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Healthcare is a basic right in the new South Africa – but the cost of medicine is making a mockery of that right.  It is time for consumers to help put a stop to profiteering by the drug companies and others in the medicine value chain who defend their commercial interests at our expense.


Unlike most commodities that consumers purchase every day, medicine is an essential item.  It’s like water: when you need it, you’ve got to have it.  That is why the supply and pricing of medicine needs to be regulated by government.  The market, on its own, has no mechanism for ensuring affordability.  It will simply charge as much as it can, and it has done so – helping to push South Africa’s medical inflation into double figures for most of the 1990's.


Government’s efforts to bring medicine prices down have been challenged almost continuously since it passed the Medicine and Related Substances Act in 1997.  Thirty eight drug companies banded together and took the Department of Health to court, saying it was unconstitutional to try and regulate their industry. This battle went on for five years, until the Constitutional Court ruled in favour of government.


Since this legal victory in 2001, says the Department of Health, the drug manufacturers have become much more helpful and compliant.  In January this year, two major associations of drug manufacturers – Innovative Medicine SA and the National Association of Pharmaceutical Manufacturers – decided to comply with the medicine pricing regulations.


Perhaps it is unsurprising that the industry has taken so long to come around – there is much at stake.  As the Financial Mail editorial said early last year: "The draft medicine price regulations constitute the most fundamental shake-up of the private healthcare sector in decades – and threaten the super-profits traditionally earned by most corporates operating in this sector."


The cornerstones of the law that will make our medicines cheaper are:
A ‘single exit price’ for medicines leaving the factory; and a ceiling on the mark-ups that middle-men add to the price at each stage of the supply chain before the medicine reaches the consumer.  This, said the Financial Mail, is "entirely consistent with what exists in most European Union countries and in Australia, fundamentally free-market economies."

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Consumer Health

APRIL 2005