SAMED welcomes 18 A & 18 B Exemption for medical devices and IVDs

The Minister of Health has published an extension of the 18A and 18 B exemption for medical devices and IVDs. Section 18 A and 18 B of the Medicines and Related Substances Act 101 of 1965 (the Act) deal with the bonusing and sampling of medical devices or IVDs i.e

Some recent history

In December 2017 the National Department of Health published draft general regulations on bonusing and called for comment within 3 months of the published date. SAMED submitted comments on the draft regulations where we indicated our support for the overarching objective and intent of 18A and B and the draft regulations i.e. to prevent perverse activities, ensure a transparent pricing system and ensure affordable medical devices and IVDs.

However, the finalization of these draft regulations has yet to happen.

In December 2018 the Minister of Health published an exemption notice, excluding medical devices and IVDs from the provisions of sections 18A and 18B. This exemption was effective for a period not exceeding three (3) years and ended in December 2021.

In Mid 2021, SAMED approached the National Department of Health and the South African Health Products Regulatory Authority (SAHPRA), motivating, in the absence of finalised regulations, for a further 6- or 12-month exemption extension. Whilst SAMED welcomes the further extension of the 18A and 18 B exemption we urge that on finalisation of the draft regulations, consideration be given to allow for further comment and a phasing in of regulations to allow for industry to adjust and re-negotiate contracts already in place i.e. there should be at least a six month window period allowed for industry to comply.

SAMED also pointed out that Section 18A (2) provides that the Minister may provide acceptable and prohibited acts. However, the minister has only provided prohibited acts in the current draft regulations. Industry may interpret this to mean that anything that is not prohibited under the draft regulations is automatically acceptable by virtue of such exclusion. In order to avoid such a situation, SAMED proposes that the Minister prescribes both prohibited and acceptable acts. The downstream impact on prohibiting certain practices need to be properly understood as it could have a negative impact on patient management, access to care and overall healthcare costs.

 Recommended Acceptable acts

The medical device and IVD sector differs from the pharmaceutical sector, and it is paramount that legislation is amended to reflect this. While a continued blanket exemption from 18A and 18B for medical devices and IVDs is not the ideal, a blanket prohibition would be detrimental to patient care and medical device and IVD supplier sustainability.

Framed within the context of bringing value to patient care, SAMED supports the following acceptable acts, free of perversity with transparent transactions, that hold the supplier accountable.

• Volume discounts are not rebates as rebates are applied retrospectively to reward the user and influence their behaviour. Instead, volume discounts are connected to economies of scale where higher volumes improve price negotiations, such as with tenders, and alleviates financial burden for both public and private healthcare providers, medical schemes and ultimately, patients.
• Settlement discounts are a standard business practice that encourages early payments intended to improve the cash flow of a supplier through fair market value discounts. The discount supports SMME sustainability who may not have significant financial reserves. These discounts are part of formal financial arrangements.
• Donations should be clearly defined and declared and should wholly benefit the patient should be deemed acceptable. There may be only one type of device suitable for a patient’s individual needs and sometimes these devices are not available within the public sector or are unaffordable for the patient. In these cases, a non-profit organisation, Healthcare professional (HCP) or patient may request the product be donated. Donations in emergency situations and for clinical trials and evaluations should also be permitted.
• Sampling and demonstration products should be used for their intended purpose. Demonstration products are used to demonstrate the safe and effective use and appropriate functionality of a medical device or IVD either to an HCP or a patient. Evaluation products are supplied for user evaluation over a defined period– this is often linked to product improvement and innovation. A limited supply of samples over a defined period enable HCPs or patients to familiarise themselves with the products. Tenders may also call for samples to evaluate quality and suitability.
• Placement of equipment refers to equipment provided for evaluation or demonstration purposes, for a stipulated period. It also includes equipment that is rented/leased/leased to own. Placed equipment may also form part of bundling and equipment placed at a Health Care Organisation (HCO) for education or research. All placed equipment should have formal, transparent agreements with clearly indicated placement time periods.
• Loan sets are not incentive schemes, but a tool to ensure the correct use of the product, ensure continuity of patient care when an instrument is in for repair and for cases where the exact specifications of a medical device can only be determined during a procedure or need to be on hand for trauma cases. Carrying every variable of a device would be a significant cost burden on the healthcare organisation and may impact the availability of a required medical device.
• Some medical devices are available in the retail sector (e.g., pharmacy, supermarket, optometry practice, etc.) for patients to purchase directly on a regular (chronic) or intermittent (acute) basis. Bonusing is an acceptable and standard industry practice in such settings and benefits the patient directly as it encourages compliance, alleviates some of the financial burden (buy one get one free, mix and match, etc.) and encourages the performance of complementary devices (by bundling associated products together).

Prohibited acts

SAMED continues to support the prohibition of:

• Discounts in respect of rebates. Rebates reward the user after utilization at a certain rate, volume or value and therefore influences the behaviour of users in anticipation of a reward which results in perversity and non-transparent transactions
• Payment for marketing, promotion, and advertising
• Fees for retail and/or pharmacy shelf space
• Loyalty fees or similar fees
• Director’s fees or shareholder fees, honoraria and similar compensation paid to a customer, excluding a fee, honorarium or compensation which is for legitimate educational activities and at fair value;
• Entertainment costs, meals and disbursements including congress and conference attendance in excess of acceptable practices of any marketing code approved and or endorsed by the regulator;
• Payment or contribution by a supplier towards any recurring expenditure of a customer which includes salaries or any subsidy of staff costs of personnel or contractors of a customer;
• Unjustified credit payments which have the effect of an inducement
• Formulary and protocol listing payments to any customer or any person who can influence such a listing