Drug makers seek relief on new rules

September 9, 2008

Drug makers seek relief on new rules

Tamar Kahn
Science and Health Editor

Posted to the web on: 08 September 2008

CAPE TOWN ? Drug manufacturers have asked the health department to give them more time to comment on its proposals for benchmarking medicine prices against those of other countries, saying 30 days is too tight a deadline.

The department has published a new set of proposed regulations for lowering medicine prices in SA, initially restricting their ambit to originator medicines. Its first proposals, published in October 2006, included generic medicines and said they should be set 40% lower than originators. Generics are copies of originator medicines and are made either under licence or after the patent has expired. They are generally cheaper than originators.

The Pharmaceutical Task Group (PTG) has written to the health department, asking for the comment period to be extended to the end of next month. The department?s head of pharmaceutical and economic planning, Anban Pillay, said a decision had yet to be taken on whether to grant the extension to the group, an umbrella body for SA?s five key industry associations for pharmaceutical firms. It includes Innovative Medicines of SA, the Pharmaceutical Industry Association of SA (Piasa), the National Association of Generic Manufacturers, Pharmaceuticals Made in SA and the Self-Medication Manufacturers Association of SA.

The proposed framework for international benchmarking says originator drug companies should drop their prices to the lowest price in a selected basket of countries, which includes Australia, Canada, New Zealand, SA and Spain.

?We chose these countries because they have the most transparent pricing systems, similar products are available there at affordable prices, and they have similar agreements around intellectual property (rights) to us (SA).

?This exercise should bring our prices in line with the rest of the world,? said Pillay.

As an interim measure, drug makers will be allowed to charge the average of the lowest three prices in the basket for the first 24 months after the system is introduced. After that they will have to switch to the lowest price in the basket.

Pharmaceutical companies will be allowed to seek an exemption to charging the lowest price in the basket if they are prepared to make full disclosure of how they price their products.

?They must explain why it would be economically unviable for them to drop the price in SA if they can sell it at (a lower) price elsewhere,? said Pillay.

The phased-in implementation appears to be a direct response to industry reaction when the first draft regulations were floated two years ago. At the time, multinational pharmaceutical firms said the proposals would cut their local revenues by about 35%. The multinationals, which make up the majority of originator medicines sold in SA, then submitted proposals suggesting that drug prices be based on the average of the basket of countries, rather than picking the lowest prices. They also suggested some drugs be exempt from the regulations, such as antiretroviral medicines.

Piasa?s Vicki Ehrich confirmed the PTG had sought an extension for the comment period on the draft regulations, but declined to say more.

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