Clicks says it will appeal against the Western Cape High Court ruling that found it owns a drug-making facility, which is illegal for a pharmacy owner. The beauty and pharmacy retailer has lost its four-year legal battle with the Independent Community Pharmacy Association, which represents independent pharmacies, over its ownership of Unicorn Pharmaceuticals, says a Business Day report. The law prohibits pharmacies from owning drug-manufacturing facilities, preventing them from dispensing only their own branded medicine to a consumer. The court ruled last week that Unicorn, which Clicks bought in 2011, is a drug manufacturer and Clicks is breaking the Pharmacy Act and regulations. The court referred the matter back to the Health Department to decide on a sanction. However, Clicks said it will appeal against the decision. Clicks denies that Unicorn is a manufacturing facility, as it does not make medicines but imports them and repackages them as Clicks generics.
ICPA CEO Jackie Maimin said the organisation has fought for years “in order to protect the best interest of the consumer against the financial interest of parties who are acting in contravention of the pharmacy act”.
CEO of the Clicks Group Vikesh Ramsunder denies it is breaking the law. “We have consistently rejected the repeated allegations made by the ICPA. All previous rulings held the Clicks corporate structure to be lawful.” It is saving customers money and denies it is promoting Clicks drugs above others. “Our pharmacies offer an extensive range of branded and generic products to ensure customer choice.”
KwaZulu-Natal pharmacologist Andy Gray said many generic medicine manufacturers only import and repackage drugs. He added if Clicks could lower prices by owning more of the supply chain they could win more contracts with medical aid schemes who incentivise their members to use certain pharmacies, often excluding smaller independent pharmacies, who are battling for long-term survival.
Clicks may have to sell Unicorn to comply with the law if its appeal is unsuccessful, Gray said.
The Western Cape High Court ruling in favour of the ICPA in its David versus Goliath case against the Clicks Group must lead to a larger conversation about medicine dispensing in the country, the SA Medical Association (Sama) is quoted in Cape Times as saying. Sama said apart from contravening the Pharmacy Act, in their view, this practice was also unethical.
“Our members have for a long time raised concerns about this system, which takes the control of medicating patients out of the hands of medical professionals and places it at the discretion of pharmacists and pharmacies who have a vested financial interest in specific drugs,” said Sama chair Dr Angelique Coetzee. The judgment was significant because it also raised issues around the dispensing of pharmaceuticals, she said.
Cape Times reports that while not mentioning the involvement of medical aid schemes, Sama believes the ruling should serve as a starting point for discussions. “Doctors make decisions based on years of study and experience. They evaluate which medications are most appropriate for their patients after thorough clinical examinations, by reviewing essential patient data, and after considering a number of other critical factors, including the patient’s medical history.
“These medically based conclusions and recommendations cannot be made by outside parties who are driven by financial interests, and who have no context for the doctor’s decisions,” Coetzee said.
South African regulations governing medicines, who may produce, import, export, wholesale, distribute and sell, and what they may charge, are among the most sophisticated in the world. The aim is to ensure that patients have equal access to quality-assured medicines, from a secured distribution chain, while at the same time preventing price gouging, conflicts of interest and monopolisation.
Daily Maverick reports that it is with this in mind that the judgment is significant.
The report says while the law has attempted to level the playing fields (while controlling pricing), independent pharmacies do operate at a disadvantage to the big groups, which aside from Clicks, include Dis-Chem, Medirite (Shoprite) and Pick n Pay Pharmacies. For instance, while the big manufacturers cannot offer bulk discounts, they do pay for market data, which the bigger groups are in a better position to gather.
ICPA’s fight is not with Clicks per se, it is a fight about unfair advantage, says Jackie Maimin, CEO of ICPA.
Technical arguments include whether Clicks Group does or does not hold a beneficial interest in both companies – there are jurisdictional “persons” between the holding company and the operating companies; and whether or not Unicorn complies with the definition of a manufacturing company.
“Our concern is that the intention, or the spirit, of the legislation is being abused,” Maimin says. “We believe this is a specific corporate arrangement that undermines the legislative intention, which is to protect the best interests of the consumer.”
Daily Maverick says at the heart of the matter are pricing and unfair competition.
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