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HEALTH PORTFOLIO COMMITTEE
3 September 2002
DEPARTMENT ON MEDICAL SCHEMES AMENDMENT BILL, MEDICINES AND RELATED SUBSTANCE CONTROL AMENDMENT BILL AND OCCUPATIONAL DISEASES IN MINES AND WORKS AMENDMENT BILL: BRIEFING
Chair: Mr L V Ngculu
Documents handed out
Briefing by Department of Health on Medical Schemes Amendment Bill [B37-2002]
Briefing by DOH on Medicines and Related Substances Amendment Bill [B40-2002]
Briefing by DOH on Occupational Diseases in Mines Works Amendment Bill [B39-2002]
Department of Health (DOH) officials, including the Director-General, Mr Ayanda Ntsaluba, briefed Committee members on three items of legislation: the Medical Schemes Amendment Bill, the Medicines and Related Substance Control Amendment Bill, and the Occupational Diseases in Mines and Works Amendment Bill. Committee members engaged in a wide-ranging debate over issues raised by the respective amendments.
Briefing by Department on Medical Schemes Amendment Bill [B37-2002]
Mr Thabo Rakoloti (DOH) and Mr Stephen Harrison (Council for Medical Schemes) briefed the committee on the bill.
For details of the presentation please refer to attached briefing notes.
Mr Jassat (ANC) requested information regarding the qualifications necessary to become a health broker.
Mr Harrison (CMS) explained that the Act provides for conditions of accreditation, and that the CMS is currently working with the Department and the industry to improve existing formulations.
Ms Kalyan (DP) asked how far along in development are the accreditation procedures and code of conduct? When will the regulations be ready?
Mr Harrison replied that the accreditation process had been ongoing since 2000. This meant that almost all health brokers have applied for, and either received or been rejected for, accreditation. The Amendment provides for consistency between the CMS accreditation process and regulatory standards established under FAIS. Improvements to the regulations were published three months ago, and the Department is now finalizing them. There will be no gap in the accreditation process.
Mr Ntsaluba (DOH) asked members to recall that the existing legislation provides for oversight of brokers. The FAIS bill was originally intended to draw the regulation of health brokers under its own jurisdiction; this legislation clarifies the relationship between the two bills.
Ms Kalyan repeated her request regarding the code of conduct.
Mr Harrison stated that the Financial Services Board (FSB) has drafted the code of conduct, and that it will come into effect with FAIS. The interim standards of conduct were established by CMS.
Ms Baloyi (ANC) expressed her satisfaction that many concerns had been addressed by the amendments, particularly the issues articulated by the FSB. Ms Baloyi asked if the regulations pertaining to the amendment have been examined, and asked what if the process to deal with problems concerning a broker between CMS and FSB. Where will the register of brokers be maintained?
Mr Ntsaluba guaranteed that there would be no delay on the regulations; he stated that they would come into force before the end of September.
Mr Harrison stated that health brokers would apply for accreditation under CMS, and that the register would be maintained by CMS. This database would be shared with FSB, and if accreditation was withdrawn by one regulator, the other would automatically be informed.
Mr Ellis (DP) asked what process of consultation had been undertaken with the industry.
Mr Ntsaluba replied that an extensive consultation process had taken place. One process had related to the original amendments, and brokers were later involved in the FAIS bill. Discussions that occurred between the two departments and two regulators were made known to brokers.
Mr Harrison added that, over the past two months, CMS held meetings with brokers in Cape Town, Johannesburg, and Durban (with 200 brokers at each venue) to discuss practical issues around implementation. Mr Harrison described this as an ongoing process.
Ms Luthuli (ANC) asked if brokers were subject to registration fees and ongoing training.
Mr Harrison stated that the accreditation fee for brokers was R1000, to be renewed every two years at the same cost. With regards to ongoing training, this was encouraged but not regulated, and the CMS liaised with broker organizations on that issue. The consultative process has been mixed with training, and the challenge is this voluntary nature of training. Mr Harrison noted that many medical schemes also required brokers to submit to training and testing before they were permitted to sell products.
Ms Kalyan asked if there were CPD points brokers must acquire to retain accreditation, whether licenses were granted by CMS or FSB, and what are the specified "fit and proper" qualifications for accreditation?
Mr Harrison stated that, at the moment, there is no regulatory process for issuing CPD points to brokers. In terms of "fit and proper" qualifications, this is enshrined in the legislation, and CMS and FSB are grappling with specific definitions. Current requirements relate to minimum educational levels and minimum experience in the industry for prospective brokers. Mr Harrison acknowledged that these requirements should be improved. Interaction between the two pieces of legislation will result in a situation where consumers are optimally protected.
He noted that brokers are required to obtain licenses under CMS, but that these are automatically recognized by FSB.
Mr Ngculu asked for clarification of the congruence between CMS and FSB.
Mr Ntsaluba asked members to recall that the main issue was around ministers retaining power over the exercise of legislation. In addition to the 1998 and 2001 acts, regulations are presently operational for brokers.
Mr Harrison pointed out that, given the fact that this is a new area of legislation and incremental improvements are inevitable, the regulatory authorities will progress toward optimal protection of consumers.
Mr Harrison also noted that the common platform with FAIS will provide for regulation of all financial advisors; this bill provides for specific intervention by the minister of health in matters of health policy.
Briefing on the Medicines and Related Substances Amendment Bill (B40-2002)
Dr H.Z. Zokufa (DOH) and Ms Joey Gauss (DOH) briefed the committee on the bill.
For details of their presentation, see the attached weblink.
Mr Gauss (NNP) asked for a definition of the term "generic" with reference to medicines, and inquired as to whether recent developments compelled reconsideration of this definition.
Mr Ntsaluba (DOH) asked for the definition from existing legislation to be read aloud. He noted that, within that formulation in the Act and the regulations just published, the concern remains that testing for generic drugs will be less stringent. He discussed WHO standards on bioequivalence and the MCC's internal standards for generics.
Ms Baloyi (ANC) asked which drugs must be reported to the INCB in Geneva.
Ms Gauss (DOH) explained that each country has a certain allotment of drugs such as morphine that they can import and consume. Usually, at the end of July, countries must report raw material imports and quantities manufactured, as well as amounts exported and export destinations.
Ms Mnumzana (ANC) inquired as to the criteria for issuance of a license to acquire Schedule 8 and other prohibited drugs? How long is the register kept and who is assessing the register?
Ms Gauss replied that the register is provided for in previous legislation. Pharmacists enter the sales of scheduled drugs into a register, and inspectors assess these registers. Offences include not keeping the register in required order. Schedules 7 and 8 are the so-called "new schedules," and only the DG can grant permission to use those drugs in Schedule 8.
Ms Kalyan (DP) asked if there is a code of ethics applying to the marketing of medicines, and asked whether any Schedule 8 drugs were on the required list.
Ms Gauss responded that Schedule 8 drugs are not on the required list. She noted that there are only regulations covering the advertising of medicines. Because of the pharmaceutical industry's marketing, a voluntary industry body was envisioned, and legislation stipulates that a code of marketing practices might be introduced in conjunction with the industry. The Act was also amended to include non-pharmaceutical industry medicine advertisements (for example, those produced by medical schemes or pharmacies).
Mr Gauss expressed his concern about the possibility that political appointees might replace qualified specialists on the board of the MCC.
Dr Jassat (ANC) asked how domestic illegal drug manufacturing might be controlled.
Ms Gauss responded that inspectors are appointed to control illegal domestic manufacturing. If products are not registered with the MCC, they are illegal and prohibited.
Mr Ntsaluba explained that the problem is implementation and enforcement, not the legislative framework. He admitted that the DOH required greater capacity to interface with SAPS and take effective action against illicit manufacturing.
Ms Dudley (ACDP) asked what provisions were being removed from the Act.
Mr Ntsaluba replied that Act 90 of 1997 did not make reference to s.3 of Act 101 of 1965. The new s.3 corrects this flaw.
With respect to clause 7, Ms Dudley asked what would be the process to deal with a doctor who does not inform patients of the potential benefits of drug substitution?
Mr Ntsaluba responded that the conditions for the licensing of dispensing doctors will include the provision of required information to patients. He also noted that the factor that presently causes many doctors to prefer branded drugs over generics is the profit margin they reap. A combination of factors will change doctor behaviour.
Ms Kalyan asked where will responsibility for medical devices lie, now that they have been removed from the purview of the Act.
Mr Ntsaluba responded that the forthcoming National Health Bill will contain a section on medical devices. The DOH opted for a differentiated approach to medicines and medical devices. A small group of devices, such as medicated devices, will continue to fall under the Medicines and Related Substances Act.
Mr Ngculu asked whether there was currently any regulation covering medical devices.Ms Kalyan pointed to the example of someone undergoing chemotherapy; where does responsibility for the associated devices lie?
A DOH official stated that the response of the MCC is to register the device as a medicine. Some exemptions are possible, as provided for in Act 101 s.36.
Ms Baloyi asked who monitors or controls drug prices between manufacturers and wholesalers?
A DOH official responded that there are no real price controls. The industry manipulates prices within itself.
Mr Cachalia (ANC) noted that base prices from the manufacturer seem to dictate the final market price paid by consumers. He asked why the price of generics has climbed 60% since the introduction of substitution?
Mr Ntsaluba discussed options considered regarding pricing. He noted that, when the Act comes into force, there will be greater interaction between the industry's pricing mechanisms and the pricing committee; if prices in South Africa are found to be disproportionately high vis-à-vis prices elsewhere, the pricing committee will recommend appropriate action to the minister.
Due to the formulation of legislation in South Africa, patent holders often have an additional 2-3 years of monopoly following the expiration of their patents. Legislation is being drafted to enable generic manufacturers to close this gap and engage in greater competition, which will lower the end-user's price.
Ms Mnumzana asked whether inspectors were examining only pharmacists; if they were entering both public and private facilities; and whether they were also checking expiry dates on stockpiled medicines.
Ms Gauss stated that s.28 enables inspectors to enter any place where there is medicine, including the residence of a given license holder. Inspectors are trained and abide by a code of practice. They check batch numbers and expiry dates. It is a criminal offence in South Africa to sell expired medicines. Any person selling medicine must now also have a license covering each site from which medicine is being dispensed.
Ms Luthuli (ANC) asked who decides how many inspectors are sufficient, and suggested that, if the number of inspectors is inadequate, the entire regulatory exercise is meaningless.
Ms Kalyan asked whether the number of 15 inspectors given earlier was countrywide.
Mr Ntsaluba agreed that inspection is inadequate. In addition to public inspectors, there are also enforcement officials attached to the Pharmacy Council. Mr Ntsaluba stated that more inspectors were needed.
Ms Kalyan asked with whom were inspectors registered, noting that they have been granted powers to enter without warrant.
Ms Gauss replied that inspectors were responsible to the DG.
Mr Ellis (DP) asked, if someone is aggrieved by DG, the approach under the amendment is different than it is for those aggrieved by the MCC. Mr Ellis implied the change reflected a desire on the part of the DG to simply make his job easier.
A DOH official explained that grievances with the DG are directed to the minister.
Mr Ellis asked why the grievance procedures were being separated. What is the context for this action?
A DOH official noted that with the increased responsibility of the DG, the changes were made for expediency, in order to prevent administrative overload.
Mr Ellis stated that he suspected the clause (9) will cause considerable controversy. A far more contained approach, rather than simply leaving grievances with the minister, would be preferable.
Ms Gauss noted that appeal to the minister do not cut off the option of appealing to the Constitutional Court.
Mr Ntsaluba stated that he was concerned that issues would take too much time if appeals had to wait for an appeals committee to review each grievance. Going to the minister is more expedient.
Mr Ngculu paraphrased the DOH officials, explaining that the department expected many appeals and hoped to expedite the process.
Mr Ellis suggested that, if DOH was expecting many appeals, officials may already know this is not a good Act.
Ms Mathibela (ANC) pointed the committee's attention back to the issue of monitoring expired drugs first raised by Ms Mnumzana. The victims of expired drugs are typically in rural areas. Expired drugs must be disposed of.
Mr Ellis noted that the State Law Advisor and others had expressed the view that the amendments should comprise a 76 bill, and that it is currently classed as a 75 bill. He asked whether this might be changed.
Mr Ntsaluba stated that this was never a 76 bill, but that he would discuss the matter with the State Law Advisor.
Briefing on the Occupational Disease in Mines and Works Amendment Bill (B39-2002)
Dr Lindiwe Ndelu (DOH) briefed the committee on the bill.
For details of her presentation, please refer to attached briefing.
Ms Baloyi (ANC) asked why the period in which the owner of a mine must compensate a worker for occupational illness was set at two years, after which the burden falls on the state.
Dr Ndelu (DOH) replied that the two-year period had been arrived at to take care of an ill miner before compensation is awarded. A section in the Act establishes that if an individual believes they need further assistance, they can apply to the commissioner.
Mr Ngculu (ANC) asked if this period began with the date of commencement of compensatable disease.
Dr Ndelu stated that the Act establish that, two years after the conclusion of employment in the mining industry, miners must go for screening.
Ms Mnumzana (ANC) asked what would happen, for example, if an individual developed a compensatable disease four years after the conclusion of employment. Would they be covered?
Dr Ndelu responded that, under s.32, that individual could apply for compensation with a letter of support from a physician.
Mr Jassat (ANC) asked whether patients were required to disclose information about their smoking habits. He also asked for information regarding the status of asbestos mining in South Africa, noting that "white" asbestos is mined in Zimbabwe.
Dr Ndelu replied that the smoking history of miners is assessed during their baseline screenings, but not during assessment for compensation. She noted that occupational compensation is a lump sum, and that former miners are free to apply for further disability grants from the government. She also noted that, while white asbestos has been said to be less dangerous, no research supports this presumption.
Mr Cachalia (ANC) noted that the condition of sufferers of chronic obstructive airway illnesses cannot be expected to improve over time.
Dr Ndelu agreed, noting that compensation is awarded on the basis of severity of disability. Monetary awards are greater for those who will be debilitated in the long-term. Dr Ndelu also stated that the Act caters to ex-miners, not active miners; when miners leave the industry, an exit examination is performed. If symptoms of compensatable illness emerge later, this information is requested from their previous employer.
Mr Ngculu asked Dr Ndelu to comment on the terminology "reasonable cost" used in the Amendment.
Dr Ndelu suggested that the 1973 Act was not based on scientific research, and that it could not cater for individual costs; compensation had to be awarded by the commissioner.
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