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Draft Fee Regulations – Attempts to address incentivising loopholes

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Draft Fee Regulations – Attempts to address incentivising loopholes

19th December 2017


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Section 18A of the South African Medicines Act (the Medicines Act) prohibits the supply of any medicine, medical device or in-vitro diagnostic device, according to a bonus system, rebate system or any other incentive scheme.

Although no definitions in respect of these prohibited activities have been included in the Medicines Act, considerable guidance as to the meaning thereof has previously been sought from a number of court decisions and, during 2014, draft general regulations relating to bonusing and sampling (the 2014 Draft Fee Regulations) were published under the Medicines Act.


The 2014 Draft Fee Regulations purported to clarify the operation of section 18A of the Medicines Act, and further purported to provide definitions of terms that are mentioned in the Medicines Act, but which are not defined in the Medicines Act.

This led to the view being held by many that the approach adopted in the 2014 Draft Fee Regulations complicated the interpretive process by stripping the words in section 18A of the Medicines Act of their inherent meaning, based on existing rules of interpretation.


The 2014 Draft Fee Regulations were never enacted, and have remained in draft form.

Several years down the line on 1 December 2017, the Minister of Health published proposed regulations (the Proposed Fee Regulations) in terms of the Medicines Act, which are intended to provide further guidance regarding the prohibited activities included in section 18A.

Should the Proposed Fee Regulations be enacted in their current form, many currently acceptable business activities will be prohibited and, for example, the supply of medical devices or in-vitro diagnostic devices at a reduced or nominal cost will be regarded as being prohibited activities.

More specifically, the Proposed Fee Regulations provide proposed definitions for each of the three prohibited activities, and further propose penalties for the transgression thereof.

Many are concerned regarding the attempts made by virtue of the Proposed Fee Regulations (and previously the 2014 Draft Fee Regulations) to purportedly “clarify” the operation of section 18A of the Medicines Act. This would mean that the Minister of Health proposes using such regulations to impose an interpretive gloss on what Parliament intended when it enacted section 18A of the Medicines Act. In our respectful view, this would mean bringing matters such as these in through the "back door", and accordingly open these Proposed Fee Regulations to court challenge.

In our view, it would be better for the Minister of Health to rather amend the relevant provisions of the Medicines Act to the extent necessary.

Interested persons are invited to provide comments in respect of the Proposed Fee Regulations, by 28 February 2018.


Written by Vaughn Harrison and Mandi Krebs, Hogan Lovells


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