The Constitutional Court judgment ends independent pharmacists’ seven-year battle with the Clicks Group over its ownership structure of retail pharmacies and a subsidiary pharmaceutical manufacturer, and if unsuccessful, it could have “opened the floodgates of patient abuse”.
The Independent Community Pharmacy Association (ICPA), which represents 1 200 independently owned community pharmacies – with about 3 500 pharmacists and 20 000 supporting healthcare personnel – said pharmacists at Clicks “were incentivised to prescribe their own in-house medication, which was not only a conflict of interest, but unethical”.
ICPA CEO Jackie Maimin told Daily Maverick they were trying to bring back the ethics of the profession, and remove commercial considerations.
“When a pharmacist dispenses a script, all they should look at is what the doctor has prescribed and (whether there is) a less expensive generic substitute. Those should be the only considerations. It should not be about whether they are going to be incentivised or appraised on what they dispense,” she said.
Unicorn Pharmaceuticals, a subsidiary of the Clicks group, has its products “sectioned off” for Clicks pharmacies, meaning independent pharmacists cannot dispense them. For patients who have been stabilised on a Unicorn (or other specific) product, that means only a Clicks pharmacy can dispense their chosen medication.
Clicks has 837 stores and 673 in-store pharmacies.
Incentivised to hit targets
The association has alleged that, as employees of the retail pharmacy chain, Clicks pharmacists were instructed to reach targets for Unicorn Pharmaceuticals to ensure their performance appraisals “looked good”.
The ICPA accused Clicks of violating the Pharmacy Act and Regulation 6(d) of the Ownership Regulations, which says that one may not simultaneously have ownership or a beneficial interest in both a community pharmacy and a manufacturing pharmacy, to ensure pharmacists do not have a vested interest in the medicines they dispense or recommend.
The Clicks Group holding company owns New Clicks, which in turn holds all of the shares in Unicorn and Investments, which holds all of the shares in Clicks Retailers. Unicorn, as the holder of a manufacturing licence in terms of section 22C of the Medicines and Related Substances Act (Medicines Act), produces about 40 generic medicines.
Hard slog
On 6 May 2016, the ICPA complained to the Department of Health that “Unicorn and Clicks (Retailers) clearly have direct or indirect beneficial interests in each other”.
It said Retailers and Unicorn are among the group’s subsidiaries and had – at the very least – indirect beneficial interest in each other and, under the Act and the Ownership Regulations, the Health Minister had prohibited manufacturers from having a direct or indirect beneficial interest in a retail pharmacy.
The ICPA asked the director-general to “revoke the manufacturing pharmacy licence of Unicorn as well as the retail pharmacy licences (held by Retailers) obtained after 30 May 2012, as they were granted on the incorrect facts”.
But the director-general rejected the complaint on 19 January 2017, claiming neither Retailers nor Investments could be said to have a beneficial interest in Unicorn.
The ICPA then took the matter through an appeals process, arguing that Clicks’ corporate structure violated section 22A read with regulation 6(d) because it created a situation where companies within the group could have a beneficial interest in community pharmacies, while simultaneously having or holding a beneficial interest in a manufacturing pharmacy. This too was dismissed.
The ICPA then approached the Western Cape High Court to have the decisions set aside, which it did, finding that shareholding in the group did indeed amount to a beneficial interest and a violation of regulation 6(d), but Clicks was granted leave to appeal.
That appeal was upheld by the Supreme Court, which is when the ICPA turned to the Constitutional Court for a final pronouncement.
‘Conflict of interest’
The association argued before the Constitutional Court that legislators worldwide have long recognised that it is undesirable for the same person/entity to have an interest in both a retailer and a manufacturer of medicines, because it gives rise to a conflict of interest:
“(If) a pharmacist stands to gain financially by promoting some medicines over others, consumers are exposed to the risk of not being provided with the best product or the lowest-priced product… there will also be a risk that medicines may be recommended and sold to consumers who do not need them.”
However, Clicks contended that no constitutional rights were infringed, maintaining it had a “sophisticated statutory framework in place” regulating the conduct of pharmacists to prevent any conflict of interest. Under this framework, they said, pharmacists were obliged to act in their patients’ best interests.
However, the court disagreed, ruling in favour of the community pharmacists, with a costs order for two counsel, while throwing the hot potato back at the Health Department to decide on the sanction to impose on Clicks.
Immediate closure or withdrawal of Retailers’ community pharmacy licences would be very drastic, the court noted, as the department would probably afford Clicks an opportunity to regularise the position, for instance by divesting itself of the manufacturing pharmacy.
Bertina Engelbrecht, CEO of the Clicks Group, said they had hoped for a favourable resolution to this long-running litigation.
“However, we have planned for the possibility of this outcome and will begin engagements with our regulator to ensure a sustainable resolution for all stakeholders.
“Importantly, the judgment does not restrict our pharmacies from continuing to dispense Unicorn products, which are all well-priced generic medicines approved by Sahpra (South African Health Products Regulatory Authority).”
Had the ICPA lost, other pharmacy groups would have seen the loss as a window of opportunity to manufacture their own medicine, said Maimin. If every chain started producing its own brands, patients would be completely locked into that network of pharmacies.
“Our biggest concern was that you would then end up with four generic companies. What would happen to all the others? (International pharmaceutical companies) would have divested from South Africa, we would have lost medicines, and you would have ended up with these oligopolies where (prices) inevitably would have been pushed up. It would have been chaos, absolute chaos.”
Maimin said they were delighted that the Constitutional Court upheld the Bill of Rights, which is a patient’s right to choose healthcare providers and medicines.
See more from MedicalBrief archives:
Clicks Group’s SCA wins appeal over ICPA complaint on pharmacies
ConCourt rules against Clicks in long battle with independent pharmacies
Clicks clash with independent pharmacies heads to Constitutional Court