The Department of Health is planning to close loopholes in the laws governing the sale of medicines it says have enabled pharmaceutical companies to inappropriately influence which medicines are prescribed to patients.
If accepted in their current form, the proposed regulations to section 22a of the Medicines and Related Substances Act will put an end to a host of underhand tactics employed by pharmaceutical companies to ensure their products get sold to patients, according to the department's deputy director-general for health regulation and compliance, Anban Pillay.
"It's quite clear that manufacturers are paying out amounts to . wholesalers and pharmacies to preferentially procure their products," he said, alleging players in the generic industry were the biggest culprits, but declining to name them.
Stocking a limited range of products effectively forced consumers to buy these goods, he said, as few patients would travel to several pharmacies in search of their prescribed medicine if an alternative were available at their first port of call.
Pharmacists are required by law to offer patients a generic medicine if one exists, but consumers are often unaware that there may be several generics to choose from and that the one offered by their pharmacist might not be the cheapest.
Pharmacies received money from drug manufacturers through a variety of schemes, said Dr Pillay.
"The most famous is the data fee: the (sales) data that is stored in a pharmacy computer is purchased by a third party, which is actually a front for the manufacturer," he said.
"There are other examples, for instance where a sales representative buys back stock from a pharmacy at a price higher than the single exit price (SEP)," he said.
Pharmaceutical companies are supposed to sell their medicines in the private sector at a uniform price, called the SEP, to all purchasers, regardless of volume.
The draft regulations, published in the Government Gazette on July 6, propose changes to the definition of illegal bonus, rebate or incentive schemes, detailed in the laws currently in place.
The draft regulations seek to ban any payments that are made to influence the sale of a particular medicine, including prizes, shelf space fees, discounts, and fake payments to healthcare professionals (who can influence medicine choice) who have not done any work.
Paul Anley, CEO of generic medicines manufacturer Pharma Dynamics, said the draft regulations sought to tighten up incentives provided to pharmacists that were "standard policies used around the world to drive the use of cheaper (generic) medicines".
"The law says pharmacists must advise patients of a generic alternative (where one exists), but everyone knows they can get around it, because patients ask for their (opinion)," he said.
The law encouraged pharmacists to sell more expensive medicines, because the dispensing fees that they were allowed to charge were calculated based on a percentage of the cost of the drug.
"We need incentives for retail pharmacists to get higher dispensing fees for generic medicines than innovator medicines," he said.
Val Beaumont, CEO of Innovative Medicines SA (Imsa), said the organisation welcomed the government's proposed moves to stamp out perverse incentives.
Imsa is a trade association for innovator companies, which hold the patents on new medicines.