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Speaker 1: For seven o two a interview, and inflation is sitting

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Speaker 1: at about three percent and it may go up because

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Speaker 1: of the global pressures such as the Middle East conflict.

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Speaker 1: Yet the Health Department is only allocated a price increase

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Speaker 1: of one point four to seven percent for medicines. Therefore,

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Speaker 1: South Africa's pharmaceutical manufacturers are demanding answers from the health

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Speaker 1: departments and many and may even here to court now

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Speaker 1: the rise force far below healthcare salary increases and medical

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Speaker 1: scheme guidelines. Joining us is a Stavros Nicolau chairperson or

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Speaker 1: the Pharmaceutical Task Group several us High, good morning, good

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Speaker 1: to chat you once again, Gay, good.

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Speaker 2: Morning, and good morning to all the listeners, and great

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Speaker 2: pleasure to be on the show with you severals.

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Speaker 1: The Health Department has approved that one point four to

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Speaker 1: seven percent rare price increase. Any reason given for this?

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Speaker 1: I mean, what are they saying? It's such way below inflation.

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Speaker 2: So perhaps I can just take a step back and

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Speaker 2: explain how the pricing system works in South Africa. So

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Speaker 2: the ministerine that department set an anal price increase, so

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Speaker 2: they can only give an increase once a year. This

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Speaker 2: usually happens in January. In fact, the case this January,

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Speaker 2: the industry received a one point four to seven percent increase,

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Speaker 2: which was less than half of prevailing inflation at the

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Speaker 2: time CPR was sitting at three point two percent. In January,

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Speaker 2: industry had asked for an inflationary increase which would have

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Speaker 2: been three point two percent, So we were about one

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Speaker 2: point eight percent shart to begin with. And then, as

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Speaker 2: you correctly state, Ray, we are starting to see and

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Speaker 2: feel inflationary pressures coming through because of the geopolitical tensions,

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Speaker 2: and I think what many people are calling geopolitical inflationary factors,

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Speaker 2: we're starting to see those folter through to drug manufacturers,

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Speaker 2: as is the case with every other sector. Incidentally, so

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Speaker 2: that place is a further scrutiny and perspective on the

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Speaker 2: one point four to seven percent, and it brings into question,

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Speaker 2: to answer directly your comment earlier, it brings into question

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Speaker 2: whether the balance between an economically sustainable supply of medicines

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Speaker 2: on the one hand, and then ensuring access to treatment

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Speaker 2: on the other hand, whether that balance is going to

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Speaker 2: hold or does it get disrupted. And I think there's

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Speaker 2: a real risk here that the balance gets tilted, and

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Speaker 2: you could potentially see drug shortages unless the situation is addressed.

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Speaker 2: Now you also mentioned potential call to action. Let me

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Speaker 2: just clarify what's intended there. There is a pricing committee

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Speaker 2: that advises the Minister. Of course, the Minister is not

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Speaker 2: compelled to follow the advice of the pricing committee. Now,

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Speaker 2: the pricing committee were the way we understand it as

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Speaker 2: an industry, the ones that advise the Minister on the

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Speaker 2: one point four to seven percent increases, we found very

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Speaker 2: difficult to accept at the time because everyone knows that

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Speaker 2: input costs went up beyond one point four to seven percent. Right,

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Speaker 2: So we have called on the committee on a number

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Speaker 2: of times to disclose in the interest of transparency, how

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Speaker 2: they arrive at these numbers, and as yet, not only

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Speaker 2: this Seben, in previous years as well, we are yet

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Speaker 2: to find transparency from the Pricing Committee. If one doesn't

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Speaker 2: find transparency, one can obviously go to the courts in

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Speaker 2: terms of page administrative justice and we can ask for

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Speaker 2: that disclosure so we can get some type of understanding

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Speaker 2: how the pricing committee would have rafted.

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Speaker 1: If I can come in quickly, I mean, how should

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Speaker 1: the health departments there their medicine pricing committee, How should

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Speaker 1: they have calculated the annual single exit prises called the step?

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Speaker 1: How should that step have been calculated? Obviously there's a formula.

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Speaker 2: For this, There is a there is a formula.

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Speaker 3: In fact, there's a there's a regulation in the Medicines

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Speaker 3: Act which sets out the different determinants and or factors

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Speaker 3: that they should apply their minds.

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Speaker 2: They have been the pricing committee should apply their minds

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Speaker 2: to the overarching thing here is that they should apply

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Speaker 2: their minds according to the conditions that prevail at the time.

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Speaker 2: And if inflation and he's sitting at three point two percent,

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Speaker 2: which was the case in January, there's a retrospective element

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Speaker 2: that comes into play as well. You consider all these

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Speaker 2: factors exchange rate, you know, exchange rate movement CPR. You

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Speaker 2: consider these factors and then you propose something to the minister.

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Speaker 2: Now we're really baffled as to given the conditions that

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Speaker 2: prevailed in January, how they would have arrived at one

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Speaker 2: comma four seven percent. And as I keep saying, ray

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Speaker 2: being repetitive are but I don't know too many businesses

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Speaker 2: whose input costs have not gone up beyond the one

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Speaker 2: point four seven percent. If I just look at what

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Speaker 2: medical schemes took as an increase. I think it's well recorded.

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Speaker 2: Medical schemes took an increase of anything from seven to

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Speaker 2: up to eleven percent.

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Speaker 1: They were rate, they were high, they were stars. What

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Speaker 1: happens next? Now? The last thing we so that Africans

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Speaker 1: are going through a lot at the moment. They are

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Speaker 1: higher fuel places, there's inflation. We've got a lot of

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Speaker 1: pressure on us. What happens next. The last thing we

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Speaker 1: want is for vital medication not to come into the country.

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Speaker 1: I mean, enough is enough? Our talks planned, what's the

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Speaker 1: next step?

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Speaker 2: So Ray, our priority here is that patients get their metsine.

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Speaker 2: I mean that's really you know, that's what our business is.

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Speaker 2: It's a you know, the industry is about saving lives

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Speaker 2: and improving quality of lives. I was fortunate enough to

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Speaker 2: see the minister yesterday in France together, the health Minister,

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Speaker 2: we were at a summit together that President ma Cron hosted.

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Speaker 2: I've had a very initial discussion with him and he

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Speaker 2: says he'd like to meet too, and I think we'd

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Speaker 2: like to present the case again to the Minister, to

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Speaker 2: the Acting d Neck Crisp. I've had some discussions with

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Speaker 2: him and We're honestly not asking to go to ten percent.

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Speaker 2: As an industry, We've asked for a further one point

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Speaker 2: seven percent, which takes us back to inflation and where

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Speaker 2: it was in January. That's the request. It's way below

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Speaker 2: what many other industries have taken and in fact other

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Speaker 2: sectors have taken with in healthcare. So I think we're

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Speaker 2: still in the mode of dialogue, but we do need

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Speaker 2: to and will continue to press the Pricing Committee for

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Speaker 2: transparency and disclosure on how they arrive at these numbers.

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Speaker 2: There's another very important element there array, and that is

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Speaker 2: these are businesses in the pharmaceutical sector and they all

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Speaker 2: require certainty and predictability in order to continue investing and

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Speaker 2: in order to attract new investments. Or all well and

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Speaker 2: good having an investment conference last week and essay investment conference,

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Speaker 2: but if we don't have certainty around regulation, the regulation

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Speaker 2: regulatory frameworks, then it's also going to affect investment. And

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Speaker 2: one of our apex industries in our country is farmer

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Speaker 2: and in fact, while I was in France was there

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Speaker 2: was a special session on how do we enhance regional

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Speaker 2: manufacturing on the continent. So you get what they call

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Speaker 2: health sovereignty and security of supply. Now the decision of

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Speaker 2: the pricing committees out of kilter with that apex priority

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Speaker 2: of the country and the continent.

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Speaker 1: Sure you see, that's very, very very concerning. Are there

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Speaker 1: any timelines to the discussion the number one and number two?

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Speaker 2: I would hope.

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Speaker 1: I would think there's no threat of a medicine not

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Speaker 1: coming into the country because of this just yet.

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Speaker 2: So Ray, lookaw, as I said earlier, our priority is

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Speaker 2: making medicines acceptable to sorry accessible to patients, and that

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Speaker 2: patients aren't left in the lerge What we I think

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Speaker 2: we're at a very early stage. I think we're watching

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Speaker 2: both elements. The first is the economic sustainability of medicines,

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Speaker 2: but also what does you know, what is the concerning

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Speaker 2: geo political picture due to sustainability of meats and supply

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Speaker 2: in the country. Fortunately, we're not importing any medicines directly

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Speaker 2: from the Golf region. In other words, there's no golf

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Speaker 2: companies that are exporting medicines directly to South Africa. So

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Speaker 2: the only initial disruption would have been some delays through

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Speaker 2: the re routing of slats in particular. But I think

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Speaker 2: to be concerned about at this point in time. As

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Speaker 2: I say, we don't know how that picture unfolds, and

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Speaker 2: we're actively keeping a watching brief on that as the

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Speaker 2: farmer industry, and we are speaking to the Half Department

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Speaker 2: about that ray.

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Speaker 1: So that's amazing.

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Speaker 2: I think dialogue is the order of the day here.

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Speaker 1: Absolutely, always good to chat to you. Chairperson. Are the

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Speaker 1: Pharmaceutical Task Group seven or two Lands reaction please