Tamar Kahn
9 November 2009
Cape Town — The government has published yet another set of proposed dispensing fees for pharmacists, surprising the industry with an offer to exempt marginal businesses from the maximum levies.
The Department of Health has been at loggerheads with the retail pharmacy industry since 2004, when it introduced laws controlling medicine prices from factory gate to pharmacy checkout and limited dispensing fees.
Pharmacists took the matter to the Constitutional Court, arguing that the fees would render many businesses unviable.
The court ruled in 2005 that while the government had the right to regulate medicine prices, its proposed fees were unreasonable and should be revised.
The health department's first attempt at a new fee prompted a fresh legal challenge from pharmacists. It was only after former health minister Barbara Hogan intervened early this year that the two sides began negotiating out of court in earnest. The department published new draft regulations for public comment in June.
On Friday, it published a revised version that leaves its June four-tier pricing structure largely unchanged. That came as little surprise to pharmacists, but the industry was caught off-guard by a proposal that opens the door for some businesses to charge more.
In terms of the draft regulations to the Medicines Act, published in the Government Gazette, retail pharmacies may apply to the health department's pricing committee for exemptions from maximum dispensing fees.
Applications must be made within six weeks of the department publishing set fees, and include details of a pharmacy's operations and finances and distance from competitors. Pharmacists will have to propose alternative fees, and show this will enable them to remain viable.
However, they will have to use the set dispensing fees while their applications for an exemption are considered, a process the regulations stipulate should take no longer than three months.
"This takes care of rural areas," said the department's head of pharmaceutical economic evaluations, Anban Pillay. "Pharmacists in far-flung areas have complained that the dispensing fees are unsustainable, and will compromise access to medicines in those communities."
Exemptions will be granted a year at a time, and can be extended on application. Qualifying pharmacies will have to tell customers they are charging higher rates and display fee structures in large notices in dispensaries.
Lorraine Osman of the Pharmacists Stakeholders Forum (PSF) declined to comment on the proposals, saying the PSF had to study the potential effects on members. The PSF represents some of biggest retail pharmacy groups: United SA Pharmacists, the Pharmaceutical Society of SA and the South African Progressive Pharmacist Association.
The original fees thrown out by the Constitutional Court said pharmacists could charge a levy of 26%, capped at R26. New Clicks, which owns pharmacy chain Clicks, joined the Constitutional Court case but has applied the R26 ceiling since then. So has its biggest rival, Dis-Chem.
Some commentators have questioned the practicality of the proposed exemption system. Pharmacists exempted from maximum fees could battle to retain customers if they had to put up signs telling them they could get their medicines cheaper elsewhere, said Andy Gray, a pharmacologist at the University of KwaZulu-Natal.
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