Medicines and Related Substances Control Amendment Bill, 1997

1. Introduction

The Medicines and Related Substances Control Amendment Bill was tabled in Parliament in May 1997. Hearings on the Bill are currently being held by the National Assembly Portfolio Committee on Health. A plenary debate is scheduled to take place on 17 June, before Parliament goes into recess. The Bill will then be referred to the National Council of Provinces.

This Amendment Bill has been drafted in order to bring the Medicines and Related Substances Control Act of 1965 in line with the National Drug Policy (NDP) of the Ministry of Health. The NDP is an integral part of the government's policy for transformation of the National Health Service, which is outlined in the White Paper published in April 1997.

2. The need to transform national drug policy

Historic inequities and wastage in the South African health system were reflected in the pharmaceutical sector, which was characterised by high drug prices and irrational use of drugs. In 1992/93, private health care covered about 20% of the population, but accounted for 48,5% of expenditure. The public sector accounted for the remaining 51,5% of expenditure. About 30% of expenditure in the private sector was for drugs, while the public sector was spending about 11% of its budget on drugs.

The current Ministry of Health is faced with the challenge of providing health care for all within the constraints of a public sector health budget which in 1997/98 represents 3,3% of GDP. It can only achieve its goals through rationalising the use of existing resources. Thus the national drug policy, which is a key component of the National Health System, has to address both:

• the need to ensure that all South Africans have equitable access to essential drugs of proven safety, efficacy and quality
• and the need to contain expenditure on drugs.

3. The process

In 1994, the Minister of Health appointed a Drug Policy Committee to advise her on transformation of the pharmaceutical sector. The committee presented its report and recommendations to the Minister in November 1994. The Department of Health then disseminated a discussion document and held consultations with key stakeholders. This process led to the launch of a National Drug Policy in February 1996. The goal of the NDP is to ensure an adequate and reliable supply of safe, cost-effective, drugs of acceptable quality to all South Africans. It also makes provision for the rational use of drugs by prescribers, dispensers and consumers.

Part of this policy is already being implemented. A list of essential drugs has been compiled and published together with standard treatment guidelines. The South African Drug Action Programme (SADAP), which aims to improve the drug supply system was launched at the beginning of 1997. Other aspects of the NDP have to be preceded by changes to current legislation, which are being proposed in the Medicines and Related Substances Control Amendment Bill and the Pharmacy Amendment Bill.

4. Content of the Medicines and Related Substances Control Amendment Bill

The proposed legislation affects all stakeholders in the pharmaceutical sector, from manufacturers and wholesalers to prescribers, dispensers and consumers. Several changes have been made in order to reduce costs. Particular attention was given to parallel importation, generic substitution, and the prohibition of bonusing and sampling. Another major change proposed in the Bill is the introduction of licencing of health care professionals to dispense medicines. This would have a major impact on dispensing doctors and their patients. Other amendments are related to governance, and affect the respective powers of the Medicines Control Council (MCC), the Minister of Health and the Director General with regard to the pharmaceutical sector.

The proposed legislation is intended to be enabling, and to facilitate the implementation of the NDP. To increase the Act's flexibility, it is proposed that in some instances, the Minister should have the power to make regulations on aspects which are currently in the main part of the Act (called the principal Act). This applies in particular to the scheduling of medicines.

4.1. Parallel importation (section 1 (2))

The bill seeks to allow for the parallel importation of drugs into South Africa. This is the importation by a given manufacturer of a medicine already registered with the MCC, from a factory of the same manufacturer located in another country. This, together with the authorisation of international tendering (section 1(4)), would enable the government to buy medicines at a lower price outside South Africa. Tender prices are currently estimated to be 21% higher on the national market than on the international market. It should also have the indirect effect of encouraging locally based multi-national pharmaceutical companies to align their prices with those practised elsewhere, in order to win public sector tenders. The legislation would also avoid situations where supplies of certain drugs run out in South Africa, by enabling these drugs to be bought from an international source.

4.2. Generic substitution (section 22F)

The bill seeks to legalise and promote the dispensing of generically equivalent medicines, otherwise known as interchangeable multi-source pharmaceutical products. These are medicines whose active ingredients are the same as those of another medicine, although there may be differences in shape, size or colour. Drug manufacturers are free to produce these copies, usually at a lower cost than the original, once the patent rights of the first producer expire, after 20 years. The Bill requires pharmacists to dispense generically equivalent medicines, except if:

• the prescriber has indicated 'no substitution' in his or her own handwriting on the prescription
• the patient expressly forbids the pharmacist to do so
• the retail price of the generically equivalent medicine is higher than that of the prescribed medicine
• the product has been declared not substitutable by the MCC.

4.3. Pricing committee (section 22G).

The Bill seeks to establish a statutory pricing committee, whose members would be appointed by the Minister of Health. The committee would advise the Minister on the introduction of a transparent pricing system for all medicines sold in South Africa. This would include a 'single exit price', or price at which medicines are sold by manufacturers. It would also advise on the introduction of a professional dispensing fee to be charged by a pharmacist or other person licensed to dispense, which would replace the percentage mark up currently charged on drugs. The Bill also proposes that the Minister be empowered to make regulations relating to a transparent pricing system.

4.4. Bonusing (section 18A), sampling (section 18B), and code of ethics (section 18C)

The Bill seeks to prohibit incentives given to practitioners which are aimed at encouraging them to prescribe certain medicines. This includes the handing out of free samples of drugs to pharmacists and other licensed dispensers of medicines. The Bill also proposes that the Minister should prescribe a code of ethics relating to marketing policies of pharmaceutical companies.

4.5. Licencing (section 22C)

Medical practitioners, dentists, nurses, and other persons registered under the Medical, Dental and Supplementary Health Professions Act, 1974, would only be allowed to compound or dispense medicines if licensed to do so by the Director-General. Conditions on which the licence would be issued will include:

• successful completion of a supplementary course prescribed under the Pharmacy Act
• other conditions, subject to regulations to be drafted after further discussion with stakeholders. These could include the dispenser's premises meeting certain standards and an assessment of geographic need, to be carried out by Provincial Authorities.

This section would both:

• enable members of certain health professions, such as nurses, to dispense certain drugs if they obtain a licence to do so, when this was previously illegal
• restrict the activities of the estimated 6 000 dispensing doctors currently practising in South Africa.

Licencing is intended to protect patients. The reasons given for licencing are that:

• it is good therapeutic practice to separate the acts of prescribing and dispensing, so that the dispenser can double-check the content of the prescription
• licencing should remove 'moral hazard': there is a risk that practitioners will prescribe medicines for the greatest profit to themselves, rather than the most benefit to their patients
• medical practitioners are not as comprehensively trained as pharmacists to dispense
• the physical conditions of practitioner's premises are not always appropriate for the storage and dispensing of medicines.

In addition, manufacturers, wholesalers and distributors are to be licensed by the MCC.

4.6 Registration (Section 15)

The role of the MCC is to ensure that drugs are safe, effective and meet approved standards and specifications. The Bill proposes two changes to the registration process:

• the MCC could fast-track the registration of certain drugs if this is deemed to be in the public interest. This could apply to drugs on the essential drug list, or drugs which in the opinion of the Minister are essential for national health
• registration should be made for a period of 5 years, after which all medicines should be subject to re-evaluation.

4.7. Governance

The Bill makes proposals which change the constitution of the MCC and affect the respective powers of the MCC, the Minister of Health and the Director-General.

The Medicines Control Council

The Medicines Control Council would become a juristic person. This means that it would be a legal entity, answerable to the legal process outlined in the Constitution. The representation of certain professionals on the Council would no longer be stipulated by the Act. The period of office of members would be shortened from 5 to 3 years. The composition of the executive committee, appointed by members of the Council, would become subject to approval by the Minister. Councillors would be obliged to declare all interests related to the pharmaceutical or health care industry, and could not participate in discussions or decisions related to these interests. The Bill provides for the termination of office of a member found guilty of improper conduct. Finally, the Bill also stipulates that the Council would be allowed to retain revenue generated through the various levies it charges.

The Minister of Health

The Bill proposes to empower the Minister to make regulations in several new areas, after consultation with the MCC. The most important changes relate to the conditions under which scheduled substances can be sold. Currently, drugs are scheduled as part of the Act. The Bill proposes the repeal of all the schedules from the principal Act and the empowerment of the Minister to prescribe schedules by regulation. Thus, the status of a drug could be shifted faster, through the government gazette rather than through legislation.

New regulator powers of the Minister include:

• the quality control of medicines and medical devices
• Council fees
• appeals against decisions of the Director-General and the MCC
• pricing systems and dispensing fees
• minimum standards and guidelines for repackaging of medicines in patient-ready packs

The Director-General

Would take on new responsibility for the licencing of health practitioners to compound and dispense medicines.

5. The Way Forward

The National Assembly Portfolio Committee on Health is currently engaged in public hearings on three Amendment Bills: the Medicines and Related Substances Control Amendment Bill, the Pharmacy Amendment Bill and the Medical, Dental and Supplementary Health Professions Amendment Bill. Amendments to the Pharmacy Act of 1974 are required to bring it into line with the NDP. The main amendment proposed is that non-pharmacists would be allowed to own pharmacies, provided the pharmacy is under the continuous personal supervision of a pharmacist.

On 20th May, submissions were made on the Medicines and Related Substances Amendment Bill by the Department of Health and the Medicines Control Council. Civil Society has been asked to make submissions on 6th June. The deadline for submissions is 2 June for oral applications and 4 June for written submissions. The second reading debate is scheduled for the 17th June, and if voted, the Bill would then be referred to the National Council of Provinces.

So far, response to the Bill has been mixed. While the NDP is broadly accepted across the pharmaceutical and health care sectors, the Bill has received criticism from some quarters in terms of the consultation process, the wording of the Bill and its content.

The Medicines Control Council reiterated its unequivocal support for the NDP in its submission. However, it was concerned that the wording of the Bill would be detrimental to the MCC fulfilling its mandate of ensuring the quality, safety and efficacy of medicines. It is opposed to the changes proposed to its constitution. The MCC was also concerned about the legality of certain clauses. Finally, the MCC expressed disappointment at having been consulted late in the legislative process, although a meeting did take place between the Minister, senior Departmental staff and the MCC in early May. An intensive consultation process between the Department of Health and the MCC was agreed upon during the hearing. The outcomes of this process will be made public on or before the 6th June.

A representative of the Chiropractors, Homeopaths and Allied Health Service Professions Council also made a submission on the 20th May. While supportive of the principles underlying the Bill, he expressed concern at the lack of inclusion of complementary health products and traditional medicines in the Bill.

Other concerns have been voiced by the pharmaceutical industry, which sees the proposed legislation, in particular concerning parallel importation, as a threat to the industry. The Pharmaceutical Manufacturers Association argues that there is a risk that fake or poor quality medicines may find their way onto the South African market.

Some dispensing doctors and their clients are also opposed to licencing. This section of the Bill was debated at length by the National Assembly Portfolio Committee on Health in November 1996. Hearing then took place on the proposed regulations on dispensing of medicines. Some of the recommendations of those hearings have been incorporated into the Bill.

For more information, please contact Jane Mathieson at (021) 696-4873 or by e-mail at philaw@wn.apc.org. PHILA is supported by a grant from the Henry J. Kaiser Family Foundation.

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