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ConCourt rules against Clicks in long battle with independent pharmacies

Clicks has lost its seven-year battle with independent pharmacies over its ownership of both pharmacies and a drug manufacturer, after the Constitutional Court ruled the company had contravened regulations to the Pharmacy Act, reports Business Day.

The judgment creates an immediate headache for the JSE-listed health and beauty retailer, as it reinstates a previous High Court ruling instructing the Department of Health to determine how to sanction the company.

There’s also the possibility that it will have to sell its pharmaceutical manufacturing subsidiary Unicorn Pharmaceuticals, which could affect its profit margins.

The Constitutional Court said while the Health Department could withdraw Clicks’ pharmacy licences or close the pharmacies down, such action would be “very drastic”. It suggested Clicks be given an opportunity to regularise the situation by divesting itself of Unicorn.

The Independent Community Pharmacy Association (ICPA) launched its challenge against Clicks in 2016, arguing its corporate structure created a conflict of interest, since its pharmacists had an incentive to recommend medicines sold by another subsidiary in the group.

Clicks Holdings owns all of the shares in New Clicks, which holds all shares in Unicorn and all shares in Clicks Investments. Unicorn owns a licensed manufacturing pharmacy that has 39 generic medicines registered with the SA Health Products Regulatory Authority (Sahpra), while Clicks Investments owns all of the shares in Clicks Retailers, which in turn owns 673 pharmacies.

The ICPA, representing more than 1 200 independently owned pharmacies, first filed a complaint with the department and asked it to revoke Unicorn’s manufacturing licence and Clicks Retailers’ pharmacy licence. When that bid failed, it took the matter to the Western Cape High Court.

The central legal issue was whether the term “beneficial interest” in the Pharmacy Act’s regulations governing the ownership and licensing of pharmacies includes owning shares in a company that owns a pharmacy business.

Regulation 6 of these rules says “any person may … own or have a beneficial interest in a community pharmacy on condition that such a person, or in the case of a body corporate, the shareholder, director, trustee, beneficiary or member … is not the owner or the holder of any direct or indirect beneficial interest in a manufacturing pharmacy”.

The ICPA argued that the corporate structure of Clicks gave companies in the group a beneficial interest in pharmacies while simultaneously holding a beneficial interest in a manufacturing pharmacy, in contravention of these regulations.

 

Business Day article – Independent pharmacies win battle to halt Clicks dispensing own drugs (Restricted access)

 

See more from MedicalBrief archives:

 

Clicks clash with independent pharmacies heads to Constitutional Court

 

Clicks Group’s SCA wins appeal over ICPA complaint on pharmacies

 

Clicks buys Pick n Pay’s retail pharmacy business

 

 

 

 

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