Sep 4,2013 / News / Legal Brief

INTRODUCTION

The Bill of Rights promises us the right to access healthcare services but what does this mean? Does it mean we have rightful access to services such as doctors and medicines, or does it mean we have rightful access to medical services at a particular price? The issue of the price of healthcare services, particularly medicines, has returned to the spotlight. This is especially true in China where there are allegations of bribery and corruption in respect of the calculation and imposition of medicine prices.[1]

Various aspects of medicine pricing have been previously addressed in amendments to the Medicines and Related Substances Act No. 101 of 1965, as amended (“the Medicines Act”). The amendments were primarily designed to introduce the single exit price for medicines and a Pricing Committee which is charged with determining whether or not medicine prices are reasonable.[2] However, additional issues are now arising in relation to medicine pricing; especially the application of intellectual property laws and the introduction of the Medicines and Related Substances Amendment Bill of 2012, which was published as Notice 216 of 2012 in the Government Gazette on 15 March 2012, for public comment and proposed regulations introducing international benchmarking for medicines.

INTELLECTUAL PROPERTY AND PATENT RIGHTS

Statements have recently been made by the Department of Health concerning the possible link between increased medicine prices and patent protections. This is a debate that certainly causes jitters in pharmaceutical companies who otherwise consider intellectual property rights to be cardinal to the protection of their businesses and their ability to conduct important research and development activities into the production of viable and efficacious medicines.

THE CIPLA/AVENTIS CASE

A recent decision by the Supreme Court of the Appeal in Cipla Medpro (Pty) Limited vs Aventis Pharma SA[3] dealt with the issue of a patent infringement where Aventis Pharma SA (“Aventis”) alleged, amongst other matters in dispute, that its patent over Taxotere was being infringed by Cipla Medpro (Pty) Limited, in so far as Cipla was making Cipla Docetaxel and Cipla Docetaxel solvent available to the market. Aventis sought an interdict prohibiting Cipla Medpro (Pty) Limited (“Cipla”) from making these products available. Various disputes were then placed before the Commission of Patents and those decisions were finally taken to the Supreme Court of Appeal by Cipla.

In its judgment, the Supreme Court of Appeal dealt with various issues concerning the application of the provisions of South African patent law, more particularly, the provisions of the Patents Act No. 57 of 1978 (“the Patents Act”). Within the context of deciding whether or not an interdict should be granted in favour of Aventis against Cipla, the Supreme Court of Appeal dealt with aspects relating to public interest. These arguments were presented by the Treatment Action Campaign (”the TAC”) who was admitted to the appeal as an amicus curiae with the consent of both Cipla and Aventis.

THE TAC’S POSITION AND THE BILL OF RIGHTS

Primarily, the TAC aligned itself with the argument presented by Cipla that an interdict should not be granted in favour of Aventis.[4] The objections raised by the TAC were founded on the Bill of Rights and the right to access healthcare services. At this point, the TAC makes an argument that the right to access healthcare services “includes a right to have access to affordable medicines” (emphasis added).[5] In addition, the argument presented by the TAC was based on the fact that the Supreme Court of Appeal should view the applicable provisions of the Patents Act through the lens of section 27(1) of the Constitution[6] so that a proper balance is struck between the person who holds patent rights and the patients to whom the medicine will be applied. The Supreme Court of Appeal considered these arguments and also considered certain foreign case law related to the application of the public interest in whether or not the interdict sought should be granted.

COMPARISONS WITH INTERNATIONAL CASE LAW

The primary issues with which the Supreme Court of Appeal was concerned was whether or not the medicine over which the patent is sought is available and whether or not an interdict would cause disservice to patients due to the lack of availability of affordable medicines. To this end, the Supreme Court of Appeal considered international case law related to public health interests in the context of granting an interdict and reached the following decision:

“There is no suggestion that Aventis is not able to meet demand for Taxotere or Docetere, which was the disputed issue in Innogenetics, N.V. v Abbott Laboratories.  Nor can it be said that Cipla’s product offers superior medicinal benefits, which was the case in Bard Peripheral Vascular, Inc. v W.L. Gore & Associates, Inc. It is also clear that there will no material disruption to patients if an interdict were to be granted, as there would have been in Johnson & Johnson Vision Care, Inc. v Ciba Vision Corporation. When the application was heard there were no users of Cipla Docetaxel. By March 2012 there were some 65 – 70 users, and I assume that by now there are probably more, but switching to Taxotere or Docetere for future treatment involves no medicinal disruption. This is also not a case like Edward Lifesciences, in which an interdict will have no practical effect.”[7]

PRICING MATTERS

But what then of money? After having considered the additional issues presented by international case law, the Supreme Court of Appeal turns its attention to the costs of the various substances in dispute:

“Taxotere, Docetere and Cipla Docetaxel are each sold in dosages of 20 mg and 80 mg.  The maximum price at which a medicine may be sold to the public is what is called its ‘single exit price’. The single exit price of Taxotere is R2 048 for 20mg and R7 532 for 80mg. The price at which it is sold to the state by Aventis is R680 for 20mg and R2 327 for 80mg. The single exit price of Docetere is R1 100 for 20mg and R3 850 for 80mg. The single exit price of Cipla Docetaxel is R1 000 and R3 500 for 20mg and 80mg respectively.”[8]

Having considered the various prices at which the substances are available, the Supreme Court of Appeal comes to the decision that “the only implication for healthcare of granting an interdict is that patients who receive private healthcare, and who are not able to recover the cost of treatment from a private medical fund, will be obliged to pay 10% more for treatment than they might have done had Cipla’s product remained on the market. Neither Cipla nor the TAC has identified any other prejudice that might be suffered by the public.”[9]

CASE DISMISSED

Various additional factors were then considered by the Supreme Court of Appeal and ultimately the appeal was dismissed in so far as the proceedings under section 51(1) of the Patents Act were concerned. The interdict was granted pending the action for final relief.

The colouring of the debate about whether or not to grant an interdict by public health factors indicates the unique nature of debates relating to intellectual property rights within the context of the healthcare sector, as well as the uneasy interaction that arises between the rights of patient-consumers and pharmaceutical companies in respect of the pricing of medicines, the availability and use of those medicines.

THE MEDICINES ACT

All that said and done, there are a number of proposed amendments to the Medicines Act that are to be introduced in the Bill, including a change of the Medicines Control Council into a new body to be known as the South African Health Products Regulatory Authority or SAHPRA.

In addition, whilst the Bill focuses on encompassing all healthcare products or at least those making claims of a healthcare nature, the powers of SAHPRA are expanded to include allowing SAHPRA to make decisions concerning the registration of healthcare products in the Republic in circumstances where it may take into account matters such as cost and price and decide that, based on the cost of a particular substance, it may not be in the public interest to have that substance registered as a medicine, medical device or intravenous device and also potentially cancel an existing registration on that basis.

Powers are also afforded to SAHPRA, in terms of amendments to section 19 of the Medicines Act, to request information related to a medicine, medical device or intravenous device from any person, which may indeed include the bases upon which any one of those substances is priced.

There are also wholesale amendments to section 35 of the Medicines Act in relation to expanding the scope of SAHPRA’s jurisdiction from only medicines and Scheduled substances to encompass medical devices and intravenous devices; bearing in mind that a health product will be defined in an amendment to section 1 of the Medicines Act as “a medicine, Scheduled substance, medical device, IVD, cosmetic or foodstuff”, which significantly expands the jurisdiction of the existing Medicines Control Council.

CONCLUSION

Certainly, the amendments to the Medicines Act by the Bill present a unique opportunity in a climate of debate about the pricing of medicines for SAHPRA to wholly adopt the issue of pricing as a significant factor to be considered when assessing an application for the registration or even continued registration of a health product in the Republic. In addition, the introduction of factors into South African law by the Supreme Court of Appeal as public interest factors when considering whether or not a patent holder’s right should be infringed, legitimately provides impetus for regulatory authorities in the Republic to view carefully the accessibility of a particular health product. This with reference not only to matters concerning safety and efficacy, but also to its pricing and the effect that pricing has on the access of that medicine by those who desperately need it.

Changes to the regulatory regime governing medicines, as well as the additional products now identified in the Bill, may create a perfect storm for patent holders in relation to the pricing of their products and the availability of those products in the South African market place.

The Bill is currently before Parliament and is expected to be sent to the President for assent shortly, although the ultimate date for the proclamation of the Bill and its coming into effect in law remain unknown.


[1] See “China Drug Costs: The Human Price” at httpwww.bbc.co.uknewsworld-asia-china-23670744 accessed on 13 August 2013

[2] Section 226 of the Medicines Act and related regulations. See “State hopes big changes to patent rules will cut drug costs” at https://businessday.newspaperdirect.com/epaper/showarticle accessed on 8 August 2013

[3] 2012 JVR 1203 (SCA)

[4] See paragraph 43 of the Cipla judgment

[5] See paragraph 44 of the Cipla judgment

[6] The Constitution of the Republic of South Africa, 1996

[7] At paragraph 55 of the Cipla judgment

[8] At paragraph 57 of the Cipla judgment

[9] At paragraph 59 of the Cipla judgment