Red tape threatens supply of drugs
March 14, 2008
By SLINDILE KHANYILE
Durban - The supply of antibiotics and other medicinal products was under threat because of delays in the approval of drug and medicine prices, manufacturers said yesterday.
The health department gives the nod on price hikes, but has not done so since approving a 5.2 percent increase in 2006.
Manufacturers said stagnant prices had squeezed their margins. Some had already stopped making certain antibiotics and were considering scrapping the production of further forms of this medicine.
Producers said the production of other medicines, such as anti-retroviral drugs and those needed for chronic illnesses, could also be hindered.
Desmond Brothers, the chief executive of Ranbaxy South Africa, said the launch of new products with lower margins had been delayed due to the risk of currency fluctuations. He said there were three drugs that had become very expensive to supply since the middle of last year.
"The price of Amoxycillin, which is a first-line antibiotic and used very widely, has risen significantly since mid-last year, which is making it unviable to supply unless we are able to increase the selling price. The same applies to Ampicillin and Co-trimoxazole," said Brothers.
Dinesh Bheema, the director for medical and new business development at Sandoz South Africa, said his firm had already stopped making two drugs - an antibiotic and an allergy medication - because it did not make business sense.
"We operate at a global level and we do large imports across the board. While you may apply for a separate increase, the reality is if you are a generic player, it would not be competitive," said Bheema.
He said the weaker rand and fuel price increases affected both logistics and marketing, while electricity shortages had played havoc with the industry.
The National Association of Pharmaceutical Manufacturers, which represents Ranbaxy B-Tabs, Thebe Medicare and Merck Generics, confirmed that since the introduction of the single exit pricing legislation in 2004 only one increase had been approved. Mohamed Bodhania, the association's chairman, said that manufacturers were under pressure to maintain their businesses.
"The department has told us that they are busy with the process internally, but we feel the process is taking too long. They are saying it is complex, but it is their legislation and they should have started the process earlier," said Bodhania.
In October, the health department published a notice in the government gazette asking for comments on the proposed increases. The industry made submissions by December, but so far no decision has been announced on prices.
Department spokesperson Sibani Mngadi said it was not aware there could be a supply shortage of some products.
"We will be making an announcement shortly on the price increases. The main cause for the delay was that we were still waiting for the work around the international benchmark which would have affected the single exit pricing," said Mngani.
Bodhania said because more than 90 percent of the active pharmaceutical ingredients were imported, the weakening rand was making things difficult for manufacturers.
Paul Anley, the managing director at Pharmadynamics, said the company was feeling pressure. He said it was also considering stopping the manufacture of some antibiotics.
Innovative Medicines South Africa, which speaks on behalf of Roche and Pfizer, said it was not as concerned as it believed that the matter was receiving priority attention.
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