Tamar Kahn
21 April 2008
Cape Town — New price controls on the private health sector and a radical overhaul of the body that regulates medicines have been proposed in sweeping new laws published for comment by the health department.
The proposed laws come as rising private healthcare costs are making medical scheme membership so expensive that a decreasing proportion of the population can afford cover, increasing the burden on the overstretched public sector.
The draft legislation is likely to heighten tension between Health Minister Manto Tshabalala-Msimang and the private hospital sector, which has so far failed to persuade the minister not to regulate their tariffs.
On Friday the department published the draft National Health Amendment Bill, which introduces a facilitator, appointed by the health minister, to oversee annual tariff negotiations between medical schemes and health service providers such as hospitals and doctors.
Parties will be allowed to negotiate in blocs, a marked departure from the Competition Commission's 2004 ruling banning collective bargaining, and will be expected to agree on maximum prices for health services. If negotiations deadlock, the facilitator will have the authority to refer matters to a government-appointed appeal tribunal with powers to decide on prices.
The proposed laws were intended to make tariff negotiations transparent and drive down costs, said Kamy Chetty, a deputy director-general at the health department. Medical schemes were obliged to pay in full for the Prescribed Minimum Benefits, the basic healthcare basket to which all their members were entitled, but there were no controls on the rates providers may charge for such services, she said.
The bill, which underscores the government's conviction that the private health sector is unable to self-regulate, has already run into stiff opposition from private hospitals.
"It boils down to price regulation by a third party. It will be anti-competitive and collusive in the extreme," said Koert Pretorius, MD of Medi-Clinic, South Africa's third-largest private hospital group.
"We feel the proposed process is fundamentally unfair, unreasonable and lacks objectivity, because the minister will make all the appointments and there is no provision for appealing against the tribunal. We question whether any minister is entitled to intervene to the extent being proposed," he said.
If the price caps agreed to under the facilitator's watch were too low, it would be unviable for businesses to charge any less, he said.
The department also published the Medicines and Related Substances Amendment Bill, which proposes replacing the Medicines Control Council with a new entity with a more extensive mandate called the South African Health Products Regulatory Authority. The council regulates only the safety and efficacy of western medicines, so the proposed authority will be responsible for overseeing traditional and complementary medicines, medical devices, and cosmetics and food products that make medical claims.
Industry sources said they needed more time to consider the implications of the draft laws, but any improvements to the efficiency of the Medicines Control Council would be welcome. "There are a lot of delays in registering medicines, " said Maureen Kirkman, spokeswoman for the Pharmaceutical Industry Association of SA, which represents multinational drug makers.
Firms had to wait for years to get approval for new medicines, said Paul Anley, vice-president of the National Association of Pharmaceutical Manufacturers, which represents generic firms.
"A single authority for all medicines is not a bad thing but it will be effective only if it has the resources and capacity to do the job," Aspen Pharmacare's head of strategic trade, Stavros Nicolaou, said.
Interested parties have until May 16 to submit comments to the health department.
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