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[2013] ZAGPPHC 329
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Medicines Control Council v Minister of Health and Others (14858/2013) [2013] ZAGPPHC 329 (11 November 2013)
IN THE HIGH COURT OF SOUTH
AFRICA
NORTH GAUTENG HIGH COURT,
PRETORIA
CASE NUMBER:
14858/2013
DATE: 11/11/2013
NOT REPORTABLE
NOT OF INTEREST TO
OTHER JUDGES
MEDICINES CONTROL COUNCIL
APPLICANT
And
THE MINISTER OF HEALTH 1ST
RESPONDENT
NEW CLICKS SA (PTY) LTD 2ND
RESPONDENT
NATAL WHOLESALE CHEMISTS (PTY)
LTD T/A
ALPHA PHARM PHARMACEUTICAL
WHOLESALERS 3RD RESPONDENT
JUDGMENT
1. The third respondent applied in
2004 to the applicant for a licence to export medicines to, in
particular, neighbouring states.
The applicant is the Medicines
Control Council, a statutory body and juristic person created by
section 2 of the Medicines and
Related Substances Act 101 of 1965
(“the Act”), with principal place of business at Civitas
Building, 42 Thabo Sehume
Street, Pretoria.
2. The second respondent launched a
similar application in 2011.
3. The first respondent cited in
these proceedings is the Minister of Health of the same address as
the applicant. He is the political
head of the Department of Health.
One of his functions is to appoint an appeal committee whenever an
unsuccessful applicant for
a licence which had to be applied for in
terms of section 22C of the Act wishes to appeal against the refusal
of the applicant
to grant the license sought. This function is
exercised in terms of section 24 of the Act. The parties are agreed
that the Minister
was incorrectly cited and has no role to play in
these proceedings. The bodies that should have been joined by the
applicant were
the two ad hoc Appeal Committees, which informed the
court through their respective chairpersons that they would abide by
the court’s
decision.
4.The second respondent is New
Clicks SA (Pty) Ltd, a company registered in accordance with the
company laws of the Republic of
South Africa. Its division that
applied for the export licence is United Pharmaceutical Distributors
which does business at 14
Tamar Avenue, Lea Glen, Roodepoort,
Gauteng.
5. The third respondent is Natal
Wholesale Chemists (Pty) Ltd a company registered in accordance with
the company laws of South
Africa, trading as Alpha Pharm
Pharmaceutical Wholesalers, with principal place of business at 18
Voortrekker Street, Newcastle.
6. Both second and third
respondents, as stated above, applied for licences to export
medicines and medical devices. The applications
were heard on
separate dates by the applicant, but both were refused on the same
ground, namely that the applicant was not, in
its view, empowered to
grant an export (or import) licence to any person or entity other
than a manufacturer. The applicant relies
on this approach upon its
interpretation of section 22C(1)(b) of the Act. The relevant section
reads as follows:
‘
Subject to the provisions
of this section
a )
b) the council may, on application
in the prescribed manner and on payment of the prescribed fee, issue
to a manufacturer, wholesaler
or distributor of a medicine or medical
device a licence to manufacture, import or export, act as a
wholesaler of or distribute,
as the case may be, such medicine or
medical device, upon such conditions as to the application of such
acceptable quality assurance
principles and good manufacturing and
distribution practices as the council may determine. ’
7. This section was amended in
2002.
8. The amendment introduced the
words 'import or export’ into the section. The second and third
respondents relied upon the
introduction of these terms into the
section when they applied for a licence to export medicines.
9. According to the applicant, the
wording of the section, interpreted according to its syntax, clearly
restricts the power to award
an export licence to a manufacturer. Its
principal plank upon which this submission rests is the meaning the
applicant ascribes
to the words ‘ ... as the case may be If I
understand the argument correctly, the applicant contends that this
phrase restricts
the power to grant an import or export licence to
the manufacturer as the category mentioned first in the subsection,
only, because
the phrase ‘ ..manufacture, import or export..’
is the first group of verbs that must be aligned to the
first-mentioned
category of traders in medicines.
10. The licence to act as
wholesaler must by the same token be restricted to wholesalers only,
and the licence to distribute must
be restricted to licensed
distributors, so goes the argument.
11. The applicant finds support for
its approach in the wording of section 22H, which determines that:
‘
22H Purchase and sale of
medicines by wholesalers
(1) (a) No wholesaler shall
purchase medicines from any source other than from the original
manufacturer or from the primary importer
of the finished product.
(b) A wholesaler shall sell
medicines only into the retail sector.
(2) Subsection (1) shall not be
construed as preventing the return of medicines for credit purposes
only, to the manufacturer or
wholesaler from which that medicine was
initially obtained.
(3) Any wholesaler may in the
prescribed manner and on the prescribed conditions be exempted by the
Director-General from the provisions
of subsection (1).’
12. Applicant also points to the
definition of ‘self in clause 1 of the Act and argues that the
absence of the word ‘export’
from the otherwise very
extensive definition is congruent with the interpretation that export
activities cannot be conducted by
traders but only by manufacturers:
'sell' means sell by wholesale or
retail and includes import, offer, advertise, keep, expose, transmit,
consign, convey or deliver
for sale or authorize, direct or allow a
sale or prepare or possess for purposes of sale, and barter or
exchange or supply or dispose
of to any person whether for a
consideration or otherwise; and 'sale' and 'sold' have corresponding
meanings..’
12. The interpretation contended
for by the applicant is clearly in conflict with the fundamental
tenet and first principle of the
interpretation of statutes that
words, phrases and sentences should be given their ordinary meaning.
The words ‘...as the
case may be clearly have the opposite
meaning of that proposed by the applicant. They mean no more and no
less than that the three
categories of traders, namely manufacturers,
wholesalers and distributors, as the case may be, may be licensed to
export medicines
in addition to the activity they are already
authorised to perform. Applicant’s interpretation presents a
tortured reinterpretation
of the natural semantic content of the
words and grammar employed in the section, which approach, with all
due respect, is contrived
and nonsensical.
13. The applicant’s approach
leads to an absurd situation: Imported medicines may only be obtained
and received by a manufacturer;
must be sold only to a wholesaler who
may only sell to a distributor who is the only entity entitled to
supply the public - a costly,
time consuming exercise that will be
beset by red tape and delay, by increased frustration and
dissatisfaction on the part of the
consumer and by increased
temptation to bypass a process that does anything but advance
business efficacy.
14. Most importantly, however, the
applicant’s approach runs counter to the judgment in Minister
of Health & Another NO
i/ New Clicks (Pty) Ltd South Africa &
Others (Treatment Action Campaign & Another as amici curiae)
[2007] ZACC 20
;
2008
(1) BCLR 1
(CC)
(2006 (2) SA 311
(CC)). The matter concerned the
validity of regulations relating to the pricing of medicines, but in
the process of analysing the
Act and its Regulations Chaskalson, CJ,
who delivered the main judgment, had to comment upon the Act’s
and Regulations’
provisions dealing with import and export of
medicines and the entities entitled to do so. He said the following:
[218] The Medicines Act requires
persons engaged in the making and distribution of medicines and s
cheduled substances to be licensed
to do so. This is dealt with in
section 22C of the Medicines Act and in the General Regulations. In
terms of sections 22C(1)(b)
and 22C(6) manufacturers, distributors or
wholesalers licensed to do so may import medicines With the exception
of section 15C,
which deals with parallel importing of patented
medicines, no other section of the Medicines Act authorises anyone
other than a
manufacturer wholesaler or distributor to import
medicines or scheduled substances. It is not clear from section 15C
whether persons
engaged in parallel importing in terms of that
section also require to be licensed under section 22C, but that need
not be decided
in this case .
[238] The regulations define an
importer as
"a person importing medicines
for the purpose of sale in the Republic from a manufacturer or other
person outside of the Republic
and includes a parallel importer as
defined in the Act".
There is no definition of "parallel
importer" in the Medicines Act. Presumably the reference was
intended to be to a person
importing medicine in terms of section 15C
of the Medicines Act, and this is how the words are defined in the
General Regulations.
[239] When they refer to an
importer in the “supply chain” the regulations may be
understood as referring to a person
other than a manufacturer,
distributor or wholesaler. This is also what may be inferred from the
way the definitions of logistics
fee. logistical services, single
exit price, retailer, and user are formulated in the regulations, and
also from regulations 6,
14. 21. 22(1), and 24
[240] The definition of importer in
the pricing regulations also contemplates that importers will be
engaged in selling medicines.
Regulation 24(4) says as much It
provides that:
Manufacturers and importers must,
with effect from the date one month after the date of commencement of
these regulations, sell
medicines and scheduled substances only in
accordance with the provisions of these regulations."
[241] In this context the
regulations must be construed as referring to lawful importers To act
lawfully, importers must be licensed
in terms of the Medicines Act.
And the Medicines Act only makes provision for such licences to be
issued to manufacturers, distributors
and wholesalers.
[242] The regulations define
“distributor” as meaning:
a person, other than a
manufacturer, wholesaler or retailer, who supplies a medicine or
Scheduled Substance to a retailer or wholesaler”.
The definition refers to "supply"
and not to “sell''. This is consistent with the Medicines Act
which does not permit
distributors to sell medicines or Scheduled
substances for their own account. They may, however, import the
medicine on behalf
of the manufacturer, and if licensed to do so,
they become importers as well.
[243] Wholesaler" is defined
as meaning:
a dealer who purchases medicines or
scheduled substances from a manufacturer and sells them to a retailer
and includes a wholesale
pharmacy ".
This is also consistent with the
Medicines Act which requires wholesalers to buy from manufacturers If
they do so they may in the
process become “importers’'
[251] I also do not agree that the
Medicines Act draws a clear distinction between manufacturers,
wholesalers and distributors on
the one hand and importers on the
other. It does draw a distinction between manufacturers, wholesalers
and distributors, but it
recognises that each may import medicine and
Scheduled substances and. with the possible exception of importing in
terms of section
15C. does not permit anyone else to import such
products. It is possible that a particular manufacturer, wholesaler
or distributor
may not be licensed to import medicine, and to that
extent there may be a distinction between those who are licensed to
import
and those who are not. But importers are not “a genus
different from manufacturers manufacturers licensed to do so may
import.
15. Apart from the judgment by
Chaskalson CJ, judgments were penned by Langa DCJ, Ngcobo J, Sachs J,
Moseneke J, O’Reagan
J, Yacoob J and Van der Westhuizen J. None
of these dealt with the interpretation of section 22C(1)(b), or of
the relevant Regulations,
and none differed from the parts of the
then Chief Justice’s judgment quoted above. Mr Notshe SC on
behalf of the applicant
argued that these comments were obiter and
unnecessary for the issue which the honourable Constitutional Court
had to decide. This
submission is incorrect. The structure of the Act
and the various provisions introduced into it to ensure an affordable
pricing
regime for medicines that need to be supplied to the public
was clearly of relevance when dealing with the Regulations
determining
prices. And even if the remarks could be said to be
orbiter they are directly in point and eminently persuasive. They
clearly demonstrate
that the applicant’s approach was and is
untenable. There simply can be no doubt whatever that the reasoning
of the judgement
quoted above must apply with equal force to export
licences as it does to import licences.
16. The applicant’s reasoning
was rejected by both the Appeals Committees constituted to deal with
the second and third respondents’
appeals launched after the
applicant refused their applications on the grounds stated above. The
Appeals Committee constituted
to hear the third respondent’s
appeal delivered its judgment on the 7th June 2012. The appeal
judgment relating to the second
respondent’s appeal was
delivered on 21 November 2012.
17. The parties are ad idem that
the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”)
applies to these proceedings
and that the applicant was therefore
obliged to comply with section 7(1) thereof. It provides that
judicial reviews must be instituted
without delay and not longer than
180 days after the decision was communicated to the applicant
concerned. The court may grant
condonation of the failure to launch a
review in time where the interests of justice so require. As part of
the consideration of
the interests of justice there must be a
reasonable explanation of the delay.
18. The applicant failed to launch
the review within 180 days in respect of the third respondent’s
appeal, but was in fact
90 days out of time when the present review
was issued on the 7th March 2013. The review was in time as far as
the second respondent’s
appeal is concerned, but still more
than three months after the judgment on appeal was handed down. Both
respondents repeatedly
communicated through their attorneys with the
applicant prior to the launching of the review application, demanding
compliance
with the appeal judgments by the applicant’s
consideration of the applications for export licences. No such step
was taken
and second and third respondents had to endure further
delay until the review was eventually launched. The failure to do so
in
time is explained by the applicant’s deponent, dr Khomo, the
applicant’s deputy chairperson, in terms that could not
be more
laconic and superficial:
‘
The delay was caused by the
fact that the applicant was seeking advice as to the course of action
to be taken. On the one hand it
wants to maintain its independence
and carry out its functions without fear or favour. On the other hand
it does not wish to easily
institute legal proceedings. This
Honourable Court has been approached as a last resort. ’
This is no explanation at all,
particularly because the review is based upon the self-same grounds
upon which the licences were
refused and that were advanced on
appeal. Given the sorry history of procrastination in respect of the
third respondent’s
application, which will be dealt with more
specifically below, this excuse demonstrates applicant’s
disregard of the respondents’
rights and another failure to
comply with its duty to deal with applications for licences speedily,
transparently and efficiently.
Had the matter not been of singular
public importance and had this explanation to be considered on its
own, no condonation could
have been granted. Both respondents desired
to deal with the matter, however, and condonation was granted as a
result thereof in
the light of the clear public interest involved in
deciding the issues at hand.
19. It has been recorded above that
the applicant had delayed its decision on the third respondent’s
application for an export
licence for a full seven years before
taking a (wrong) decision. There is no explanation, no justification
and no apology for this
extraordinary failure to perform its
functions timeously in spite of repeated reminders by third
respondent’s legal representatives.
The third respondent raised
the extraordinary delay in taking a decision on its application in
its answering affidavit. The second
respondent complained in its
answering affidavit about the failure to implement the findings of
the Appeal Committee and the delays
experienced in the proceedings
preceding the hearing of its appeal. The applicant chose not to file
a replying affidavit - without
any explanation - with the result that
the second and third respondents’ complaints are uncontested.
It should be remarked
in passing that applicant’s heads of
argument were filed out of time and that applicant's legal
representatives - the State
Attorney - failed to paginate and index
the papers to prepare them for argument. This function was undertaken
by second respondent.
20. In the light of this history,
third applicant seeks a punitive costs order which is clearly
justified. The claim for attorney
and client costs was not strongly
contested in argument.
21. It remains to be added that
both Appeals Committees awarded costs orders against the applicant.
The parties are agreed that
they had no power to do so and that that
part of each finding on appeal must be set aside in so far as the
second and third respondents
have not already abandoned those orders.
The following orders are made:
1. The application for a review of
the Appeals Committees’ findings that applicant is obliged to
consider the second and third
respondents’ applications for
licences to export medicines is dismissed with costs;
2 Such costs are to be calculated
on the basis that the employment of senior counsel was justified and,
in respect of the third
respondent, are to be calculated on the scale
of attorney and client;
3. It is recorded that the
applicant is obliged, in terms of the Appeals Committees' orders, to
consider second and third respondents’
applications referred to
in 1. above within thirty days from date hereof;
4. The respective award of costs
made by the Appeals Committees is set aside.
Signed at Pretoria on this 11th day
of November 2013.
E BERTELSMANN
Judge of the High Court