Prescribing change: Alongside a full-scale health system overhaul, pharmaceuticals regulation is also being reformed

Ture and functions, with responsibility of making drug-registration decisions. The council was made up of a group of part-time functionaries largely appointed from universities and research institutions, slowing decision-making, as the members met only occasionally.

The MCC received on average 800 applications for licensing a year, but was only able to handle around 200, though some drugs, particularly anti-retrovirals, were fast-tracked. The delays meant that the pharmaceuticals industry was losing up to R3bn ($365.7m) a year, according to Val Beaumont, executive director of the Innovative Pharmaceutical Industry Association South Africa. The drawn-out process of registration was not the only issue; the organisation has also been accused of lack of transparency, operating under an apartheid-era secrecy rule dating back to its foundation. “The MCC acknowledges that it was deficient in many areas, to this end a new entity is needed in order to bring about the required change,” Brian Daniel, CEO and country manager of pharmaceuticals company Pfizer, told OBG.

Staffing

SAHPRA was due to be operational by April 2013, but at the time of writing, it had yet to be formally launched. The organisation will have a CEO with the authority to appoint and oversee staff, as well as to appoint committees to investigate and report back on any matters within the authority’s responsibilities. SAHPRA replaces the MCC’s part-time council with full-time staff answerable to the CEO, roughly following the model of the US Food and Drug Administration (FDA).

Much of the authority’s funding will come from fees paid by companies to license products. In order to deliver on its promises to speed and strengthen the registration process, SAHPRA expects to employ more than 400 permanent staff within three to five years, up from the 150 staff that were employed at the MCC.

Clearing The Backlog

One of SAHPRA’s first tasks will be to clear the backlog of pending pharmaceuticals licensing applications. With the market for pharmaceuticals likely to accelerate as the National Health Insurance (NHI) programme is implemented and demand The pharmaceuticals market in South Africa was worth some $4bn in 2012, accounting for 0.4% of the global total, with imports taking a 65% share of sales by value, according to Andre Kudlinski, a pharmaceuticals expert at the Department of Trade and Industry. The market is expected to grow by a compound annual growth rate of 5.8% this decade, according to a report by market intelligence firm GlobalData. Factors driving growth include the government’s expansion of insurance coverage, the improvement of regulatory procedures and broader economic growth. Unlike most African countries, licensing is the only barrier to entering the South African market. The country does not use a “negative list” approach to restrict imports, and there are no duties or price caps.

New Licensing Authority

The new South African Health Products Regulatory Authority (SAHPRA) is due to come into being in 2013. Alongside the most prominent task of licensing medicines, SAHPRA will also be responsible for regulating medical devices and in-vitro diagnostics. The authority is expected to substantially reduce the time taken to register new drugs to 24 months for brand-name medicines and 12 months for generics, from up to five years under the Medicines Control Council (MCC), its predecessor. When fully operational, these times should drop to one year and six months, respectively, below the global average of 14 months. The quicker process should help spur investment in the medical sector, as pharmaceuticals companies seek to enter a growing market for which barriers to entry have been lowered.

Predecessor

SAHPRA will replace the MCC, which was established in 1965 as part of the Medicines and Related Substances Control Act – passed in response to the international scandal surrounding thalidomide, a medicine for pregnant women that had been inadequately tested and resulted in many babies being born with physical defects. The act has been amended several times since, but the MCC, under the Department of Health (DoH), has retained much of the same strucgrows, the new authority will have to prove itself considerably quicker and more efficient than its predecessor at licensing drugs and allowing them to move to market, lest a backlog build up again. However, its leadership will also be well aware that they are under scrutiny as the government, the medical profession and most importantly the public want to be sure that reform does not mean a slackening of standards.

While the advent of SAHPRA has been widely welcomed in the medical sector, both Beaumont and Kudlinski told OBG that the licensing system could be further accelerated at considerably lower costs by the automatic granting of licences to medicines approved by a highly regarded foreign or international regulatory body, for example the FDA or the EU’s European Medicines Agency. The government argues that the different genetic make-up of South Africa’s population rules this out. While Beaumont disagrees, it seems that, for the time being, the more efficient structure promised by SAHPRA is the likeliest option to be implemented.

Procurement

Reforms to South Africa’s pharmaceuticals procurement laws in 2011 have put an emphasis on the public sector preferring drugs manufactured by companies with good Black Economic Empowerment scores. The Preferential Procurement Policy Framework Act also puts an emphasis on sourcing more medicines from domestic suppliers, which should provide a boost to the local pharmaceuticals industry, which underwent a decline in the last decade.

Public procurement will become ever more important as the NHI is rolled out. As well as increasing consumption of curative medicines, the NHI aims to increase access to preventative care, including immunisations against diseases such as influenza and tuberculosis, thus increasing demand for these services and medicines. However, there may be a degree of conflict between the goal of promoting local manufacturing and that of containing costs, the latter of which is crucial if the NHI programme is to be a success.

Kudlinski told OBG that the NHI will lead to “huge demand”, but says that the scheme’s tight budget will mean that it favours using cheaper generics rather than branded drugs. “The NHI is of course good news for the likes of Pfizer,” Daniel told OBG. “While questions remain about how it will be rolled out and financed, it will regardless grow the pie in terms of medicine consumption as more and more scale is achieved. As a multinational, all we want is level and equal access to sell into the programme at a fair market price.”

Manufacturing

International pharmaceuticals companies have a relatively small manufacturing presence in South Africa, though the UK’s GlaxoSmithKline, France’s Sanofi and US-based MSD all have facilities in the country. According to Kudlinski, more than 35 plants have closed down since 1999 in the wake of legislative changes that made domestic production less attractive, though many were smaller factories. However, there are signs that the sector is reviving. While multinationals express scepticism about new procurement laws – indeed, Kudlinski thinks that some may withdraw – local generic and niche manufacturers are optimistic.