Medicines & Related Substances Amendment Bill : deliberations

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02 September 2008
Chairperson: Mr L Ngculu (ANC)
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Meeting Summary

The Committee agreed to the Department of Health’s drafted amendments to clauses 28, 29, 31 and 32. The Committee amended clause 30, which spoke of appeals against the decision of the Authority. They also discussed clause 32 on Inspectors.

Members amended clause 30 by inserting subsection (c) which said that the members in the appeals committee could not have any direct or indirect financial or business interests in an appellant’s affairs. The Department of Health appealed to the Committee not to include the subsection, as it meant that the establishment of an appeals committee could be delayed. They said it was a known fact that members were not supposed to have any interests in the appellant’s affairs. The Committee agreed that the subsection had to be added to guarded against conflict of interest. 

The Committee discussed clause 32 on the appointment of inspectors. Some wanted a board to oversee inspectors and asked why the legislation had been changed so that the Chief Executive Officer now appointed the inspectors instead of the Director-General. The Department explained that the Chief Executive Officer, as the accounting officer for the South African Health Products Regulatory Authority, would appoint inspectors to enforce the Act.

National Treasury provided advice about provisions in the Bill about the Council’s functions as a juristic person. The Committee noted that medical analysts had to be included into the Bill. There was debate on whether the timeframes should be placed in the regulations or the rules. If it were placed in the rules, it could be changed whenever the Chief Executive Officer deemed it necessary. The Department suggested that the Committee could publish the rules and any proposed amendments for public comment. More debate occurred when it was noted that the Minister could make a decision based on the recommendation of the South African Health Products Regulatory Authority. Although it was suggested that it was mentioned that such recommendation was thoroughly researched by established committees by the Authority, the Chairperson highlighted the potential for delays and unintended consequences. Dr Rabinowitz had a document of proposed amendments that addressed the issues mentioned above as well as the definition of wholesalers. It was decided that the Committee would assess the document and discuss it at the next meeting


Meeting report

Deliberations on Amendments
Clause 28 amending Section 23: Disposal of Undesirable Products

There were no objections to the amendments.

Clause 29 amending Section 24: Appeal against Decision of Director-General
Ms S Kalyan (DA) noted that the Department wanted to do away with the old appeal committee. She wondered how the new appeal committee would be structured.

The Director-General of the Department of Health (DoH), Mr Thami Mseleku, stated that the Committee could deal with the structure of the board at a later stage, as they were currently still busy with matters of appeal.

The Committee agreed with the amendments. 

Clause 30 amending Section 24A: Appeal against Decision of Authority
The Department proposed that Section 24A (1) be amended to include the words “except the decision contemplated in Section 15(3)(f)” after the word “Authority”. Section 15(3)(f) spoke about the registration of products, medical devices or in vitro diagnostic medical devices (IVDs). Section 15(3)(f) stated that “The Authority shall after receipt of the panel’s recommendations, decide on whether to register the product, medical device, or IVD or not and inform the applicant and the objector, if any, accordingly”.

Dr R Rabinowitz (IFP) wondered how the clause differed from what was in the old Act, as they seemed rather similar.

Mr Mseleku replied that the difference between this clause and the original Act was that the old Act did not include a “built in” discussion with the Chief Executive Officer (CEO). The CEO would engage with the client on the appeal and then take it to the appeal committee.

Ms Kalyan proposed that the Committee insert the words “neither of whom shall have a direct or indirect interest in the decision” after the word Chief Executive Officer in Section 24A(4)(a).

Mr Mseleku appealed to the Committee not to include this in the clause, as the appeal committee’s decision could be appealed against. This precondition meant that people could write directly to the CEO to stop the process of establishing an appeal committee. The CEO would have to spend time looking at whether the people appointed to the appeals committee had interests in the appeal or not. He warned that the Committee had to guard against inserting that part in the clause.

Dr Rabinowitz noted that if there was somebody in a very important position above the Authority who was taking appeals, one would not want them to have a direct link with the people making the appeals. This was always in the legislation. She wondered why the clause had been changed.

Mr S Dithebe (ANC) stated that this was a very old debate that he did not think would ever be exhausted. He wondered who would decide if the appeal committee members were independent and did not have direct or indirect interests in the appeal.

The Chairperson proposed that Section 24A (4)(a) be amended to state: “comprise the chairperson who shall be appointed on account of his or her knowledge of the law, four other persons who shall have knowledge of the subject matter of appeal, two of them nominated by the appellant and the other two by the Chief Executive Officer. No member shall have direct or indirect interests in the affairs of the appellant or respondent”. The Chairperson stated that the amendment allowed for a balance and it ensured that there was no conflict of interest.

Mr Mseleku stated that he wanted to make the Committee aware of the fact that the CEO would be guided in appointing the committee members. The CEO would make sure that the members did not have direct or indirect interest in the appeals. The reason that the clause had been changed was because the Committee had argued that the Authority was independent and therefore should not be politically influenced. The CEO would appoint the appeals committee that would handle appeals against the Authority.

Dr Rabinowitz noted that there was a feeling that the Authority had too much power over the appeals committee. To correct this, the Department inserted the part in Section 24A (3)(a) that said that the appellant could appoint two members to the appeals committee. She explained that this was fine. However, the Committee wanted to add another part to the section, a subsection (c), that stated that members were not allowed to have any direct or indirect interest in the appeal.

The Chairperson stated that the Committee could leave Section 24A (3)(a) and (b) as it was and then insert a subsection (c) which would say, “No member should have any direct or indirect interests in the affairs of the appellant and the respondent”.

Ms Rabinowitz indicated that she was happy with the proposal.  

Mr Mseleku clarified that there would still be two members nominated by the appellant and two members nominated by the CEO.

Ms Kalyan added that it was not the Committee’s business to assess if the appeals committee members’ had direct or indirect interest in the appellants affairs. The Committee’s duty was to pass good legislation. The CEO’s duty was to know what the members’ interests were. She suggested that the Committee agree with the insertion of the subsection (c).

Mr Dithebe stated that a provision for a judicial review could sufficiently cover the concerns that Members might have about parties having direct or indirect interests in the appellant’s affairs.

Mr Mseleku hoped to convince the Committee to exclude subsection (c). The clause stated that it implied that the CEO had to be satisfied that everyone who was nominated did not have a direct or indirect interest in the appellant’s affairs. This would mean that the CEO would begin to define, in his or her own way, what the mechanisms were to establish whether or not nominees had direct or indirect interests in the appeal. This meant that the appellant could actually say to the CEO that he or she did not think that the CEO applied its mind when appointing the committee, as there could be direct or indirect interest in the appeal. If the Committee wanted the appeals process to be faster, then the Committee should not put the onus on the CEO to perform due diligence on the members that had to be appointed to the appeals committee. He stated that the legislators needed to have a good reason for including the clause, as it was a known fact that members were not supposed to have direct or indirect interests in the appeal.

Dr Rabinowitz wondered if the word “indirect” should be taken out of the new subsection, as it could be confusing. However, she wanted to make sure that members of the appeals committee did not have any financial interests.

Mr Dithebe said the Committee was concerned at the length of time it would take medicines to be registered. He stated that Members had to be careful about delaying the registration of medicine.

Mr M Waters (DA) informed Members that they had to be cautious when deciding the criteria of the committee. He liked the idea that members that were chosen to be on the appeals committee had to declare if they had any interests in the affairs of the appellant. The Committee just needed some assurance that members of the appeals committee would not be interested in the appellant’s affairs.

The Chairperson agreed that the onus was on the appeals committee member to declare his or her interests. The onus was not on the Authority to perform all the due diligence processes.

Mr Dithebe reminded the Chairperson that Ms Kalyan had stated that it was expected of the appeals committee members that they would not have any direct or indirect interests in the appellants’ affairs. She was not saying that if members had interests in the appellants’ affairs then they should declare so. The Committee had to be very clear about what they wanted in the legislation.

Dr Rabinowitz stated that the she knew that Mr Mseleku was worried about the amount of work that would have to be done by the Authority and the CEO in appointing the appeals committee. However they did not need to “run around” and gather information about the appeals committee members. The Department could just require the member to fill out and sign a form saying that they did not have any direct or indirect interests in the appellant’s affairs. This put the onus on the member, if there was any follow-up.

Mr Mseleku warned the Committee against having such a subsection. Even Dr Rabinowitz’s suggestion did not help because the clause assumed that the appeals committee members’ would not have a direct or indirect interest in the affairs of the appellant or respondent. If a member was asked to fill a form, then there was still an onus on the Department to find out if the member was being honest. There was also an onus on the CEO to make sure and apply their minds in finding out whether committee members had interests in the appellants’ affairs or not.

Dr Rabinowitz pointed out that an appeal against the Authority would always fall on the Authority’s side, as the appellant could only nominate two people while there would be three people on the Authority’s side. These were the two members nominated by the CEO and the Chairperson of the appeals committee. The ratio would always be three to two (3:2); therefore there was no balance in the appeals committee. She suggested that the clause say that there should not be a conflict of interest with the appeals committee.

Mr Mseleku stated that the appeals process would not go anywhere if people opposed the decision and were asking questions about the committee prior to its decision. If they wanted, people could prove conflict of interest issues in various ways. The clause did not speak about conflict of interest; it spoke about the affairs of the appellant. 

The Chairperson stated that the Committee was faced with two proposals. The first proposal spoke about inserting a subsection (c) that spoke about the appeal committee not having direct or indirect financial or business interest in the appellant’s affairs. The second proposal would say that the chairperson of the appeals committee would have knowledge of the law and would not have direct financial or business interests in the affairs of the appellant.  

Dr Rabinowitz stated that she preferred the first proposal, as it made it clear that there was not supposed to be any direct financial interests in the affairs of the appellant.

Members agreed to the amendment.

Clause 31 amending Section 25: Privileges of Authority and Committees
The Committee agreed with the amendments.

Clause 32 amending Section 26: Inspectors
Dr Rabinowitz stated that she hoped there was an explanation for the “arms-length” relationship between the Director-General’s role and that of the Authority’s. She said that it was “dicey” for the Committee to decide who would become inspectors if they did not know if there was going to be a board and what the particular tasks of each board member was going to be. She recommended that the Committee decide on the structure of the board and asked if there was actually going to be a board.

The Chairperson stated that there would not be a board. He stated that the inspectors would be appointed by the CEO to enforce the Act of the Authority. The CEO was accountable for enforcing the Act; therefore the CEO was in charge of appointing the inspectors.

Dr Rabinowitz stated that there were two divisions that dealt with the Act. There was the Department and the Director General (DG) as well as the Minister and the CEO. She wondered why the Department changed the legislation so that the CEO now appointed the inspectors instead of the DG. She stated that responsibilities could only be doled out once it was decided that there had to be a board.

The Chairperson clarified to the Committee that the idea of Dr Rabinowitz for having a board came from a proposal that was submitted from Treasury.

Dr Rabinowitz stated that people were uneasy that there was no board and therefore no structure. Those that submitted proposals also thought that an appeals committee would complicate things further, as it enabled people within the committee to keep fighting against each other’s rights to produce medicines. The answer was simple; all the Committee needed to do was to appoint a board.

The Chairperson stated that the Committee had already discussed this particular issue when Treasury submitted the provision.

Mr Mseleku commented that whether or not there was a board, there was an accounting officer that appointed people according to the Act. In the past, the DG appointed the inspectors because the Council was a group of people who did not have accounting responsibilities or the experience to employ inspectors. There had to be someone who could account for the actions of the inspectors. This was the DG’s role. Now there was the CEO who was the accounting officer of the Authority. The CEO would appoint a group of people to be inspectors and to act on behalf of the Authority to enforce the Act. The clause was not about the structure of the board; it was about the accounting officer having the authority to appoint inspectors.

The Chairperson added that the clause had to ensure that the inspectors could be held accountable for their actions. This had to be defined in the Act. The purpose of the Bill was to establish the South African Health Products Regulatory Authority (SAHPRA). The accounting officer of this Authority was the CEO. He stated that the Committee was now remedying the inadequacies of the principal Act. Therefore, whether there was a board or not was immaterial, as the purpose of the Bill was to establish the SAHPRA. He stated that the Committee was not to be diverted from their task because of the Treasury’s proposal. There were a lot of financial implications in having a board. He added that the Treasury’s presentation was fundamentally flawed.

Mr Mseleku said that Cabinet had debated the issue of the board and resolved that the best way to go forward, given the resources in the country, was to establish an agency or Authority. Cabinet decided against having a board.

Mr Waters stated that the Chairperson had said that there should not be a board because of the financial implications. However, the Committee did not know the financial implications. He added that the Committee had every right to change the Bill, as they were not bound by Cabinet’s decision. He also thought that the Committee should take in to consideration some of the proposals made by the Treasury.

Mr Dithebe wondered why an official from the National Treasury would submit a proposal that opposed what the Minister of Finance had said. The Committee, as legislators, had to make up their own minds. He wondered if excluding the board and details of the board from the Bill meant that the Committee would be in violation of the Public Finance Management Act (PFMA).   

The Chairperson stated that the Committee kept going to and fro and were not being systematic in their deliberations. He told Members to focus on whether they agreed to the clause that spoke about inspectors.

The members agreed to the amendments.

Afternoon session
The Chairperson noted that the letter from the National Treasury indicated that virtually all regulatory entities were classified as public entities. Its primary point was that SAHPRA was a regulatory entity and virtually every regulatory entity in South Africa was classified as a public entity. Several examples of regulatory entities were referred to as public entities. Their very nature of performing functions could be called upon to oversee governments’ own initiatives and activities. Another issue was that standard provisions on operations and functions of an entity such as powers and functions for purchasing of property and levying of fees, should be provided for. The government arrangement referred to in Chapter Ten of the Task Team report should also be captured in the legislation. The letter suggested that if it was a juristic person, it should have a board. They had to define public entity and juristic person.

Mr Sello Ramasala (Head of Legal Services: Department of Health) responded that it was not correct to suggest that juristic persons should have a board. There were a number of juristic persons that did not have a board.

The Chairperson said it might not be correct to say that the South African Health Products Regulatory Authority should be defined as a public entity but rather as a juristic person.

Prof Ronnie Green-Thompson (Special Advisor to the Minister) replied that as an agency it was a juristic person and retained revenue. Globally the regulatory authorities were usually in government. It was discussed within the ministerial task team that it should be seen as a juristic person within the Department of Health (DOH), report to the Minister and adhere to the Public Finance Management Act (PFMA). The government arrangements spelt out were in line with the Bill. None of the principles of government were in conflict with the Bill. If it were placed in the legislation, every time they wanted to change a post they would have to come to Parliament.

Dr R Rabinowitz (IFP) suggested that an amendment be added in the Bill as well as a suggestion of an organogram to illustrate that there was something between the heads of committees and the Minister and that was the executive committee. The executive committee could comprise of the heads of the various committees, and it should meet from time to time. If it was a good idea, they should put it in the regulations. The amendment could possibly read: “An executive committee, comprising of the heads of other committees, must meet from time to time to formulate and review policy of the Authority.”

The Chairperson thought that perhaps this should be put in the regulations.

Prof Green-Thompson clarified that it was not heads of committees, but heads of units and components within the regulatory authority, that would form the executive committee under the CEO.

Dr Rabinowitz proposed that it be left as is.

Mr Thamsanqa Mseleku (Director-General: Department of Health) appealed that the logic be noted differently. They were establishing an authority and it would be led by a CEO, the structural arrangements would be determined after consultation with the Minister of Public Service and Administration. By stating in the legislation the frequency of meetings, they were beginning to micro-manage the way the management should work. This was an operational managerial structure.

Clause 33, Amendment to Section 27
Ms S Kalyan (DA) noted that this was to include medical technicians. She also asked to what category of analysts was the Bill referring.

Mr Mseleku suggested that perhaps it should read “or any other appropriately qualified person as considered necessary.”

Clause 36, Amendment to Section 30
Mr S Dithebe (ANC) asked if there was a reason why the forfeiture was limited and did not include the reference to aircrafts.

The Chairperson noted that they were dealing with the actual offences and the penalties were given.

Mr Mseleku replied that they were not referring to the seizure of all those. It referred to such products as medical devices or in vitro diagnostic medical devices (IVDs), books and records that related to those things. The rest referred to where these could be found.

Clause 37, Amendment of Section 37
Mr M Waters (DA) asked why there the amendment referred to evidence to the contrary. The phrase “It is proved” was quite definite.

Mr Mseleku replied that it unpacked what proof meant.

Mr Dithebe asked if they were referring to evidence beyond reasonable doubt or evidence balanced on the scale of probability.

Dr Rabinowitz suggested that it was easier to use evidence that may incriminate people than evidence that was difficult to prove. She suggested that it should be left as is.

Ms Ntombi Mnyikiso (Senior State Law Advisor) replied that it was simplifying it for everyone. It was beyond reasonable doubt that was stated.

Clause 38, Amendment of Section 33A
Mr Dithebe asked if they were being realistic when they stated that the Council could accept donations as long as there were no strings attached.

Mr Mseleku replied that sections of the industry would agree that they felt that it was in their interest that they bequeath IT capacity, for instance, because at this stage the Authority did not have capacity, the law should not prohibit this.

The Chairperson thought it also referred to the Food and Drug Administration (FDA) and the European Union (EU) since those were the bodies that principally capacitated the Drug Authority in South Africa.

Clause 40, Amendment of Section 35
Mr Mseleku noted that the Committee wanted the Authority to determine rules for the timeframes for the considerations of applications, and a clause had been added. Many of the regulations listed under the section could be transferred to the Authority as rules. If they were only going to include timeframes then the whole legislation would need to be looked at. Instead they had separated the things that related to that clause from ministerial regulations. They would expand on Clause 11. It would not be limited to timeframes.

Dr Rabinowitz replied that there has been a big debate about taking things out of the regulations and placing them in the rules. The control that the public had over it got weaker and the access to that information got narrower. She would not agree on moving it to rules and suggested that it remained in the regulations.

Mr Mseleku replied that those rules could be published for public comment.

The Chairperson clarified that perhaps the clause could be simplified.

Mr Waters added that if it were placed in the rules, than there would be more flexibility. But, for instance the timeframe was six months to register new medicines and if that target was not reached, they could then simply change the rules.

Mr Mseleku thought that the Committee was not pleased with the Minister’s involvement, and that was the reason why they thought that the Authority should determine the rules. It was suggested that the Committee decide whether the rules should be published for public comment before they were passed and whenever they were changed.

Clause 41, Amendment to Section 36
Mr Waters said that in the Principal Act, it was: the Minister decided on the recommendation of the Council, it was now suggested that it was on the recommendation of the CEO. He wanted to know why it was limited to one person.

Dr Rabinowitz supported Mr Waters. It was one individual with no checks and balances.

Mr Mseleku replied that the authority functioned in terms of the Constitution and the rules of administrative justice. It did not say that the CEO could ask the Minister to do anything. The Authority would have to have good reasons to do anything. They should work on trust that the Authority would have established a committee that would have looked at the matter and made a recommendation to the Authority. There were checks and balances. The Minister would ask for the basis for that recommendation.

Mr Waters suggested that if the CEO would act only on the recommendation of one of the relevant committees, then perhaps this should be added into the Bill.

Mr Dithebe added that the Authority was established as a juristic person and that in this instance the CEO would then act as a juristic person.

Mr Mseleku thought that perhaps members were addressing one concern by going to structure. The basis on which the Authority made their recommendations to the Minister should be transparent. They could add that in making such a decision, the Minister must ensure that the Authority was advised by the best available experts. They were ensuring that the advice from the Authority could be transparently scrutinised.

The Chairperson noted if there were added layers, there could be consequential delays because they would have to source out further expert advice. If there was an open-ended clause they could have delays. There were expert committees that could deal with it.

Mr Dithebe shared the concerns of the Chairperson in that this could have unintended consequences in the form of delays.

The Chairperson suggested that the clause be left as it is.

The Committee reverted to the section dealing with wholesalers:

Clause 27, Amendment Section 22H
Mr Mseleku was not sure what was trying to be achieved here. If they were asking for a particular logistic fee then they should go the pricing committee. There was a danger to satisfying the one group.

Dr Anban Pillay (Chief Director: Strategic Planning: Department of Health) added that they had one view from the wholesalers and an opposing view from the distributors. They had published a call for comment in order to make the necessary amendments to the fee aspect and the definition. It was a complicated process. It would be difficult for the committee to do its work if it became confused by too many definitions.

Ms R Mashigo (ANC) appreciated the fact that by coming up with a definition, they could deal with the issue of logistic fees since something had to be done. 

Dr Rabinowitz offered to draft amendments that addressed the matter and provided for a definition of wholesalers and the logistic fee. These could be discussed at the next meeting.

Ms M Madumise (ANC) asked who was deciding and why could they not take a firm decision on and regulate it.

The Chairperson noted Ms Madumisa’s comment. They should find a remedy; it may be true that there is a view from the wholesalers. It was a pity that the wholesalers did not give any submissions. There was a legislative gap to define the question of logistic fee. It was within the Committee’s right, if they felt it necessary, to amend another clause and add it into the amendment Bill. Alternatively, it had been said that it was a technical process from the pricing committee. However the process seemed severely flawed. The Committee could make a resolution to the pricing committee, requesting that the matter be clarified. This could be an appended resolution from the Committee.

Mr Dithebe asked what would they address.

The Chairperson replied that they had to define wholesalers.

Mr Mseleku suggested that the pricing committee come to a meeting where they and the stakeholders concerned could address the issue. He was concerned that it was possible that there was a gap in the implementation. The Committee could then decide what should be amended.

Dr Rabinowitz responded that they were sitting for a short time in 2008 and that the Committee’s meetings were focused on urgent legislation. The chances that they would find time to debate the issue with the pricing committee was slim. She added that the Committee already understood the issue. The manufacturers wanted to manipulate the price structure and get a cheaper deal through using distributors, who benefited while the licensed wholesalers did not benefit.

Clause 43, Amendment of Section 37A
Mr Thami added that there was nothing prohibiting them from making personnel appointments for the Authority, so that when the Minister decided the Act was operational, everything was in place.

The Chairperson adjourned the meeting.


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