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State clarifies medicine pricing
Tamar Kahn, Science and Health Editor - Business Day
2007-05-04
The health department has corrected a confusing notice it issued last month on the pricing of nonprescription medicines, making it clear that schedule 0 products are exempt from the two key provisions in the Medicines Act that control prices.
This means the price of these goods will be determined by market forces rather than by regulatory controls. Schedule 0 products are sold without prescription in both pharmacies and supermarkets and include a wide range of substances, such as basic painkillers, indigestion remedies, and vitamins.
In a notice in the Government Gazette last week, acting health minister Jeff Radebe exempted schedule 0 substances from section 22g and 18a of the Medicines Act.
Section 22g empowers the minister to set prices and markups along the entire medicine supply chain, from factory gate to pharmacy till, while section 18a bans rebates and discounts.
The exemption effectively means suppliers can charge whatever prices the market will bear, and wholesalers and pharmacists can add whatever markup fees they deem appropriate
The notice follows one issued a month earlier which, because it exempted schedule 0 medicines only from section 22g, left the industry nonplussed as to how to interpret the apparently contradictory instructions that allowed price competition but banned discounts.
Both the Pharmaceutical Society of SA, which represents pharmacists, and the National Association of Pharmaceutical Wholesalers (NAPW) sought legal advice. They also wrote to the health department raising concerns about the directive. Similar concerns were expressed by the National Association of Pharmaceutical Manufacturers, which represents generic drug makers.
NAPW lawyer Jaco Roestoff welcomed the speed at which Radebe issued the correction, saying the new notice confirmed his firms view on the pricing intentions of the Medicines Act.
We said all along that section 22g and 18a go hand in hand. You cant exempt schedule 0 medicines from one without the other. This means there will be free competition on schedule 0 medicines, and hopefully that will result in lower prices, said Roestoff.
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