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State set to stamp out drug cheating

Underhand tactics used by some drug manufacturers depict uncompetitive behaviour and consumers are at the centre of bearing costs from such activities.Photo SUPPLIED 1

Underhand tactics used by some drug manufacturers depict uncompetitive behaviour and consumers are at the centre of bearing costs from such activities.Photo SUPPLIED 1

Published Feb 28, 2012


The Department of Health has vowed to root out a resurgence of the underhand tactics used by some drug manufacturers that it said were taking the pharmaceutical sector back to the sleazy days of bribes and buying market share.

Anban Pillay, the head of pricing, said the department was investigating a number of “unbecoming commercial practices” that might be taking place in the pharmaceutical industry, which were in breach of the Medicines and Related Substances Control Act.

Activities such as loyalty programmes, rebates or payment in exchange for market share, sales of data, payments for shelf space and trade discounts were some of the uncompetitive activities being resorted to by drug manufacturers, wholesalers, distributors and pharmacies. These activities added unnecessary costs for little or no value to patients.

“All the incentives that drug manufacturers pay cost money and that money has to be recovered. It’s recovered from the consumer through the drug price,” Pillay said.

Pillay said some manufacturers gave their sales representatives credit cards which were swiped every time they delivered to pharmacies in exchange for recommending their products to consumers.

“They tell the pharmacy you must push my product and they have a target which, when the pharmacy reaches it, they’ll get something for that, like a commission,” he said.

What worried the department was that the medicine recommended to a consumer was not always appropriate and people would often pay again and again for something that was not ideal for their sickness.

“When they pay for what you call the ‘shelf space’, it has nothing to do with the shelf size or anything but it’s more about incentivising the pharmacy and it’s mostly about how many of these products you can sell,” he said.

Pillay said some pharmacies sold information about sales and doctors’ prescriptions to drug manufacturers, which then targeted the doctors and offered to incentivise them if they prescribed their medicine.

When the single exit price was introduced as part of the reforms in the pharmaceutical industry, incentives and bonuses accumulated by buying in bulk were abolished. But Pillay said the department had received evidence and reports from the industry even though everybody said they were not involved in these activities.

Healthcare group Litha said it supported any action taken to address any “perverse, unethical and unbecoming practices” in the pharmaceutical supply chain.

Innovative Medicines SA (IMSA) said it supported the department fully “in condemning the perverse or unbecoming practices” that were simply not in patients’ best interests.

“As an association we believe that these practices are indeed going on, albeit involving a minority of the industry, and we would welcome the government taking this a step further – the government would have IMSA’s total support,” said Val Beaumont, the executive director at the industry group.

Vicki St Quintin, the chief operating officer at the Pharmaceutical Industry Association of SA (Piasa), said the association believed the practices in question were being made possible by the lack of regulations under section 18A of the medicines act. She said together with other associations, Piasa had in the past presented to the department a draft that could serve as regulations under section 18A.

“Offenders who are in contravention of section 18A or 22G of the medicines act should be dealt with through legal channels.”

She said avenues available to deal with offenders included prosecution under section 18A and 22G of the medicines act, the Competition Act or the Consumer Protection Act. - Londiwe Buthelezi

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