Sweeping legislative changes are aimed at stabilising healthcare costs.
South Africa's healthcare industry is in for a major upheaval over the next couple of years as government begins working its plan to improve access to healthcare and reduce the cost of medicines.
The industry shake-up gets under way in April, when legislation that has been in the pipeline since 1997 comes into effect.
Act 90 1997, which amends the Medicines and Related Substances Control Act, will change how pharmaceutical companies, distributors, pharmacists, private hospitals and doctors operate and make money.
Other legislation is either in the works or is to be implemented shortly.
The Pharmacy Act, which comes into effect on April 2, will deregulate pharmacy ownership on condition qualified pharmacists are employed to run them.
And next year, government will introduce legislation to regulate the dispensing of medicines by doctors.
Doctors, who make a profit dispensing drugs, will, from April next year, have to be licensed to do so.
Competition authorities are also paying close attention to the healthcare industry. Most cases now before them are disputes between industry players.
The director-general of health, Ayanda Ntsaluba, says Act 90 will change the industry, particularly the cost of drugs.
It will require pharmacists to offer consumers a generic substitute, regardless of their prescription by a doctor. This applies only to off-patent products.
The new legislation will reduce the local sales of Pfizer, one of the world's biggest pharmaceutical companies, by 10% next year, says Imraan Munshi, the head of Pfizer's corporate affairs.
Eli Lilly SA, another multinational, says it already has a strategy in place to align itself with the new laws but declines to elaborate. Director Sipho Moshoane says the effect on its South African business will be minimal in the short term.
Makers of generic medicines are gearing themselves up for a boom. The chief executive of Aspen Pharmacare, Stephen Saad, says the legislation will improve generic volumes and should result in decreased costs to consumers. Aspen, a JSE-listed company, is South Africa' s biggest maker of generics.
Adcock Ingram CEO Mike Norris says the new laws will reduce the profits on highly regulated medicines. Adcock plans to counter this by increasing sales of generics and focusing on medicines that are less regulated so that we can maintain profitability at levels that will satisfy shareholders.
Private hospitals, the second-biggest buyers of medicines after government, say they are not opposed to the use of generics but are concerned about the practical ramifications of the legislation.
Norman Weltman, the director of the Hospital Association of South Africa and also an executive director of South Africa's largest private hospital group, Netcare, questions how one would deal with an unconscious person. In terms of the new laws, doctors must ask patients specifically whether they would like to have a generic substitute.
Weltman says the hospital industry is concerned that the drafting of the Act was based solely on the retail pharmacy industry without making special provision for hospitals.
He says he hopes hospitals will be granted representation on the pricing committee.
The retail pharmacy industry is also in for its share of uncertainty as big retail chains such as Pick 'n Pay and Nu-Clicks muscle in.
United South African Pharmacies, which represents about two-thirds of independent retail pharmacies in South Africa, says that the big retail firms should not be allowed in the field, apart from in locations that not currently serviced.(Source: Business Times, 23 February 2003)