The Constitutional Court judgment puts an end to independent pharmacists’ seven-year battle with the JSE-listed Clicks Group over its ownership structure of retail pharmacies and a subsidiary pharmaceutical manufacturer.

The Independent Community Pharmacy Association (ICPA) represents 1,200 independently owned community pharmacies, with about 3,500 pharmacists and 20,000 supporting healthcare personnel.

The association’s CEO, Jackie Maimin, told Daily Maverick that they were trying to bring the ethics of the profession back and remove commercial considerations.

“When a pharmacist dispenses a script, all they should look at is what the doctor has prescribed and [whether there is] a less expensive generic substitute. Those should be the only considerations. It should not be about whether I am going to be incentivised or am I going to be appraised on what I dispense?”

Unicorn Pharmaceuticals’ products are “sectioned off” for Clicks pharmacies, meaning independent pharmacists cannot dispense them. For patients who have been stabilised on a Unicorn (or other specific) product, that means only a Clicks pharmacy can dispense your chosen medication.

“That’s not what medicines are supposed to be. Medicine should be freely available so that you can fill prescriptions.”

Clicks, South Africa’s leading pharmacy, health and beauty retailer, has 837 stores and 673 in-store pharmacies.

Incentivised to hit targets

The association has alleged that, as employees of the retail pharmacy chain, Clicks pharmacists were instructed to hit targets for Unicorn Pharmaceuticals to ensure their performance appraisals “looked good”.

The ICPA accused Clicks of being in violation of the Pharmacy Act and Regulation 6(d) of the Ownership Regulations, which says that one may not simultaneously have ownership or a beneficial interest in both a community pharmacy and a manufacturing pharmacy, to ensure that pharmacists do not have a vested interest in the medicines they dispense or recommend.

The Clicks Group holding company owns New Clicks, which in turn holds all the shares in Unicorn and Investments, which holds all the shares in Retailers. Unicorn, as the holder of a manufacturing licence in terms of section 22C of the Medicines and Related Substances Act (Medicines Act), produces about 40 generic medicines.

Hard slog

On 6 May 2016, the ICPA complained to the Department of Health that “Unicorn and Clicks [Retailers] clearly have direct or indirect beneficial interests in each other”.

It said Retailers and Unicorn are among the group’s subsidiaries and had – at the very least – indirect beneficial interest in each other and, in terms of the Act and the Ownership Regulations, the Minister of Health had prohibited manufacturers from having a direct or indirect beneficial interest in a retail pharmacy.

The ICPA requested the director-general to “revoke the manufacturing pharmacy licence of Unicorn as well as the retail pharmacy licences [held by Retailers,] obtained after 30 May 2012, as they were granted on the incorrect facts”.

But the director-general rejected the complaint on 19 January 2017, claiming neither Retailers nor Investments could be said to have a beneficial interest in Unicorn.

The ICPA then took the matter through an appeals process, arguing that Clicks’ corporate structure violated section 22A read with regulation 6(d) because it created a situation where companies within the group could have a beneficial interest in community pharmacies, while simultaneously having or holding a beneficial interest in a manufacturing pharmacy. This too was dismissed.

Aggrieved, the ICPA approached the Western Cape High Court to have the decisions set aside, which it did, finding that shareholding in the group did indeed amount to a beneficial interest and a violation of regulation 6(d), but Clicks was granted leave to appeal. That appeal was upheld by the Supreme Court, which is when the ICPA turned to the Constitutional Court for a final pronouncement.

‘Conflict of interest’

The association argued before the Constitutional Court that legislators the world over have long recognised that it is undesirable for the same person/entity to have an interest in both a retailer and a manufacturer of medicines, because it gives rise to a conflict of interest: 

“[i]f a pharmacist stands to gain financially by promoting some medicines over others, consumers are exposed to the risk of not being provided with the best product or the lowest-priced product… [t]here will also be a risk that medicines may be recommended and sold to consumers who do not need them.”

However, Clicks contended that no constitutional rights were infringed, maintaining that it had a “sophisticated statutory framework in place” regulating the conduct of pharmacists to prevent any conflict of interest.  Under this framework, they said, pharmacists were obliged to act in the best interests of their patients.

However, the court disagreed, ruling in favour of the community pharmacists, with a costs order for two counsel, while throwing the hot potato back at the health department to decide on the sanction to impose on Clicks.

Immediate closure or withdrawal of Retailers’ community pharmacy licences would be very drastic, the court noted, as the department would likely afford Clicks an opportunity to regularise the position, for instance by divesting itself of the manufacturing pharmacy.

Asked for comment, Bertina Engelbrecht, CEO of the Clicks Group, said they had hoped for a favourable resolution to this long-running litigation. “However, we have planned for the possibility of this outcome and will commence engagements with our regulator to ensure a sustainable resolution for all stakeholders.

“Clicks continues to provide high-quality healthcare that is accessible and affordable, and we do not expect last week’s judgment to impact on our operations. Importantly, the judgment does not restrict our pharmacies from continuing to dispense Unicorn products, which are all well-priced generic medicines approved by Sahpra [South African Health Products Regulatory Authority].”

Had the ICPA lost, other pharmacy groups would have seen the loss as a window of opportunity to manufacture their own medicine, said Maimin. If every chain started producing its own brands, patients would be completely locked into that network of pharmacies.

“Our biggest concern was that you would then end up with four generic companies. What would happen to all the others? [International pharmaceutical companies] would have divested from South Africa, we would have lost medicines, and you would have ended up with these oligopolies where [prices] inevitably would have been pushed up. It  would have been chaos, absolute chaos.”

Maimin said they were delighted that the Constitutional Court upheld the Bill of Rights, which is a patient’s right to choose healthcare providers and medicines. BM/DM