The Competition Commission’s investigation into pharmaceutical companies for alleged "excessive pricing, price discrimination and/or exclusionary conduct" could easily be a plot line in one of Frans Kafka’s works.
The investigation demonstrates prices determined by one government agency could be found to have been illegally determined by another. The holding of a patent approved by one arm of government in compliance with patent laws, could also be found to be illegal and punishable by another arm of government.
The government regulates the price of medicines sold in the private sector through the single exit price mechanism. It compels manufacturers and importers to charge the same prices for products sold to private sector customers, regardless of the size of the order. It also prohibits them from offering discounts or donating medicines.
The Department of Health is not subject to these constraints. Its pricing committee stipulates the annual increase the private sector will charge. The government can also enter into negotiations with manufacturers — some medicines are available to them at about one-tenth of the cost to the private sector.
Pharmaceutical companies must be feeling increasingly uneasy about their future due to chronic delays in drug registration; price controls; proposed amendments to patent laws that seek to legitimise the appropriation of innovative companies’ property; the introduction of a state pharmaceutical manufacturer; and the general hostile environment for any private sector participation in healthcare.
We constantly hear about state capture by profit-seeking cronies, yet little is said about state capture by leftists who seek to use SA’s bureaucratic morass to attack the private pharmaceutical industry. It will lead to fewer medicines, higher prices and worse healthcare, with the poor paying the highest price.
Jasson Urbach Johannesburg
This article was first published in Business Day on 22 June 2017