Implications of the SA vs Big Pharma Legal Settlement Patent vs Patient Rights

By Nevin, Tom | African Business, June 2001 | Go to article overview

Implications of the SA vs Big Pharma Legal Settlement Patent vs Patient Rights


Nevin, Tom, African Business


The implications of the recent South Africa versus Big Pharma legal settlement will be massive not only in Africa but throughout the developing world. Tom Nevin reports

Aids sufferers, concerned bodies and government health workers all demonstrated their delight in the streets of South African cities when the 29 international drug companies bringing suit against potential copyright violation, withdrew their objection to the proposed Medicines & Related substances Control Amendment Act.

The retreat by the Pharmaceutical Manufacturers' Association (PMA) brought to an end the delay in implementing a revolutionary new model for pharmaceutical business in South Africa. Jubilant activists labelled it "the day we called the pharmaceutical industry's bluff."

If nothing else at this juncture in the three-year confrontation, the notion that patents are inviolable, and that patient rights are expendable is buried once and for all. It is seen not only as a victory for South Africa, but for the public health sectors in developing countries around the world. They may now not feel quite so powerless in the face of high drug prices.

The concession opens the way for the production in South Africa, and, in some cases, the importation of anti Aids and HIV drugs. In money terms, it represents a huge loss for the world's biggest pharmaceutical companies, and the saving of billions for health departments, healthcare organisations and medical aid schemes around Africa.

NGO Medecins Sans Fronrieres legal adviser Ellen 't Hoen says nothing should now stand in the way of "countries that want to ensure long-term access to affordable medicines. We don't think the drug companies will be taking another developing country to court any time soon.

Profound changes

The Medicines Act introduces three important measures:

(1) Generic substitution of off-patent medicines and those imported and produced under compulsory licenses,

(2) Parallel substitution of patented medicines, and

(3) Transparent medicine pricing system.

If the feud was all about price, then the anti-industry troops had a field day. The meaty part of the agreement between the Ministry and the pharmaceutical companies revolves around a pricing committee allowed for in the Act and set up by Health Minister, Manto Tshabalala Msimang herself.

The committee is charged with introducing a transparent pricing system for all medicines based on their factory exit prices. Pharmacists will not be allowed to add a percentage mark-up, but will instead be paid a professional fee. The idea behind this move is to remove the commission incentive paid to pharmacists for higher-priced drugs.

"The beauty of this system is the profound change it will bring in the pharmacists' behaviour," says Board of Health-care Funders CEO Aslam Dasoo. "It means that pharmacists no longer have the incentive to stock high-priced inventory and you'll begin to see tremendous competition among manufacturers. It's fantastic."

Dasoo points out that medical schemes, which provide healthcare benefits to just over 7m beneficiaries, are projected to have spent about R35bn last year for their members. "Of this amount," he says, "40% to 45% is spent on pharmaceutical products and services. The global average is 15% to 20%."

While the first prize of the local manufacture of retrovirals remains out of reach for the time being, other concessions rocked the foundations of the pharmaceutical industry.

Although the pharmaceutical industry was bloodied in the battle, their foes did not escape without some flesh wounds.

The concession doesn't altogether pull the rug from under the pharmaceutical industry's feet, but it reduces the power of the World Trade Organisation's agreement on Trade Related Intellectual Property Rights (Trips) that prevents countries from doing things that the agreement actually allows. …

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