THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case Nos 542/04
543/04
In the matter between:
PHARMACEUTICAL SOCIETY OF SOUTH AFRICA
AND OTHERS Appellants
and
THE MINISTER OF HEALTH AND ANOTHER Respondents
NEW CLICKS SOUTH AFRICA (PTY) LIMITED Appellant
and
DR MANTO TSHABALALA-MSIMANG NO
AND ANOTHER Respondents
Coram: HARMS, NAVSA, MTHIYANE, BRAND and CLOETE JJA
Heard: 30 November and 1 December 2004
Delivered: 20 December 2004
Subject: Medicines and Related Substances Act – Regulations relating to
a Transparent Pricing System for Medicines and Scheduled
Substances – validity – legality (ultra vires) – Leave to appeal –
failure of court of first instance to make order within reasonable
time – effect.
J U D G M E N T
HARMS JA/
2
HARMS JA
INTRODUCTION
[1] The applicants are appl ying for leave to appeal. In issue is the validity
of the ‘Regulations relating to a Tran sparent Pricing System for Medicines
and Scheduled Substances’.1 They were promulga ted on 30 April 2004 by
the Minister of Health in terms of s 22G of the Medicines and Related
Substances Act 101 of 1965 (‘the Medi cines Act’). The section permits the
minister to make regulations on the recommendation of a pricing committee
established by the section. The regulat ions may, essentially, provide for a
transparent pricing system for ma nufacturers of medicines and may
prescribe a dispensing fee. Manufacturer s are obliged to charge the same
price to all; discounts are prohibite d; manufacturers must publish their
‘single exit price’; no one in the suppl y chain may charge more than the
single exit price; pharmacists and othe r licensed health professionals may,
however, add the prescribed ‘appropria te dispensing fee’, but no more. The
regulations under attack provide for a pricing system that defines and
controls the single exit price for ma nufacturers and importers and for a
dispensing fee, which, for pharmacist s amounts to either 16% of the exit
price (if it is less than R100) or R16 (if more than R100) without a medical
prescription. If there is a prescription the figures are 26% (if it is less than
1 GN R553 GG 26304 of 30 April 2004. The date of commencement was 2 May.
3
R100) and R26 (if more than R100, whether R100 or R1000). The major
issues are whether these fees are ‘appropriate’ and whether the regulation of
the single exit price is legal.
[2] There are two applications. In one the first applicant is the
Pharmaceutical Society of South Africa (‘PSSA’), joined by six other
entities that own pharmacies. The other is by New Clicks SA (Pty) Ltd, the
owner of 86 pharmacies. Th e respondents in both applications are first, the
Minister of Health and second, Prof D McIntyre, cited in the court below
under uniform rule 53 in her capacity as chairperson of the pricing
committee. At the appeal stage the Treatment Action Campaign joined the
proceedings as amicus curiae.
HISTORY OF THE PROCEEDINGS
[3] The applicants, in separate revi ew applications, applied in the Cape
High Court for the setting aside of the re gulations. Due to the urgency of the
matters, the court granted interim relief by agreement on 1 June. 2 In terms of
the order the regulations were suspe nded pending the final determination of
the reviews and the parties placed on terms for filing papers. At the behest of
the respondents early hearing dates we re allocated, namely 17 and 18 June.
The matters were heard by a full bench as a court of first instance. Judgment
2 All dates are 2004 unless otherwise indicated.
4
was delivered on 27 August and the applications were dismissed (per Yekiso
J, Hlophe JP concurring; Traverso DJP dissenting).
[4] Alleging that the dismissal of their review applications (which
brought the suspension of the regulations to an end) did not remove the
urgency, the applicants immediately so ught leave to appeal from the court
below by filing their applications on the next court day, 30 August. These
notices did not raise any issues not covered by the two judgments. The
applicants then requested an early hear ing date but the court ruled that the
date had to suit responde nts’ counsel. The applications were eventually
heard on 20 September but instead of making an ex tempore order, as is the
practice in matters of this kind, the court reserved judgment.
[5] Some five weeks later, on 20 Oc tober, the applicants in the PSSA
application wrote to the registrar of the court below, with a request to
establish whether the judge president, who had intimated at the hearing that
he would write the judgment, would indicate when a ruling might be
expected (even if reasons were to follo w). Neither the registrar nor the judge
president responded. The applicants th ereafter decided to file the present
applications with this court. They inte nded as a gesture of courtesy to meet
with the judge president to inform hi m in advance but he was unable – for
5
unknown reasons – to meet them. On 11 November the present applications
were filed.
[6] The next day the judge president became available for the courtesy
call and, according to the state attorney, he told those present that the second
draft of the judgment was in the process of being typed. He enquired of them
whether, in the light of the applicati ons, he was expected to stop the process
and dispense with the need to fina lise the judgment. No one responded and
he then said that he would continue to finalise the judgment. Once again, no
indication of when judgment was to be delivered was given and no
explanation for the delay provided. If there were compelling reasons for the
delay, one would have expected some explanation.3
[7] In the meantime and pursuant to the filing of the present applications I
had invited the parties to a conference in chambers to enable me under
delegated powers to issue the necessary directions in terms of SCA rule 11
as to the manner in which the applicat ions were to be dealt with. At the
request of the respondents the meeting took place on 17 November, two days
later than intended, and the ruling was issued early the next morning after
consultation with the head of court a nd the members of the panel to whom
the applications were allocated. Th e ruling was in the customary form: 4 the
3 Rolled Steel Products (Holdings) Ltd v British Steel Corp [1986] 1 Ch 246 (CA) 310C-E.
4 Eg National Union of Metalworkers of SA v Jumbo Products CC 1996 (4) SA 735 (A) 738E-G.
6
hearing of the applications was consolidated, the applications were referred
for oral argument on 30 November and 1 December in terms of s 21(3)(c)(ii)
of the Supreme Court Act 59 of 1959, the parties were to be prepared (if
called upon to do so) to address the c ourt on the merits, and the respondents
were to file any affidavits and heads of argument if and when convenient.5
[8] On 29 November, the ev e of the hearing before this court, the judge
president gave notice to the parties that judgment would be delivered on 3
December. In the event it was. Hlophe JP (Yekiso J c oncurring) refused
leave whilst Traverso DJP would have done otherwise. Why it took three
weeks to type or check a second draft of a judgment that ultimately ran to
thirteen well-spaced typed pages we have not been told. As this court once
said:6
‘Much more than a matter of mere courtesy is involved. By such conduct the
administration of justice is hampered, and ma y be seriously hampered, by an arbiter of
justice himself, whose responsibility it is to render it effective and not add judicial
remissness to its already irksome delays.’
[9] Three issue arise from the present applications: (a) should they be
dealt with as a matter of urgency; (b) were the applicants entitled to
approach this court for leave to appeal where the court of first instance had
not yet ruled on their applications (the so-called jurisdiction point) and (c) if
5 Which they did at close of the registrar’s office on 29 November.
6 S v Lifele 1962 (2) SA 527 (A) 531F. The context was different.
7
so, do the applicants have reasonable prospects of success on appeal? The
respondents raised a further procedural issue, namely whether the first two
issues should be separated from the third, insisting that this court should deal
with the application piecemeal, and not as a whole.
URGENCY
[10] In the court below (as mentioned) the case was dealt with by
agreement between the parties and by the court as one of urgency until
judgment on 27 August. Nothing has since changed except that the
respondents were successful. The only point made by the respondents of any
consequence is that the matter is no longer urgent; had it been urgent, the
applicants would have applied for l eave to appeal to the Constitutional
Court; instead they applied for leave to this court. 7 One gained the
impression that the respondents believe (a view shared by the court below as
will appear later) that since ther e are constitutional issues only the
Constitutional Court should deal with th e matter. The choi ce of forum was
that of the applicants alone. If pr operly engaged, this court has a
constitutional duty to deal with a matte r and deal with it expeditiously. This
court does not have the power to divert cases to the Constitutional Court. In
any event, and this the applicants a llege is their dilemma, the Constitutional
7 There was a rather lame attempt in the respondents’ answering affidavits in the present applications to
show that the regulations did not threaten the viability of the dispensing profession but respondents’
counsel thought it best no to deal with the allegations during argument.
8
Court is entitled to refuse to hear app eals directly and may require that they
first be heard by this court. Therefore, they say, it was prudent for them to
take the present route.
[11] Although not raised with refere nce to any facts in the affidavits
opposing the applications be fore us, respondents’ counsel objected to the
present proceedings and submitted that they were procedurally unfair
because of the limited time allowed to enable them to pr epare on the merits;
eight court days were allegedly insufficient.8
[12] In the court below the respondent s were able to deal with both cases
within exceptionally short periods, mo st of their own choosing. They
prepared lengthy answering affidavits by 31 May (amplified by 9 June),
taking into account the applications were only served on 24 and 27 May, and
were in court on 1 June for the prelim inary hearing. And they were ready to
argue on 17 June, three ordinary days af ter the replying and eight ordinary
days after the answering affidavits ha d been filed. They w e r e a l s o i n a
position to file heads of argument, so full that the court below was able to
dispose of argument by four sets of c ounsel within a day and a half, despite
the fact that the combined record ran to about 4000 pages.
8 The members of this court were, without any background, able to prepare the appeal within the allotted
time during the busiest part of term.
9
[13] The respondents’ submissions in this regard, sadly, were but a
smokescreen. Already at the meeti ng on 17 November with me, the
respondents’ counsel insisted emphati cally on a separation of issues and
stated that their clients would not inst ruct counsel to deal with the merits.
During oral argument before us, th e respondents’ lead counsel was
specifically and repeatedly asked whether they required a postponement in
order to prepare argument on the me rits. The questions did not elicit a
response. When asked whether the respondents could provide a date
convenient to them for argument on the merits, the question failed to extract
a reaction. When asked whether they n eeded an adjournment to consider a
request for a postponement, yet again, counsel did not reply and simply
proceeded to argue another point.9
[14] This is consistent with the attitude from the outset that the
jurisdictional issue should be dealt with separately . They had a right, they
said, to a separate hearing. And they wi shed to exercise that right in order
that, if we dismiss their argument, they could appeal. That is why they
decided in advance not to instruct couns el, why they refused – in spite of a
request on 17 November – to provide c opies of the heads of argument used
in the court below to assist us in pr eparing for the hearing, and why they
9 In answer to a complaint about my ruling, addressed to the Acting President of the court, he pointed out
that the respondents were entitled to apply at the hearing for a postponement of the ‘merits’, which they
never did.
10
were generally obstructiv e in relation to each suggestion relating to an
expedited hearing. 10 As will become apparent from the discussion on the
merits, the issues are of national im portance. Because of uncertainty and
confusion created and the frustration of what was intended, namely access to
health care, it is imperative that the litigation should be brought to an early
conclusion. There is accordingly no merit in the respondents’ submission
that the applications are not urgent or that they were prejudiced procedurally
by an urgent hearing.
SEPARATION OF ISSUES11
[15] In S v Malinde 1990 (1) SA 57 (A) 67F-G it was said:
‘This Court is in principle strongly opposed to the hearing of appeals in piecemeal
fashion. . . . An exception may be made, howe ver, where unusual circumstances call for
such procedure . . . or in “enkele gevalle van 'n besondere aard” . . ..’
The same applies to applications. Nic holas AJA proceeded to state (at 68C-
E):
‘Substantial grounds should exist for the exercise of the power. The basis of the
jurisdiction is convenience – the convenience not only of the parties but also of the Court.
The advantages and disadvantages likely to follow upon the granting of an order must be
weighed. If overall, and with due regard to th e divergent interests a nd considerations of
10 Of the seven counsel who appeared on behalf of the respondents in the court below, three appeared
before us. One of these was a member of the pricing committee, which was responsible for the draft
regulations.
11 Uniform rule 33(4) does not apply to the SCA.
11
convenience affecting the partie s, it appears that the ad vantages would outweigh the
disadvantages, the Court would normally grant the application.’
He concluded (at 86E) by saying that the court should not grant an
application for a separate hearing unle ss there appeared to be a reasonable
degree of likelihood that the alleged advantages would in fact result.
[16] The respondents have not sought to justify a separation of issues by
filing an application therefor. Instead, th ey claim a right thereto and in this
regard they cited Chevron Engineering (Pty) Ltd v Nkambule 2003 (5) SA
206 (SCA) and American Natural Soda Cor poration v Competition
Commission 2003 (5) SA 655 (SCA). They submitted that the separation of
jurisdiction from other issues is the normal procedure of this court. They are
wrong. Sometimes the issue is dealt with separately but that usually depends
on the nature of the appli cation. For instance, in American Natural Soda the
application was for an order declaring, inter alia, that the applicants were
entitled to note an appeal while in Chevron the applicant not only asked for
leave to appeal but also for directions in regard to the further prosecution
and conduct of the appeal. 12 In neither case was the record before court nor
did the question of separation of issues arise.
[17] As said, the only reason the respondents advanced in support of a
separation was that they wished to ap peal any unfavourable ruling first,
12 See Chevron Engineering (Pty) Ltd v Nkambule para 20; and American Natural Soda Corporation v
Competition Commission para 1.
12
which would have added to the delay. That reason is insufficient and does
not fulfil the requirements laid down in S v Malinde . In addition, there are
the considerations alluded to in pa ra 14 above, which militate against a
separation.
JURISDICTION
[18] The facts recited have a material bearing on the next issue, namely,
whether this court was entitled to ente rtain the applications for leave to
appeal considering the fact that they were launched before the court below
had ruled on the applications before it. The respondents submit not. The
basis of their submission is that this court does not have any jurisdiction in
the absence of a ruling by the lower court.
[19] As a starting point, this court does not have any original jurisdiction. 13
Its jurisdiction is derived from the C onstitution and is principally limited to
decide appeals and issues connect ed with appeals (which includes
applications for leave to appeal). 14 Although this court, like the
Constitutional Court and High Courts, has the inherent power to protect and
regulate its own process, that ‘doe s not extend to the assumption of
jurisdiction not conferred upon it by statute.’15
13 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 3 SA 1 (A) 7F-G.
14 Constitution s 168(3); S v Basson 2004 (6) BCLR 620 (CC) para 103.
15 Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service 1996 3 SA 1 (A) 7F-G. See also Sefatsa
v Attorney-General, Transvaal 1989 (1) SA 821 (A) 834E.
13
[20] This principle requires some elucidation, which can be done with
reference to the cases just cited. In Moch the facts were these: s 150 of the
Insolvency Act 24 of 1936 does not permit an appeal against a provisional
order of sequestration. The applicant in that matter argued that this court
could bypass the prohibition by the exercise of its inherent jurisdiction. It
was in answer to that submission that th is court said that the inherent power
to regulate its process does not extend to the assumption of jurisdiction not
conferred upon it by statute. In S v Basson 16 the issue was similar. The
question was whether the Criminal Pro cedure Act 51 of 1977 gave the state
a right to appeal the discharge of an accused on the merits. If the
Constitution or a statute does not provide for such a right that is the end of
the matter and this court cannot assume the power. Neither case was
concerned with the instance where ther e is a right of appeal subject to
procedural preconditions.
[21] Appeal jurisdiction of this court in civil proceedings is derived from s
20(1) of the Supreme Court Act. This c ourt has jurisdiction to hear appeals
against judgments or orders in any civil proceeding. 17 Section 20(4)(b)
contains certain conditions that apply to the present cases:
16 2004 (6) BCLR 620 (CC).
17 The only exclusion is in s 20(7) which deals with certain matrimonial disputes.
14
‘No appeal shall lie against a judgment or order of the court of a provincial or local
division [read: high court] in any civil proceedings . . . except—
(a) . . . ;
(b) . . . with the leave of the court ag ainst whose judgment or order the appeal
is to be made or, where such leave has b een refused, with the leave of the appellate
division [read: Supreme Court of Appeal].’
The purpose of para (b) is to protect this court against baseless appeals and it
does so by limiting appeals to those that have reasonable prospects of
success.18 Prior to its amendmen t in 1982, the section gave a party in the
position of the applicants an untrammelled right of appeal to this court.19
[22] Although couched in the negative, these provisions mean that in civil
proceedings emanating from high cour ts, everyone has a right of appeal
against judgments or orders. The right is not absolute since leave to appeal is
required. Leave is a condition for exercisi ng the right or, put differently, it is
a jurisdictional fact for an appeal. The court whose judgment is sought to be
appealed must first be approached for leave. 20 If that is granted, the
condition is fulfilled. If it is refused, the party wish ing to appeal has a right
to petition this court for leav e. That much is clear from National Union of
18 S v Rens 1996 (1) SA 1218 (CC) para 7; Cronshaw v Coin Security Group (Pty) Ltd 1996 (3) SA 686 (A)
689B.
19 The amendment was introduced by the Appeals Amendment Act 105 of 1982.
20 That court must also consider whether the appeal should be to the full court or this court. Since these
matters were heard in the first instance by a full bench of three members, an appeal to the full court was not
possible.
15
Metalworkers of SA v Jumbo Products CC 1996 (4) SA 735 (A) 740A-D
where Corbett CJ said that –
‘no appeal lies to this Court against the judgment on the mer its or the judgment refusing
condonation of the late filing of the application to the Court a quo for leave to appeal
except either where the Court a quo has itself granted leave to appeal or where, the Court
a quo having refused such leave, such leave ha s been granted by this Court. Thus, as is
clear from the subsection, this Court’s jurisdic tion to grant leave itself is dependent on
the Court a quo having refused such leave. The proper procedure, as imperatively laid
down by section 20(4)(b), is for the would-be appellant to apply for leave first to the
Court against whose judgment the appeal is to be made. If th at Court grants leave, then
this Court may entertain the appeal. If that C ourt refuses leave, then (but only then) may
this Court consider an application for leav e to appeal. Thus se ction 20(4)(b) not only
prescribes the proper procedure, but it also defines the jurisdiction of this Court to
entertain an application for leave to appeal.’
[23] In view of the considerable emphasis placed by the respondents on
this passage, some aspects should be emphasised about the judgment. The
first is that the applicant for leave di d not apply for leave from the court of
first instance and thus failed to take the first step. (The same is true of most,
if not all, the cases where this court has said that an application to the court a
quo and its subsequent order are jurisdictional facts.)21 Second, the judgment
did not deal with the case where a litigan t, following the correct procedure,
is unable to obtain a decision from that court within a reasonable time
21 Eg Middelberg v Prokureursorde, Transvaal 2001 (2) SA 865 (SCA) para 5.
16
(relative to the circumstances). Third, the effect of the (interim) Constitution
on the interpretation of the provision did not arise.
[24] Although a ruling by the court belo w is a jurisdictional fact, this does
not mean that the filing of an appeal or an application for leave with this
court is a nullity simply because the c ourt below has not yet given its ruling.
That is apparent from a series of judgments dating back to Gabriel v Natal
Law Society 1913 AD 327. There the appellant required leave to appeal. The
court below did not grant or refuse leave, wrongly believing that it was
unnecessary to make a ruling. At the hearing the appellant argued that leave
was not required but this court di sagreed. It then granted leave nunc pro
tunc, as though proper application had been made timeously, but warned that
such procedure should not generally be adopted.
[25] In terms of the then applicable statute, no interlocutory order was
subject to appeal save by leave of the court or judge making the order. 22 In
other words, this court could not grant leave, even if leave had been refused
by the court of first instance. The appellant in Blaauwbosch Diamonds Ltd v
Union Government (Minister of Finance) 1915 AD 599 failed to apply for
leave. Although this court had no jurisdiction to hear the matter, it did not
strike the appeal from the roll as bei ng a nullity; instead it allowed the case
to stand down to enable the appellant to obtain the necessary leave. It did not
22 Appellate Division Further Jurisdiction Act 1 of 1911 s 3(b).
17
hear argument on the merits and postp one the judgment pending the grant of
leave because the court of first instan ce was the final arbiter of whether
leave should be granted or not. The hearing continued eleven days later,
leave having been obtained in the inte rim from the court of first instance. 23
The facts in Oliff v Minnie 1952 (4) SA 369 (A) were virtually identical. The
same provision applied and the appellant failed to apply for leave to appeal
from the court of first instance. This court noted that it had no jurisdiction to
dispose of the case but nevertheless he ard argument on the merits and let the
case stand over. It said (at 376B-C):
‘This matter must, therefore, stand over to enable the plaintiff to apply within
twenty-one days of this judgment to the Court a quo for leave to appeal . If that Court
grants such leave and the order granting leave is lodged with the Registrar of this Court,
we, having heard argument on the merits, will be in a position to deliver a judgment on
the merits and to make an appropriate order as to costs. If the Court a quo refuses leave to
appeal and the order refusing such leave is lodg ed with the Registrar of this Court, this
matter will, without any further order of this Court, be deemed to have been struck off the
roll with costs.’
The reason for the ruling in the ultimate sentence was that, as mentioned, the
court of first instance could refuse leave, which would put an end to the right
of appeal. The appeal was later upheld without further argument.24 A similar
course was taken in Sita v Olivier NO 1967 (2) SA 442 (A) 450E-H under a
23 But see De Beer v Minister of Posts and Telegraphs 1922 AD 175.
24 Oliff v Minnie 1953 (1) SA 1 (A).
18
statutory provision which, for all intent s and purposes was identical to that
contained in s 20(4)(b) of the Supreme Court Act.25
[26] In Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A) 608E-
G, Trollip JA summed up the position when he said that –
‘Where the necessary leave to appeal is lacking this Court may, in appropriate
circumstances, defer the hearing or determination of the appeal to enable to appellant to
obtain such leave . . .’26
It should be emphasised that either the hearing or the determination
(judgment) can be deferred and, secondl y, that the circumstances should be
appropriate before this extraordinary procedure may be adopted.
[27] Instructive is Holt v Brook 1959 (3) SA 803 (N). Under the applicable
statute the appellant, in order to app eal, had to give a prescribed notice
(referred to as a s 61 notice) to the othe r party of its intention to appeal and
had to obtain the leave of the court of first instance. In issue was the
question whether or not the notice coul d precede the grant of leave. Broome
JP, speaking on behalf of a full bench, said (at 805C-F):
‘A litigant may surely form and notify an intention to appeal before he has taken all the
procedural steps which lie before him. Thes e must be taken before his appeal can be
heard, but the order in which they are taken does not appe a r t o m e t o b e o f a n y
importance, provided that each is taken within the time, if any, specifically prescribed
25 The ultimate decision was reported as Sita v Olivier NO 1967 (3) SA 597 (A).
26 Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A) 608E-G.
19
therefor. When a person desires to institute action in any Court he will invariably find
that the law prescribes an initi al step which he must take to set his litigation on foot.
Usually it is a summons. Similarly a litigant against whom judgment has been given who
desires to appeal will find that an initial step is laid down which he must take to set his
appeal on foot. Normally this step is the notice of appeal. In the present case it is the
notice under sec. 61. When that notice is given his appeal is on foot. It may be, as here,
that he requires leave to appeal, but the obt aining of such leave is not the initial step
which sets his appeal on foot and without which there is no app eal on foot at all. It is a
step which he must take before his appeal can be entertained by the Court of Appeal.’
[28] In all the cases cited, the would- be appellant failed to apply for leave
to appeal from the court of first in stance. Notwithstanding the absence of
this jurisdictional fact, this court accep ted that it could hear and decide the
matter provided the conditio n was fulfilled before judgment was delivered.
In this case the applicants are in a better position. They took all the
prescribed steps; they did apply to the court below; they did apply to this
court. All that was missing was the ruling of the court belo w. That came less
than 48 hours after conclusion of argument, but, as is apparent from the body
of authority cited, that is not fa tal. The procedural condition for the
determination of the applications for leave has now been fulfilled.
[29] There is another reason why s 20( 4)(b) of the Supreme Court Act does
not prevent a consideration of the application. All statutes must be read in
the light of the Constitution. More pa rticularly, s 39 enjoins courts, when
20
interpreting the Bill of Rights to prom ote the values that underlie an open
and democratic society based on human dignity, equality and freedom; and
when interpreting any legislation, to promote the spirit, purport and objects
of the Bill of Rights.
[30] Although the Constitution does not gu arantee a right of appeal in civil
proceedings explicitly,27 a general right to a ‘fair’ hearing is entrenched in s
34.28 Applied to the provisions of the Supreme Court Act, this means that the
proceedings there described must, procedurally, be ‘fair’. In Boodhoo & Ors
v. Attorney General of Trinid ad and Tobago (Trinidad and Tobago) [2004]
UKPC 17 (PC) the Privy Council had to consider the effect of a basic right
to ‘the protection of the law’ contained in the constitution of Trinidad and
Tobago on a delay in appeal proceedings , and it quoted with approval the
following statement of de la Bastide CJ in the Court of Appeal of Trinidad
and Tobago (at para 9):
‘It seems to me that this is the right that can most appropriately be invoked by
persons who complain of delay by a court in delivering judgment or for that matter
failure to deliver judgment. Su rely, if the protec tion of the law means anything, it must
mean that persons are entitled to have reco urse to the appropriate court or tribunal
prescribed by law for the purpose of enforcing or defending their rights against others or
resolving disputes of one kind or another. It is axiomatic that such a right is meaningless
27 Whether the right is implicit does not arise. Cf s 35(3)(c).
28 Cf Besserglik v Minister of Trade, Industry and Tourism (Minister of Justice intervening)1996 (4) SA
331 (CC) para 9-10.
21
without a decision by the court or tribunal to which the claim or dispute is referred for
adjudication.’
The Privy Council concluded by holding that
‘delay in producing a judgment would be capable of deprivi ng an individual of his right
to the protection of the law, as provided for in section 4(b) of the Constitution of Trinidad
and Tobago, but only in circumstances where by reason thereof the judge could no longer
produce a proper judgment or the parties were unable to obtain from the decision the
benefit which they should.’
(Para 12, emphasis a dded.) The same must apply to the right to a ‘fair
hearing’ in respect of an application for leave to appeal.29
[31] The Supreme Court Act assumes th at the judicial system will operate
properly and that a ruling of either aye or nay will follow within a
reasonable time. The Act – not surprisingly – does not deal with the situation
where there is neither and a party’s ri ght to litigate further is frustrated or
obstructed. The failure of a lower cour t to give a ruling within a reasonable
time interferes with the process of this court and frustrates the right of an
applicant to apply to this court for leave. Inexplicable inaction makes the
29 Cf s 35(3)(d) and (o) of the Constitution. The European Convention on Human Rights provides in art
6(1) that ‘In the determination of his civil rights and obligations ..., everyone is entitled to a … hearing
within a reasonable time by [a] tribunal ... .’ There are many judgments on the article and reasonableness is
assessed particularly in the light of the circumstances of the case, having regard in particular to the
complexity of the case and the conduct of the parties to the dispute and the relevant authorities.
Terranova v Italy (ECHR) 4 December 1995, Series A no. 337-B para. 20).
22
right to apply for leave from this court illusory. 30 This court has a
constitutional duty to protect its processe s and to ensure that parties, who in
principle have the right to approach it, should not be prevented by an
unreasonable delay by a lower court. 31 In appropriate circumstances, where
there is deliberate obstructionism on the part of a court of first instance or
sheer laxity or unjustifiable or inexplicable inaction, or some ulterior motive,
this court may be compelled, in the spirit of the Constitution and the
obligation to do justice, to entertain an application of the kind presently
before us.
[32] In Montsisi v Minister van Polisie 1984 (1) SA 619 (A) the court dealt
with s 32(1) of the since repealed Police Act 7 of 1958. It proscribed the
institution of legal proceedings against the police more than six months after
the cause of action had arisen. Accord ing to jurisprudence the six months
period was a ‘vervaltermyn’, which m eant that it could not have been
suspended under the provisions of a pr escription statute. The allegations
were that the appellant had been de tained by the SA Police on 10 June 1977
under the provisions of the Terrorism Act 83 of 1976 and that he was
assaulted while in detention on 13 J une and 27 October 1977. He was only
released from detention on 28 July 197 8, after the lapse of the six month
30 In S v Venter 1999 (2) SACR 231 (SCA) the trial court took eight months to enroll the application for
leave to appeal. The applicant had been sentenced to 4 years effective imprisonment. He was in prison and
on appeal his sentence was reduced to six months. A clear failure of justice due to judicial delay.
31 See s 173 of the Constitution, which deals with this court’s inherent power to regulate and protect its own
process.
23
period. It was common cause that, by virtue of the provisions of s 6 of the
Terrorism Act, the appellant was not able to institute any legal proceedings
during the period of his detention. This court found that his claim was not
out of time applying the general principle of lex non cogit ad impossibilia (at
635A-H). This principle, which is rea lly one of the law of contract, has
general application. Applied to the issues in this case, if an applicant finds it
impossible to obtain a ruling within a reasonable period from a court below,
its absence cannot be held against it. (By parity of reasoning one could apply
the principle of fictional fulfilment of a condition.)
[33] That brings me to a consideration of whether, on the facts of this case,
there was an undue delay in issuing a ru ling, which entitled the applicants to
approach this court for leave. In this re gard it is well to remember that by its
very nature the judicial process is slo w, judges have other ca ses to attend to,
they have to consider their verdicts and give reasoned judgments, due
allowance must be made for the speed with which individual judges work,
and that –
‘citizens who are engaged in litigation have to face a number of possible hazards. The
members of a court consisting of an even num ber of judges may divide evenly, so giving
rise to the need for a rehearing. A jury may have to be discharged or a judge to recuse
himself at an advanced stage of a trial, wit hout anyone having been at fault. A judge may
24
die or take ill before concl uding the hearing of a case or be fore judgment is given. These
constitute the ordinary risks inseparable from litigation . . ..’32
[34] The present matters began as urge nt applications and, since the
parties were agreed that they were urgent, the court below properly dealt
with them on that basis. Two comp endious judgments (in all about 180
typed pages) were delivered within tw o months. The applications for leave
raised no new points that had to be covered by any fu rther judgment.
Applications for leave are ordinarily dealt with by courts expeditiously and
leave is either granted or refused instantly, sometimes accompanied by an ex
tempore judgment of a page or two.33 The validity of regulations that have a
profound effect on many w ould usually provide compelling reasons to have
the issue determined as soon as possible.34
[35] The respondents did not submit th at the delay was reasonable or
justifiable. Their counsel was not prepar ed to deal with the question of what
the case would have been if a court refu ses because of an ulterior motive to
give a ruling, saying it was hypothetical . Instead, he submitted that the court
all along intended to deliver a ruling, relying on the meeting with the judge
president on 12 November. It really mi sses the point. One is supposed to
32 Boodhoo & Ors v. Attorney General of Trinidad and Tobago (Trinidad and Tobago) [2004] UKPC 17
(PC) para 14.
33 This court as a rule disposes of applications for leave without oral argument and without providing any
reasons: Mphahlele v First National Bank of South Africa Ltd 1999 (3) BCLR 253 (CC).
34 Cf Minister of Public Works v Kyalami Ridge Environmental Association 2001 (3) SA 1151 (CC) para
27.
25
adjudge the matter as it stood when the applications were filed, and
objectively.
[36] It is necessary to have regard to the terms of Hlophe JP’s judgment to
see whether it contains any clues as to why it had to be delayed. The first
seven pages of the judgment deal with the reason why the application for
leave was not dealt with in chambers but in open court. Those reasons are
academic and have nothing to do with the question whether or not leave
should have been granted. During the course of this discussion Hlophe JP
took umbrage to the applicants’ direct ap proach to the head of this court to
determine the availability of dates before the application had been
determined, as if it amounted to some kind of lese-majesty.
35 Apparently he
did not appreciate fully that the applicants were entitled to approach this
court either by way of an appeal or an application for leave to appeal,
irrespective of the outcome of their applications before the court below.
[37] Hlophe JP, when dealing with the merits of the application, himself
said that –
‘there was absolutely nothing new that cam e out in argument when we heard the
application for leave to appe al. All the issues raised we re fully canvassed in a long
judgment which was carefully written.’
35 He did not comment, maybe because he was unaware that the respondents had approached the Acting
Chief Justice to determine what dates were available there.
26
Why then, one may fairly ask, did it ta ke longer to dispose of the application
for leave than the application itself? He said that the fact that there was a
minority judgment did not mean that another court might reasonably agree
with the minority. (As Antoine de Saint- Exupéry said, it is harder to judge
oneself – and, one may a dd, the fruits of one’s labours – than to judge
others.) He proceeded to find (so it w ould appear) that since the case raises
constitutional issues, leave to this c ourt should not be gr anted, apparently
assuming that a court of first instan ce does have the right to choose the
appeal forum while all it can decide is whether there were reasonable
prospects of success.
[38] Ineluctably, in the light of th e nature and scope of the issues, the
period of the delay, the lack of expl anation, the urgency of the case, the
content of Hlophe JP’s judgment and the other factors mentioned, the only
conclusion can be that the delay was not only regrettable, it was
unreasonable – so unreasonable in fact th at it could only be interpreted as a
refusal of leave.
[39] The judgment of Hlophe JP concl uded with a reference to the spirit of
ubuntu in interpreting statutes. The word appeared in an endnote of the
interim Constitution where it dealt with national unity and reconciliation:
27
‘These can now be addressed on the basis that there is a need for understanding
but not for vengeance, a need for reparation but not for retaliation, a need for ubuntu but
not for victimisation.’
It does, however, not appear in the Constitution in express terms. Ubuntu has
many dimensions but its application to statutory interpretation is novel. 36 It
ought to apply to the relationship between courts and the respect required of
organs of state and courts towards citizens and towards each other. One does
sense that the court below was irrita ted because the applicants had the
temerity to ask for a quick disposition of the appli cations for leave. There
are some who believe that requests for ‘ hurried justice’ should not only be
met with judicial displeasure and cas tigation but the severest censure and
that any demand for quick rendition of re served judgments is tantamount to
interference with the independence of j udicial office and disrespect for the
judge concerned.37 They are seriously mistaken on both counts. First, parties
are entitled to enquire about the progress of their cases and, if they do not
receive an answer or if the answer is unsatisfactory, they are entitled to
complain.38 The judicial cloak is not an impregnable shield providing
36 S v Makwanyane 1995 (6) BCLR 665, 1995 (3) SA 391 (CC) para 225:‘Respect for the dignity of every
person is integral to this concept.’ Para 237: ‘The concept carries in it the ideas of humaneness, social
justice and fairness.’ Para 263: ‘“The need for ubuntu” expresses the ethos of an instinctive capacity for
and enjoyment of love towards our fellow men and women; the joy and the fulfilment involved in
recognizing their innate humanity; the reciprocity this generates in interaction within the collective
community; the richness of the creative emotions which it engenders and the moral energies which it
releases both in the givers and the society which they serve and are served by.’ Para 308: ‘Generally,
ubuntu translates as “humaneness”. … in its fund amental sense it denotes humanity and morality.’
37 Botha v White 2004 (3) SA 184; [2003] 2 All SA 362 (T) para 55.
38 The protocol issued in 2003 by the Chief Justice and Judges of the Supreme Court of Tasmania
out what the local position has been since time immemorial:
28
immunity against criticism or repr oach. Delays are frustrating and
disillusioning and create the impression that judges are imperious. Secondly,
it is judicial delay rather than complaints about it that is a threat to judicial
independence because delays destroy the public confidence in the judiciary.
There rests an ethical duty on judges to give judgment or any ruling in a case
promptly and without un due delay and litigants ar e entitled to judgment as
soon as reasonably possible. 39 Otherwise the most quoted legal aphorism,
namely that ‘justice delayed is justice denied’, will become a mere platitude.
Lord Carswell recently said:
‘The law's delays have been the subject of complaint from litigants for many
centuries, and it behoves all cour ts to make proper efforts to ensure that the quality of
justice is not adversely affected by delay in dealing with the cases which are brought
‘1. The policy of the Court is that judgment should be delivered as expeditiously as possible. However,
given (inter alia) the constantly changing and often unpredictable demands on judicial time, the differences
in the priorities for the delivery of judgments in different cases and the difference in the time required for
the writing of judgment in different cases, the judges do not regard it as appropriate or useful to settle a
time-table governing the delivery of reserved judgments.
2. It is the Court's view that it is highly desirable that the Court is always informed if there is some special
reason why judgment should be delivered quickly in a particular case and the Court has never seen any
objection to solicitors for the parties making an enquiry in appropriate cases as to when a reserved
judgment might be expected to be delivered.
3. In the event that the solicitors for one or more of the parties are concerned at the delay in any given case,
an enquiry in writing may be made to the Judge in question or to his Associate as to when judgment may be
expected.
4. If the enquiry is not answered to the satisfaction of the solicitor or the client, the enquiry should be
directed to the Chief Justice, who will then consult with the Judge who has reserved judgment.
5. If the delay is that of the Chief Justice, the enquiry should be made to the Senior Puisne Judge.
6. If any solicitor is reluctant to make a direct approach as set out above, he or she should write to the
President of the Tasmanian Bar Association in confidence advising details of the proceeding number, the
parties, the name of the Judge and the date of reservation. The President will then write to the Chief Justice
(or Senior Puisne Judge) without identifying the solicitor on whose behalf the enquiry is made and the
Chief Justice (or Senior Puisne Judge) will then consult with the Judge who has reserved judgment.
7. After consultation with the Judge who has reserved judgment, the Chief Justice (or Senior Puisne Judge)
will respond to the President's enquiry for forwarding to the solicitor making the original enquiry.
8. This Protocol is similar to one operating in Victoria, which is said to have operated satisfactorily from its
inception. It is made in response to a request from the Tasmanian Bar Association.’
39 ‘Ethical guidelines for judges’ para 17 published at 117 (2000) SALJ 406. These guidelines were adopted
by the heads of court and apply to all judges.
29
before them, whether in bringing them on for hearing or in issuing decisions when they
have been heard.’40
In Goose v Wilson Sandford and Co 41 the Court of Appeal censured a judge
for his delay in delivering a reserved judgment and said:
‘Compelling parties to await judgment for an indefinitely extended period . . .
weakened public confidence in the whole judicial process.
Left unchecked it would be ultimately subversive of the rule of law.’
THE MERITS
[40] In order to succeed, the applicants have to persuade us that there is a
reasonable prospect of success in the ap peal. Once an application of this
kind is referred to oral argument there is no reason to have two hearings, one
to ascertain whether there are r easonable prospects and a second to
determine the merits of the appeal. The respondents, forewarned that this
established procedure may be followed, decided, as mentioned, not to
address these issues.
42 Although we have been depr ived of the privilege of
their argument, we are fortunate to ha ve a full judgment of the majority of
the court below which dealt favourably with most of the points raised by the
respondents in their papers. One can al so glean from the affidavits, which
contain much by way of argument, a nd the minority judgment what the
40 Boodhoo & Ors v. Attorney General of Trinidad and Tobago (Trinidad and Tobago) [2004] UKPC 17
(PC).
41 The Law Times Reports (Feb 19, 1998) 85 at 86.
42 They are not the first to do so: Letterstedt v Morgan (1849) 5 Searle 373.
30
respondents’ contentions would have been. Cowed by the respondents’
refusal to be of any assistance we ca nnot be. Organs of state, who have a
constitutional duty to, inter alia, assist courts to ensure their effectiveness, 43
have always treated courts with respect and we assume that the refusal to
argue is not indicative of a change of heart but rather of inappropriate legal
advice based on overconfidence.
LEGALITY
[41] In Gerber v MEC of the Gauteng Provincial Government,
Development Planning & Local Government [2002] 4 All SA 518, 2003 (2)
SA 244 (SCA) at para 35 it was pointed out that –
‘The Republic of South Africa is a cons titutional State. Local authorities and
other State institutions may act only in acco rdance with powers conferred on them by
law. This is the principle of legality, an incident of the rule of law.’
This brings me to the main thrust of the attack on the validity of the
regulations, which is that they l ack legality or, in pre-Constitutional
parlance, that they are ultra vires. As was said by Chaskalson P,
‘What would have been ultra vires under the common law by reason of a functionary
exceeding a statutory power is invalid under the Constitution according to the doctrine of
43 Constitution s 165(4).
31
legality. In this respect, at least, constitu tional law and common law are intertwined and
there can be no difference between them.’44
The learned President furthe r pointed out that the doct rine of legality, as an
incident of the rule of law, was an implied provision of the interim
Constitution; that it is central to th e conception of our constitutional order
that the legislature and executive in every sphere are constrained by the
principle that they may exercise no power and perform no function beyond
that conferred upon them by law; and that the Constitution in specific terms
now declares that the rule of law is one of its foundational values. 45 In this
regard it is well to remember that it is not the function of the judiciary
‘to “second guess” the executive or legislative branches of government or interfere with
affairs that are properly their concern’
but that
‘[a]dherence to the prescribed forms and pr ocedures and insistence upon the executive
not exceeding its powers are important safeguards in the Constitution’46
and that questions of legality cannot be decided on the basis that the minister
or the committee acted in good faith.47
44 Pharmaceutical Manufacturers Association of SA: In re Ex parte President of the RSA 2000 (3) BCLR
241; 2000 (2) SA 674 (CC) para 50.
45 Para 17. He referred to Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan
Council 1998 (12) BCLR 1458; 1999 (1) SA 374 (CC) para 56-59 and President of the Republic of South
Africa and Others v South African Rugby Football Union and Others 2000 (1) SA 1; 1999 (10) BCLR 1059
(CC). See also Minister of Home Affairs v Eisenberg 2003 (8) BCLR 838; 2003 (5) SA 281 (CC) para 39.
46 Executive Council of the Western Cape Legislature v President of the RSA 1995 (10) BCLR 1289; 1995
(4) SA 877 (CC) para 99.
47 At para 100.
32
[42] In order to determine the sc ope of the minister’s powers in
promulgating the regulations in contention the logical starting point is an
interpretation of the Medici nes Act. The Act must be read in the light of s
27(1) of the Bill of Rights, which pr ovides that everyone has the right to
have access to health care services, including reproductive health care and
that the state must take reasonable le gislative and other measures, within its
available resources, to achieve the progre ssive realisation of this right. One
has to agree that the right of access to health care includes the right of access
to medicines although this right is not without limitations.
48 It is also correct
that the prohibitive pricing of medicines may be tantamount to a denial of
the right of access to health care. All that is really common cause. What is
not, is how parliament has sought to ach ieve the progressive realisation of
this right through the provisions of the Act.
[43] There is another dimension of th e right in issue, namely the negative
obligation resting on the state to desist from preventing or impairing the
right of access to health care services.
49
[44] As initially promulgated, the Me dicines Act was ca lled the Drugs Act
and provided for the registration of dr ugs for human use, the establishment
of a Drugs Control Council and matters incidental thereto. It has been the
48 Soobramoney v Minister of Health, KwaZulu-Natal 1998 (1) SA 765, 1997 (12) BCLR 1696 (CC).
49 Minister of Health v Treatment Action Campaign (2) 2002 (10) BCLR 1033; 2002 (5) SA 721 (CC) para
46.
33
subject of repeated amendments, including one in 1974 when a name change
to the Medicines and Related Substances Control Act took place.50 The word
‘control’ was removed from the name by s 28 of the Medicines and Related
Substances Control Amendment Act 90 of 1997. When courts have said 51
that the purpose of the Medicines Ac t was directed at the control of
medicines and so-called re lated substances, to regul ate the manner in which
scheduled substances were made avai lable to members of the public, to
control the quality and supply of medi cines generally and to protect the
citizenry at large, they were not dealing with the provisions introduced by
the amending Act. Some are of particular significance to this case, namely
sections 15C, 18A, 18B and 22G. In order to determine the purpose and
meaning of the provisions introduced by amending Act one has to delve
deeper.
[45] It needs to be mentioned in parenthesis that the Medicines Act was
supposed to have been repealed – sa ve for some provisions including those
just mentioned – by the South Afri can Medicines and Medical Devices
Regulatory Authority Act 132 of 1998. Because of certain problems, the
50 Drugs Control Amendment Act 65 of 1974 s 35.
51 Administrator, Cape v Raats Röntgen and Vermeulen (Pty) Ltd 1992 (1) SA 245 (A) 254B-G; Mistry v
Interim Medical and Dental Council of SA 1998 (7) BCLR 880; 1998 (4) SA 1127 (CC) para 10-11.
34
promulgation by the President of this Act was set aside. 52 Since then the
repealing Act itself has been repealed.53
[46] The Medicines Act has no prea mble and its long title is singularly
uninformative. It provides for the regist ration of medicines and states that
only registered medicines may be sold (s 14(1)). They, and related
substances,54 are classified. In general term s, schedule 0 drugs may be sold
in an open shop; schedule 1 drugs may by sold by pharmacists without a
prescription; schedule 2 drugs may also be sold by pharmacists without a
prescription but only under stricter conditions; schedule 3, 4, 5 and 6
substances may be sold by a pharmaci st but only with a prescription;
whereas schedule 7 and 8 substances are prohibited substances (s 22A).
Persons other than pharmacists wh o are registered under the Health
Professions Act 56 of 1974 may be licensed to di spense medicines (s
22C(1)(a)). The Act also recognises the existence of a chai n of supply for
medicines, and manufacturers, importe rs, wholesalers and distributors must
all be licensed (s 22C(1)(b ), s 22H). It follows from this that dispensers of
pharmaceuticals are considered essential to the provision of medicines to the
public, especially since the number of dispensing doctors is subject to
regulation (s 22C(1)(a)). It also follow s that the viability of the dispensing
52 Pharmaceutical Manufacturers Association of SA: In re Ex parte President of the RSA 2000 (3) BCLR
241; 2000 (2) SA 674 (CC).
53 Medicines and Related Substances Act 59 of 2002 s 14.
54 For purposes of this judgment reference will not be made to ‘related substances’.
35
profession is a matter of public interest and was a matter of concern to the
legislature. I shall deal in more detail with this aspect later.
[47] It is common cause that s 22G is concerned with the provision of
more affordable medicine s. There are hardly any contextual guidelines
available to determine its meaning. (In due course I shall re fer to its history
because that throws some light on its scope.) One contextual pointer,
however, is s 15C, which provides that the minister may prescribe conditions
for the
‘supply of more affordable medicines in certain conditions for the supply of more
affordable medicines to protect the health of the public’.
The ‘conditions’ are carefully circumsc ribed: they deal with parallel
importation of patented medicines and the importation of medicines identical
to others already registered, ie, to obviate or limit the registration procedures
for new suppliers of medicines al ready on the market. The present
regulations, it needs to be emphasised, do not purport to and could not have
been promulgated under this section.
[48] Instead the regulations were, as mentioned, made under s 22G, which
in its present form provides as follows:
‘22G ‘Pricing committee.—(1) The Minister shall appoint, for a period not exceeding
five years, such persons as he or she may deem fit to be members of a committee to be
known as the pricing committee.
36
(2) The Minister may, on the recomme ndation of the pricing committee, make
regulations—
(a) on the introduction of a transparen t pricing system for all medicines and
Scheduled substances sold in the Republic;
(b) on an appropriate dispensing fee to be charged by a pharmacist or by a
person licensed in terms of section 22C (1) (a);
(c) on an appropriate fee to be charge d by wholesalers or distributors or any
other person selling Schedule O medicines.
(3) (a) The transparent pricing system contemplated in subsection (2) (a) shall include a
single exit price which shall be published as pr escribed, and such price shall be the only
price at which manufacturers shall sell medicines and Scheduled substances to any person
other than the State.
(b) No pharmacist or person licensed in terms of section 22C (1) (a) or a wholesaler or
distributor shall sell a medicine at a price higher than the price contemplated in paragraph
(a).
(c) Paragraph (b) shall not be construed as preventing a pharmacist or person licensed in
terms of this Act to charge a dispensing fee as contemplated in subsection (2) (b).
(4) To the members of the pricing committee who are not in the full-time employment of
the State may be paid such remuneration an d allowances as the Minister, with the
concurrence of the Minister of Finance, may determine.’
[49] It is clear that the minister’s po wers to make regulations is dependent
on the recommendation of the pricing co mmittee, in other words, such a
recommendation is a jurisdictional fact. The committee’s recommendation
has to be in accordance with the provisi ons of s 22G – ie it must be a lawful
37
administrative action as provided for by s 33(1) of the Constitution – since
the committee has no power beyond that give n to it by this section. And it
follows from the principle of legality that the minister cannot accept a
recommendation or promul gate a regulation that does not fall squarely
within the section.
TRANSPARENT PRICING SYSTEM
[50] Section 22G permits regulations that introduce a ‘transparent pricing
system’. The concept is not defined and must therefore be given its ordinary
meaning unless there are reasons for no t doing so. The only qualifier for the
pricing system is that it must be ‘tra nsparent’, ie, open to public scrutiny.
This is explained further in para (3)(a), which provides that the system must
include a single exit price that has to be published in a prescribed manner.
[51] Some aspects need to be emphasised:
(a) The ‘single exit price’ is the price charged by the ‘manufacturer’.
(b) The manufacturer may sell at that price only to persons other than
the state.
(c) The Act itself draws a clear dis tinction between a ‘manufacturer’,
an ‘importer’, a ‘wholesaler’ and a ‘distributor’.
(d) An importer, wholesaler or distri butor may not sell medicines at a
price higher than the manufacturer’s single exit price.
38
(e) The only exception may be schedule 0 medicines: wholesalers,
distributors and other vendors may charge a prescribed
‘appropriate’ fee in addition to the manufacturer’s single exit price.
(f) A dispenser may also not sell at a higher price than the
manufacturer’s exit price.
(g) However, a dispenser may char ge a prescribed ‘appropriate
dispensing fee’.
(h) These provisions must be read in the light of s 18A and 18B:
section 18A prohibits the supply of medicines according to a bonus
system, rebate system or othe r incentive system while s 18B
prohibits the supply of free samples.
[52] The Act, in this form, must ha ve raised immediate problems for the
committee. The first would have been that it does not take account of the
fact that manufacturers of medicines may be foreign concerns and that their
products may be imported by third parties. (As men tioned, the Act requires
importers to be licensed.) The comm ittee, one assumes, recognised the
problem of prescribing to foreign manufacturers that they have to publish a
single exit price and that they may not sell for more than that price. The
committee was also faced with the problem that it could hardly be fair to
deny importers the right to charge more than the manufacturer’s price. No
doubt, in order to overcome these de fects in the Act, the committee’s
39
proposal was to recognise that an ‘importer’ 55 purchases medicines from a
manufacturer abroad and to define the single exit price as the price not only
set by the manufacturer, but, alternatively, by the importer. 56 This could not
be done. The Act is clear. It requires manufacturers (and only
manufacturers) to set their single ex it prices, and importers are a genus
different from manufacturers and cannot by any stretch of the imagination be
equated with them. It follows that, to this extent, the regulations are ultra
vires the Act: the committee was not entitle d to make the proposal and the
minister was not entitled to accept it.
[53] An associated problem the co mmittee obviously had was that the Act
does not allow wholesalers or distributors to charge more than the
manufacturer’s single exit price. Ho wever, the Act does not prohibit
wholesaling or distributing by thir d parties (because that would have
amounted to a breach of the constitutiona l obligation not to make medicines
inaccessible) and since it requires them to be licensed, one has to accept that
the Act regards them as a link in th e supply chain. The only limitation the
55 ‘”Importer” means 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.’
56 The full definition reads: ‘“Single exit price” means the price set by the manufacturer or importer of a
medicine or Scheduled substance in terms of these regulations combined with the logistics fee and VAT
and is the price of the lowest unit of the medicine or Scheduled substance within a pack multiplied by the
number of units in the pack.’ [Emphasis added.]
40
Act places on wholesalers is to oblig e them to purchase from the original
manufacturer or the primary importer of the finished product (s 22H).
[54] In order to solve the problem the committee devised the idea of a
logistics fee, which is payable in resp ect of ‘logistical services’. These are
defined to mean –
‘those services provided by distributors and wholesalers in relation to a medicine or
Scheduled substance including but not limited to warehousing, inventory or stock control
management, order and batch order proces sing, delivery, batching, tracking and tracing,
cold chain storage and distribution.’
The manufacturer or the importer has to agree with the wholesaler or
distributor on this fee. The regulations define the single exit price as ‘the
price set by the manufacturer or importer . . . combined with the logistics
fee’, which is something greater than the manufacturer’s price, since it
includes both the manufacturer’s price and the logistics fee.
[55] All this, with the best of mo tives, circumvents s 22G which states
expressly that the ‘single exit price’ is the manufacturer’s selling price.
Wholesalers, as the Act and the regulations recognise, purchase from
41
manufacturers or importers. 57 To deem their mark-up as part of the
manufacturer’s price is an impermissible simulation.58
[56] There is another problem that goes to the root of this regulation.
Providing for a ‘transparent’ pricing system was the whole object of the
exercise. The Act says so in terms but the logistics fee is not transparent
precisely because it is a fee negotiated privately betwee n the manufacturer
and wholesaler. Although the minister may prescribe a maximum (probably
impermissibly, as an im proper delegation), that in itself does not make the
fee transparent.
[57] Next to consider is whethe r s 22G permits, through the pricing
system, price control by the state and, if not, whether the regulations provide
for price control. As Yekiso J correctly pointed out, the legislative history of
the enactment shows that its purpose is
‘the elimination of the system of discounts and subsequent mark-ups which had the effect
of rendering medicine unaffordable, particularly to the poor section of our population’
because
57 The regulations define ‘wholesaler’ as ‘a dealer who purchases medicines or Scheduled substances from
a manufacturer and sells them to a retailer and includes a wholesale pharmacy.’ [Underlining added.]
58 The second respondent, according to her affidavit, thought that the transparent pricing system as
contemplated by the Act included a logistics fee. She may have been confusing the regulations with the
Act.
42
‘the discounting and the subsequent ma rking-up of pharmaceutical products that
characterised the sale of such products in the past, had the e ffect of negating the right to
healthcare enshrined in section 27(1) of the Constitution.’
Therefore –
‘Section 22G was enacted to address the misc hief of the system of discounting and the
subsequent marking-up of pharmaceutical prod ucts in circumstances where it was not
known how the price, which the end user or consumer or patient had to pay, was arrived
at.’
[58] In other words, since manufactu rers are obliged to sell to all and
sundry at a single exit price that is transparent and may not give discounts,
the public will be able to know what th e true price of th e goods are. And
since dispensers are only entitled to ad d a prescribed fee, a member of the
public would be able to assess whethe r the price paid is the correct one.
Because manufacturers would know wh at the prices charged by their
competitors are, they will have to reduce their prices and publish the reduced
prices in order to compete.
[59] That is the price reduction mech anism envisaged by the section. It
does not contemplate a system whereby the committee, the state or the
regulations can fix or limit the manufactur er’s exit price. Although this is
clear from the section as a whole it is comforting to know that the
43
department59 agreed with this interpre tation as did the court below 60
although the second respondent did not in her affidavit.
[60] The majority found that ‘the State does not play a role in the
determination of the single exit price.’ The problem with this finding is that
it was made without any regard to the specifics of the regulations. Although
reg 5(1) provides that the manufactur er must set the single exit price upon
the commencement of the regulations, reg 5(2) immediately set a cap on that
price: it could have been no more than a price calculated with reference to a
formula based on prices that prevailed during the year 2003. It becomes
more intricate when the regulations deal with new medicines. Then the price
of the medicine must be calculated –
‘using the average of the total rand value of sales less the total rand value of the discounts
for the period for which the medicine was sold and with reference to the price of that
medicine in other countries in which prices of medicines and Scheduled substances are
regulated and published.’61
(The other countries are not specified, but that is a discrete problem.)
[61] The next phase is the determin ation and publication by the director-
general of –
59 Per the director-general, Mr Ntsaluba, in previous litigation under oath.
60 Per Yekiso J: ‘It is worth repeating that the single exit price referred to in the Act and the Regulations is
set by the manufacturer or the importer of the relevant medicine or Scheduled substance. The single exit
price has to be set by the manufacturer or the importer concerned.’
61 Reg 5(2)(c) proviso.
44
‘a methodology for conforming with international benchmarks, taking into account the
price, and factors that influence price, at which the medicine or Scheduled substance, or a
medicine or Scheduled substance that is deemed equivalent by the Director-General, is
sold in other countries in which the prices of medicines and Scheduled substances are
regulated and published’.
62
Within three months thereafter the single exit price must –
‘conform with international benchmarks in accordance with such methodology.’63
[62] Finally, for a period of one y ear the single exit price may not be
increased; it may not be in creased more than once a year and the extent to
which it may be increased is to be determined by the minister after
consultation with the committee.64
[63] In the light of this elementary an alysis of the pricing system contained
in the regulations it is impossible to subscribe to the finding of Yekiso J that
‘the applicants’ concern as regards the Regul ations complained of, namely, that they
restrict the manufacturers’ and the importers’ right to determine a single exit price, has no
merit.’65
While the Act contemplates the impositi on of a downward pressure on the
prices of medicines through the introd uction of a transparent pricing system,
the committee thought that it contemplates direct price control. In its
submission to the minister, which accompanied the draft regulations, it
62 Reg 5(2)(e).
63 Reg 5(2)(e).
64 Regs 5(2)(a) and (b), 7 and 8.
65 At para 53.
45
explained that ‘the regulation of medi cine prices is both justifiable and
necessary’ and proceeded to set out how manufacturers’ prices would be
‘reduced’ and ‘managed’ in the way set out above. Yekiso J quoted a
number of extracts from the minutes of the committee which are consistent
with the contents of the memorandum. He found, howev er, that these
references were selective and that, havi ng regard to the record as a whole,
the inference that the committee had rega rd to irrelevant considerations was
unjustified. Unfortunately, he did not provide any references from which a
contrary conclusion can be drawn a nd I could not find any. Whether the
regulation of medicine prices is justifiable or necessary and how it should be
done are matters for parliament to decide. It chose the limited option
contained in s 15C. It was not for the committee to pursue its own agenda,
irrespective of how commendable its motives may have been, and the
minister was not entitled to accept a recommendation that did not fall within
the parameters of the Act.66 In a country struggling with limited resources to
meet the needs of the poor it is laudable and noble to strive to reduce the
costs of medicines. We are, however, a nation that subscribes to the primacy
of the rule of law and all measure to that end must comply the principle of
legality.
66 Cf Goldberg v Minister of Prisons 1979 (1) SA 14 (A) 48E.
46
[64] Another problem with the regulati ons in this regard is the fact that
while the Act requires that the regula tions should prescribe the method of
publication of the single exit price, the regulations have delegated the
function to the director-general.67 This the Act does not permit.
[65] The regulations, insofar as they d eal with a transparent pricing system,
consequently fail the legality test on many fundamental aspects.
SCHEDULE 0 MEDICINES
[66] It is convenient to deal now with the regulations where they purport to
prescribe, in the words of s 22G
‘an appropriate fee to be charged by wholes alers or distributors or by any other person
selling Schedule 0 medicines.’68
It will be recalled that sch 0 medicines are those that can be sold in an open
shop.
[67] There is once again a problem with the Act. While it allows for the
setting of fees to be charged by vendors of sch 0 medicines, it
simultaneously prohibits the sale of sc h 0 medicines at a price higher than
the single exit price. The only add-on pe rmitted is the fee of the dispenser
67 Reg 3: ‘In order to promote transparency in the pricing of medicines . . . a manufacturer or . . . the
importer of a medicine . . . shall publish, where applicable, the following information in such manner and
format, at such time intervals, upon such conditions and in such media as may be determined by the
Director-General from time to time by notice in the Gazette.’ [Emphasis added.]
68 This is the result of a 2002 amendment.
47
and, unless one indulges in hermeneutical gymnastics, the fee of the
wholesaler or distributor, though pres cribed, cannot be added to the ‘single
exit price’. But that has nothing to do with the validity of the regulations and
I shall approach the matter on the basis that there is no prohibition on the
addition of the fee to the single exit price.
[68] In its final recommendation to the minister, the co mmittee noted that
in its view substantial competition preva ils in the sch 0 market. It therefore
recommended that all retailers be a llowed to sell these medicines with a
percentage mark-up as they have done in the past, save that the mark-up may
not exceed what it was at the time of the introduction of the regulations.
Regulation 13 accordingly provides:
‘The appropriate fee to be charged by any person, other than a whol esaler or
distributor, in respect of Schedule 0 medicines shall not exceed the percentage mark-up in
respect of that medicine or Scheduled s ubstance that was applied at the date of
commencement of these regulations.’
[69] Because sch 0 medicines are subj ect to a single exit price and that
price does not allow for any mark-up or fee for wholesalers or distributors,
by excluding them from reg 13, the regul ation in effect determines that
wholesalers and distributors are not entitled to any fee, let alone an
appropriate fee.
48
[70] The mark-up of each individual retailer on each i ndividual product,
which it had on the shelf on 2 May, cannot be considered to be a ‘fee’. A
‘fee’ is in ordinary parlance a paym ent made to a professional or para-
professional in exchange for advice or se rvices. It is not th e same as a gross
profit or a mark-up on goods. There must in the light of the regulations be
tens of thousands of ‘fees’ in the market place. The Act insists that the ‘fee’
must be ‘appropriate’. There is no basis for the assumption that the mark-up
on a particular medicine on a particular day by a particular retailer can ever
amount to an appropriate fee. For instan ce, the item could have been sold as
a loss leader on the relevant date, in wh ich event the product must be sold at
a loss in perpetuity. On the other side of the coin, if the item was then sold at
an excessive price, the retailer will be able to carry on selling at that price.
[71] The regulations, insofar as they deal with sch 0 medicines, once again
do not pass muster. Yekiso J, while holding the contrary gave no reasons for
his conclusions – except that retailers would have known what their mark-
ups were – and did not deal with the issues raised in the preceding
paragraphs.
‘APPROPRIATE DISPENSING FEE’
[72] While s 22G permits the mini ster, on the recommendation of the
committee, to make regulations on an ‘appropriate dispensing fee’ to be
49
charged by a pharmacist or a person licen sed in terms of section 22C(1)(a),
the Pharmacy Act 53 of 1974 (in s 49( 1)(a)) allows the minister, in
consultation with the Pharmacy Council, to make regulations relating to
‘the practice of pharmacy, the c onduct of the business of a pharmacist, the tariff of fees
payable to a pharmacist in respect of professional services rendered by him and the
trading activities of a pharmacist’.
[73] This apparent contradi ction gave rise to different interpretations in the
court below. Traverso DJP sought to solve the problem by holding that s
22G did not permit the making of regulations that fix professional fees but
only to prohibit the giving of rebates on dispensing fees or require their
publication by pharmacists. I cannot agr ee because the attempt to harmonise
the two provisions appears to me to be forced. The correct way to approach
the matter is to consider that s 22G is a narrow provision while s 49(1)(a) is
a general provision. The general prov ision must yield to the specific.
Consequently, the minister may make re gulations relating to the quantum of
dispensing fees under s 22G and under the Pharmacy Act the tariff of all
other fees, excepting dispensing fees, may be prescribed. If no regulations
are made under s 22G, dispensing fees may be set under the Pharmacy Act.
[74] The Medicines Act, in requiring dispensing fees, gives recognition to
the fact that dispensers are first and foremost professionals and not traders in
medicines. Although the advisability of the new scheme was debated at
50
some length by some deponents, this is not open to question because
parliament has made a policy decision in this regard and the constitutionality
of s 22G is not in issue. Even tho ugh dispensers perfo rm a professional
function, their fee cannot be based on a simple time-related basis because, in
order to provide their service they ha ve to incur business related operating
costs like labour, stock management, capital costs, the financing of stock and
debtors (including medical aid schemes) and the like. Hospital pharmacies,
for instance, are required by law to ha ve certain medicines in stock and,
while the average pharmacy may keep 2000 stock items, they generally
stock between 10 000 and 12 000 line items.
[75] The next issue is the justiciability of the regulations in relation to the
quantum of the dispensing fees. The section requires the dispensing fee to be
‘appropriate’. What is appropriate wa s not left to the discretion of the
minister, and also not to that of the co mmittee. In this regard there is a clear
break from the approach adopted in ma tters such as security legislation
during the pre-Constitutional era. There, the jurisdictional fact was quite
often the opinion of one or other functi onary and, provided the functionary
held the opinion, courts were rather hamstrung. Here the jurisdictional fact is
not someone’s opinion but an objective fact, namely a dispensing fee that
must be ‘appropriate’. Whether it is appropriate, can be tested judicially. If
51
the fee does not pass this threshold requirement, the regulation is pro tanto
void because it has no legal basis or justification.69
[76] The word ‘appropriate’ means ‘specially suitable’ or ‘proper’.70 In
Hoffmann v South African Airways 2000 (11) BCLR 1211; 2001 (1) SA 1
(CC) paras 42-43 the court had to dete rmine its meaning in the context of
‘appropriate relief’ as contemplated by section 38 of the Constitution.
Ngcobo J said that
‘“appropriate relief” must be construed purposively, and in the light of section 172(1)(b),
which empowers the Court, in constitutional ma tters, to make “any order that is just and
equitable.” Thus construed, appropriate relief must be fair and just in the circumstances
of the particular case. Indeed, it can hardly be said that relief that is unfair or unjust is
appropriate. As Ackermann J remarked, in th e context of a comparable provision in the
interim Constitution, “[i]t can hardly be argued, in my view, that relief which was unjust
to others could, where other available relief m eeting the complainant’s needs did not
suffer from this defect, be classified as appr opriate.” Appropriateness, therefore, in the
context of our Constitution, imports the elements of justice and fairness.’
‘Fairness requires a consider ation of the interests of all those who might be
affected by the order. In the context of employment, this wi ll require a consideration not
only of the interests of the prospective employee but also the interests of the employer.’
[77] In the present context, I believe, the word has a similar connotation. It
can hardly be argued that a dispensing fee, which is unjust or unfair, can be
69 SA Defence and Aid Fund v Minister of Justice 1967 (1) SA 31 (C) 34H-35D; President of the Republic
of South Africa v South African Rugby Football Union1 2000 (1) SA 1 (CC) para 168 footnote 132.
70 Shorter OED.
52
‘appropriate’. One has to assume that the legislature did not intend unjust or
unfair fees. In determining what is appropriate one must consider the
conflicting interests of all those involved and affected. On the one hand there
is the public, which is entitled to acce ss to health care including affordable
medicines. On the other hand there are the interests of dispensers who, in
terms of the Act, are essential to th e public for the supply of medicines and
whose economic viability is implicitly recognised by the Act and is of
national importance. As the minister herself once said:
‘The pharmacy profession with its various sp ecialities is a crucial role-player in
this regard. It embodies the knowledge sp ectrum of formulating, manufacturing, quality
control, efficacy, safety, appropriate us age, and drug supply management of drug
products.’71
One is really dealing with the balanci ng act implicit in the right of access
which, as mentioned, encompasses pos itive and negative obligations on the
state. Affordability is not the only dime nsion; access is just as important.
Cheap medicines available at two hyperm arkets provide cold comfort to the
poor living in a township or on the platteland. This means that, in order to be
appropriate, the fee must be such that affordable medicines do not become
inaccessible.
[78] To avoid any misapprehension a bout the scope of s 22G, it must be
emphasised that it deals with the private sector only. Medicines sold to the
71 The text of her speech forms part of the papers.
53
state or dispensed by the state are ex cluded from its operation. Those who
are dependent on the state for access to health care receive no benefit from
the regulations, nor does the state.72
[79] There is not an absolute standard for being appropriate and more than
one fee can be appropriate. The word car ries with it a me asure of elasticity
and reasonable persons may within reas on disagree on what is and what is
not appropriate. A fee structure may, fo r instance, be appropriate within the
meaning of s 22G even if it leads to the closure of some pharmacies because
the prescribed fee need not keep all pharmacies afloat or provide all
pharmacists with gainful employment. The fee, also, should not cross-
subsidise the unprofitable parts of a pharmacist’s business. But the fee
should not be such that only a few la rge dispensers located in relatively
affluent areas with huge turnovers can survive.
[80] The Act does not define ‘dispens ing’. Ordinarily it means to make up
medicine or to supply it according to a doctor’s prescription. In this case the
question arose whether it included formulation or compounding and whether
a dispenser is entitled to charge, under the Act, additionally for
compounding. It arose in the context of the appropriateness of a fee of
R104,00 for reconstituting and preparing a set of chemotherapy drugs, which
72 The applicants estimate that the private sector’s expenditure on medicines accounts for 70% and the
state’s for 30% of all funds spent. On the other hand, the private sector consumes 30% and the state 70% by
volume. This indicates the great discrepancy between the two systems, something the Competition
Commission is concerned about. The respondents deny these estimates but do not explain their denial.
54
may take an hour and a half to prepare, which requires special equipment
and procedures, and where the cost to the pharmacist of the medicines
amounts to R2 146,62 or, in another instance, a fee of R26,00 for
compounding, taking two a nd a half hours, of medicine costing R8 715,00.
In the answering affidavits the respondents attempted to justify the fee by
stating that compounding can be char ged for separately . The deponent on
behalf of the minister (who was a memb er of the committee) and the second
respondent (its chair) were not in agreement as to exactly what can be
charged extra. But all that is really of no consequence. Section 22G is clear.
It prohibits any add-ons except the pres cribed dispensing fee. Whatever one
understands under the term, it is all that can be added to the single exit price.
Any other interpretation would defeat th e object of the Act. This illustrates
that the committee misunderstood the Ac t and that impacts materially on
whether the prescribed fee is indeed appropriate.
[81] The fee prescribed to be charge d by pharmacists has to be calculated
as follows (reg 10):
‘ (1) With regard to medicines and sche duled substances falling into Schedules
1 and 2 of the Act, in the absence of a pres cription the dispensing fee, exclusive of VAT,
must not exceed—
(a) 16% of the single exit price of a medicine or Scheduled substance where
the single exit price of that medicine or Scheduled substance is less than one hundred
rands;
55
(b) sixteen rands in resp ect of a medicine or Sche duled substance where the
single exit price of that medicine or Scheduled substance is greater than or equal to one
hundred rands.
(2) With regard to medicines and sche duled substances falling into Schedules
3, 4, 5, 6, 7, and 8 of the Act, and medicine s and Scheduled substances falling into
Schedules 1 and 2 of the Act in respect of which a prescription has been written, the
dispensing fee, exclusive of VAT, must not exceed—
(a) 26% of the single exit price in respect of a medicine or Scheduled
substance where the single exit price of that medicine or Scheduled substance is less than
one hundred rands;
(b) twenty six rands in respect of a medicine or Scheduled substance where
the single exit price of that medicine or Sche duled substance is greater than or equal to
one hundred rands.’
[82] The simplest way of determining whether these figures, which appear
to have been calculated since they are not round figures, represent fees that
are appropriate would have been to have regard to the record of the
committee’s meetings or to the responde nts’ evidence as to how they were
calculated. Except for a general statemen t that all factors were taken into
account, there is no evidence or docum ent that shows what those factors
were, what weight they bore, whether any calculations were made and, more
particularly, whether any regard was gi ven to the viability of the dispensing
56
profession.73 Yekiso J surmised that the committee’s recommendation ‘was
obviously preceded by some factual background’ but if it were, the
committee’s deafening silence is not understood. Assuming that it took, in
the learned judge’s words, ‘a consci ous decision’ that these fees are
‘appropriate’ (of which there is no evidence) that is of no assistance in the
absence of an explanation as to how or why it took the decision.
[83] Bereft of an explanation from those in the know, it is necessary to deal
with the expert evidence filed by the applicants. Dr Robert Stillman, a highly
qualified economist, who runs an international consultancy specialising in
the economics of competition policy a nd regulation called Lexecon, did a
financial analysis to assess the likely impact of these fees on the future
economic viability of different segmen ts of the pharmacy profession. He
concluded that the fees will not provid e pharmacists in any of the sectors
analysed with sufficient revenues to cover their operating costs.
[84] His conclusion was based on a caref ul and detailed analysis of factual
data and cannot be dismissed as ‘sheer speculation’ as Yekiso J did without
any analysis of the facts. There is a difference between speculation on the
one hand and prediction on th e other. Stillman took as his starting point the
actual figures of a number of pharmac ies for April 2004. He recalculated
73 It is possible that the committee had worked on the fact that the average gross profit of pharmacies was
about 25% and then conflated gross profit with mark-up.
57
their operating profit or loss on the assu mption that the regulations had been
in force during that month. For exampl e, in relation to courier pharmacies,
which provide an indispensable serv ice to those who are bedridden or
housebound, he analysed the operati ons of one of the three largest
companies, CMD, and concluded that fo r the month tested, its gross profit
margin would have been reduced by 37% which would have eliminated its
operating profits and would have left it w ith an operating loss equal to 5,1%
of sales. 74 He did a similar exercise in relation to the New Clicks
pharmacies, which are commu nity pharmacies, and found that the operating
profit margins would have been negative in 67 of the 69 stores covered. His
analysis of the impact on pharmacies in medical centres was that they would
have suffered an operating loss e qual to 20% of revenue. Hospital
pharmacies would have suffered an operating loss of 8,7% of revenue.
[85] Mr Willem Jordaan, a pharmacist with a master’s degree in
pharmaceutical economics, did a detaile d exercise in relation to the New
Clicks pharmacies. In this he excise d the front shop activities in order to
isolate the effect of the fees on the dispensing business and to exclude the
effect of cross-subsidisation. He calc ulated the net loss per line item to be
R5,33.
74 Yekiso J found that since the regulations under the Pharmacy Act do not recognize courier pharmacies as
a separate category for registration purposes, the pricing regulations could not cater for them. I disagree.
These regulations could easily have categorized pharmacies for its own purposes and the committee was
not bound by another classification for other purposes.
58
[86] The answer on behalf of the fi rst respondent was one of a denial
which was to be demonstrated by expert evidence. Prof Mooney, an
Australian expert, gave an exposition why the free market system does not
work for pharmaceuticals and why regulation is required, none of which was
ultimately helpful in determining the answers to the questions before us. Mr
Pillay, the director of pharmaceu tical economic development in the
department, who one would have ex pected knew how the fees were
calculated, limited his evidence to th e question whether a gross profit of
26% is required to maintain a viable pharmacy and said that he had found
that some pharmacies with a higher gros s profit were not viable and others
with a lower one were. (T his has nothing to do with the present question.)
He did not deal at all with the Lexe con report and as far as Jordaan is
concerned, he simply said that ther e were uncertainties with the analysis
without identifying them. He added, without substantiating the allegation,
that the prescribed dispensing fees do not differ significantly from those in
other countries. Prof Mossialos expresse d a similar opinion, namely that the
fee is ‘quite reasonable by international standards’ but he also gave no
factual basis for his opinion. Prof Henry, also from Australia, let the
proverbial cat out of the bag when he said that the committee (of which he
was a member) was ‘concerned primaril y about the affordability’. He gave
no indication that the viability of th e dispensing profession was ever
59
considered. He conceded that it is difficult to make a judgment of the
appropriate level for a dispensing fee and he then made so me international
comparisons.75 Australia, for instance, allows a dispensing fee equal to
R23,00 but then it allows an additiona l retail margin. Because the result of
the comparison did not suit him, he ma de adjustments, taking into account
the purchasing power of the two currencies.
[87] The last witness for the respondent s on this aspect was Dr Thiede, the
deputy director of the Health Econom ics Unit at the University of Cape
Town. He was also a memb er of the committee and he , too, in spite of his
expertise, chose to keep everyone in the dark as to how the fees were
calculated. He questioned Jordaan’s evidence because the sample was not
random, the allocation between back-shop and front-shop could only have
been approximate and he could not on the facts provided make a
recalculation.
[88] In a separate affidavit he took brief issue with the Lexecon report.
Basic to his evidence is that he believed
‘that the dispensing fee is only one fee in a catalogue of fees the pharmacist may charge,
such as for example for compounding.’
(I have already pointed out that this a ssumption is flawed.) What other fees
he had in mind, is unclear, unless he thought that functions like taking blood
75 Whether the fee is lower in, say, Botswana, does not indicate whether the public there has reasonable
access to dispensers or whether the bulk of medicines is supplied by the state.
60
pressure (which have always been done free of charge) could provide an
income stream. He also did not atte mpt to quantify that kind of income
which, on the evidence, is negligible (less than 1%). He further, blandly,
attacked the expertise of Stillman, and stated without motivation that the
methodology did not conform to rigorous scientific studies and that the
sample was not a random one. The reply indicated that he was misinformed.
It is significant that he nowhere gave any factual data to dispel the
applicants’ evidence.
[89] This brief analysis of the evidence on record shows that there is no
bona fide dispute of fact. It establishe s that the fees are not appropriate and
that the respondents, within whose peculiar knowledge the calculation fell,
were unable to give any rational explanation for the quantum of the fees.
The access to medicines is seriously th reatened because they are insufficient
to cover the cost of dispensing. This conclusion is not based on the opinion
of pharmacists but on the unassailed f actual material on record. It is not
without significance that the Congress of SA Trade Unions, the Consumer
Goods Council and the amicus curiae came to the same conclusion.
[90] There appears to be an explana tion for the inability of the respondents
to justify the fees. It flows from the f act that the different functions of the
department and those of the committ ee were not kept in mind, and the
61
working methods of the committee. According to the Act, the committee has
to make the recommendations. The onl y function the depa rtment has until a
report is presented to the minister is that of the committee’s secretariat.
[91] After the draft regulations were published, the committee decided that
oral representations by stakeholders should be organised by the department.
These were to be led by the depa rtment, ‘but the Pricing Committee
members will also be invited.’ In cons equence of the decision the director-
general invited stakeholde rs to make oral presentations. The terms of the
letter are revealing (I quote selectively):
‘The purpose of these sessions is to hear oral representations from stakeholders
and to give them an opportunity to fully can vass their concerns and comments regarding
the proposed regulations. There will be no negotiation or debates between the
Department or the Committee on the one hand and yourselves on the other concerning the
proposed regulation.’
‘The Pricing Committee is a technical committee whose task is to make
recommendations to the Minister of Healt h. You are therefore advised to prepare your
written and oral inputs in as much detail as possible and with a view to supplying
accurate and substantiated information to the Department and the Pricing Committee on
how the proposed regulations may affect your interests.’
‘Only members of the Pricing Committee and officials from the Department of
Health will be attending. Not all members of the Pricing Committee may be able to
attend every session due to other commitments.’
[Emphasis added.]
62
[92] Days were set aside for this purpose. Sometimes committee members
attended, sometimes not, sometimes haphazardly. Many stakeholders made
detailed oral presentations (with visuals) on the effect of the proposed fees.
Was this a presentation to the departme nt or to the committee? The second
respondent, justifying the fact that th e committee did not co nsider the oral
representations, said it was to the de partment. For what purpose, she did not
say because, as mentioned, the de partment had no function except a
secretarial one. Dr Zofuka, on behalf of the minister, unflinchingly said that
the committee considered ‘all the submissions and comments’ but elsewhere
admitted that they considered the wr itten ones only. Yekiso J found no fault
with these perplexing events, holding that there was nothing to show that the
meetings were ‘formal meetings of the committee’ or that the committee was
under a duty to afford stakeholders an opportunity to make oral
representations. To my mind the facts speak for themselves. There was no
reason to mislead stakeholders by inv iting them to participate in a futile
exercise or to ignore relevant and available material during the committee’s
deliberations. It is not necessary for me to deal further with this aspect of the
case because of the finding that the regulations do not prescribe a dispensing
fee that is appropriate.
63
CONCLUSION
[93] Thus far the findings are that the regulations have, on many material
aspects, failed the test of legality. So metimes problems arose as a result of
the enabling Act, sometimes it was b ecause of a misunderstanding of the
scope of the Act. The applicants al lege in addition that some of the
provisions are vague and void for that reason and they submit that there are
instances of impermissible delegation of powers where matters, which
should have been prescribed, have been left for the minister or the director-
general. Some of these arguments cannot as be dismissed as easily as the
majority below was able to do and some cannot be accepted as the dissenter
did, but for present purposes it is not necessary to deal with them.
[94] The question whether mini sterial regulations and the
recommendations of the committee could have been the subject of scrutiny
under the Promotion of Administrative Jus tice Act 2 of 2000 formed a large
part of the judgments below. The major ity held that they could not and the
minority held otherwise. Notwithstan ding they were agreed that the
regulations had to withstand the test of legality. The deba te, consequently,
has no bearing on this judgment and I prefer to refrain from commenting
save for saying that I find it unlikely that this Act, written in the light of the
64
Constitution and supposedly written to codify administrative justice
principles, reduced the level of administrative justice.
[95] The amicus curiae, while submitting that the regulations, at least as
far as the dispensing fee is concer ned, are void, requested that any
declaration of invalidity should be suspended to enable the committee to
prepare a new set. There are a number of problems in this regard. As
mentioned, s 22G save for minor amen dments, has been since 1997 on the
statute book and was only brought into effect in 2004. That may give an
indication of the ability of the respondent s to formulate regulations within a
reasonable period. As found, the regulati ons are fatally defective. It will be
extremely difficult, if not impossible, to draft sensible regulations unless the
Act is amended. The respondents did not, in their papers, raise the possibility
of a suspension and did not place any fa cts before the court below on which
a decision to suspend can be made; neither did the amicus curiae . The
regulations have been in effect dur ing May and then after the judgment
below, for less than four months. It is not as if a long existing pricing regime
is being upset or that existing rights ar e affected. In short, the request does
not satisfy the guidelines laid down for a suspension.76
76 Mistry v Interim Medical and Dental Council of SA 1998 (4) SA 1127 (CC) para 37.
65
ORDER
[96] The following order is made:
1. Leave to appeal is granted in both applications.
2. The appeals are upheld.
3. The first respondent is ordered to pay the costs, including the costs of
two counsel in each matter.
4. The order of the court below is set aside and replaced with the
following order in each application:
(a) The ‘Regulations relating to a Transparent Pricing System for
Medicines and Scheduled Substances’ as published in GN R553 on 30 April
2004 are declared invalid and of no force and effect.
(b) The first respondent is ordered to pay the costs of the
applicant(s), including the costs relatin g to the interim application, such
costs to include the costs of two counsel.
_____________________
L T C HARMS
JUDGE OF APPEAL
CONCUR:
NAVSA JA
MTHIYANE JA
BRAND JA
CLOETE JA