef­fi­cient drug reg­is­tra­tion sys­tem, there is a back­log of medicines wait­ing for mar­ket­ing ap­proval. This ad­min­is­tra­tive in­er­tia is deny­ing thou­sands of pa­tients ready ac­cess to medicines avail­able in other coun­tries that could cure or man­age their symp­toms. For cancer and HIV pa­tients, these de­lays could be fa­tal.

Data from the de­part­ment shows that it takes an av­er­age of 37 months for a generic medicine to be ap­proved, and 38 months for an in­no­va­tive medicine. Only 70% of new medicines tar­geted for pri­or­ity fast-track re­view – cancer, HIV, TB medicines and vac­cines – are ap­proved within two years. The of­fi­cial ac­count of the cause for the de­lays makes for de­press­ing read­ing. “Old medicines ap­pli­ca­tions dated from the 1990s still in sys­tem. Un­able to com­ply with cur­rent reg­u­la­tory re­quire­ments. Lack of ex­pe­ri­enced and skilled val­u­a­tors”, says the MCC in its an­nual re­port.

When gov­ern­ment reg­u­la­tors are slow and in­ef­fi­cient in ap­prov­ing generic ver­sions of prod­ucts some old, off-patent drugs might not be fac­ing com­pe­ti­tion from other generic en­trants, which cre­ates an open­ing for com­pa­nies to ex­tract ex­traor­di­nar­ily high prof­its. But this is the re­sult of reg­u­la­tory in­com­pe­tence cre­at­ing an ar­ti­fi­cial dis­tor­tion in the mar­ket.

With­out the gov­ern­ment-im­posed bar­ri­ers, the high price would be the sig­nal for other phar­ma­ceu­ti­cal com­pa­nies to step into the mar­ket and com­pe­ti­tion would re­duce prices.

With the chronic de­lays in drug reg­is­tra­tion, price con­trols, pro­posed amend­ments to patent laws that seek to le­git­imise the ap­pro­pri­a­tion of in­no­va­tive com­pa­nies’ prop­erty, the in­tro­duc­tion of a state phar­ma­ceu­ti­cal man­u­fac­turer, and the gen­eral hos­tile en­vi­ron­ment to­ward any pri­vate sec­tor par­tic­i­pa­tion in health­care, phar­ma­ceu­ti­cal com­pa­nies are prob­a­bly feeling in­creas­ingly un­easy about their future.

The gov­ern­ment con­ve­niently over­looks its own fail­ures and in­com­pe­tence, and con­tin­ues to point fin­gers at the pri­vate sec­tor that obeys all the laws and reg­u­la­tions the gov­ern­ment has in­sti­tuted. This ap­proach will re­sult in fewer medicines, higher prices and worse health­care, with the poor pay­ing the high­est price – of­ten their lives.

Ad­min­is­tra­tive in­er­tia is deny­ing ac­cess to medicine

Di­rec­tor, Foun­da­tion Free Mar­ket


SIDE EF­FECTS: The com­mis­sion is in­ves­ti­gat­ing Pfizer for charg­ing “ex­ces­sive prices” for a cancer drug that is not reg­is­tered for sale in South Africa. Pic­ture: Mark Lennihan / AP

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