On 5 July 2024, the South African Health Products Regulatory Authority ("SAHPRA") issued a communication to industry stakeholders in relation to its revised Broad-Based Black Economic Empowerment ("B-BBEE") policy document.
The policy document relates to the issuance of licences pursuant to section 22C(1)(b) of the Medicines and Related Substances Act No. 101 of 1965 (the "Medicines Act") in an effort to align with the transformative B-BBEE principles enshrined in the Broad-Based Black Economic Empowerment Act No. 53 of 2003 (the "B-BBEE Act").
SAHPRA is an organ of state and a public entity, and as such, is required to align itself with the provisions of section 10(1)(a) of the B-BBEE Act, which provides that "[e]very organ of state and public entity must apply any relevant code of good practice issued in terms of this Act in determining qualification criteria for the issuing of licences, concessions or other authorisations in respect of economic activity in terms of any law".
The Medicines Act provides for the monitoring, evaluation, regulation, investigation, inspection, registration and control of health products, scheduled substances, clinical trials and related matters in the public interest. Section 22C(1)(b) of the Medicines Act authorises SAHPRA to issue licences that enable medical device/in vitro diagnostic establishments, manufacturers, wholesalers and distributors to manufacture, import, export, distribute or wholesale medicines, scheduled substances, and/or medical devices as the case may be.
SAHPRA's current draft B-BBEE licence policy (the "Current Draft B-BBEE Licence Policy") is aimed at encouraging persons who apply for licences in terms of section 22C(1)(b) of the Medicines Act to comply with the B-BBEE Act, in an effort to achieve broad-based and meaningful participation in the economy.
SAHPRA had, in April of 2023, published a B-BBEE policy for the issuance of licences as per section 22C of the Medicines Act (the "Previous Draft B-BBEE Licence Policy") which provided for its implementation to occur over two phases. The first phase contemplated SAHPRA requiring applicants to submit their B-BBEE level certificate when applying for a section 22C(1)(b) licence. SAHPRA would then verify the applicant's B-BBEE level status and should an applicant fail to submit their B-BBEE level certificate, or should such certificate not be verifiable, SAHPRA would not issue a section 22C(1)(b) licence to such applicant. The second phase of implementation of the Previous Draft B-BBEE Licence Policy then utilised the relevant applicant's B-BBEE level to review and issue such licences.
The Current Draft B-BBEE Licence Policy has changed the abovementioned position as the first phase of implementation of the Current Draft B-BBEE Licence Policy does not prevent applicants who have failed to submit their B-BBEE level certificate, or whose B-BBEE certificates are not verifiable, from obtaining a section 22C(1)(b) licence. Failure to comply with the Current Draft B-BBEE Policy does not dispossess applicants of their licences, nor does it automatically render their application unsuccessful – but it does place them at the 'back of the line' as the applications of those that have met the B-BBEE criteria will be prioritised.
It is key to note that the Current Draft B-BBEE Licence Policy does not affect the registration process for medicines and medical devices. Further, it does not cover matters pertaining to employment equity and preferential procurement. The Current Draft B-BBEE Licence Policy simply seeks to ensure that the pharmaceutical industry moves towards developing B-BBEE sector codes and/or criteria similar to what has been successfully implemented in various other sectors of the economy.
Although the Current Draft B-BBEE Licence Policy still contemplates its implementation process following two phases, the outcomes of the phases have been amended to reflect SAHPRA's revised position with respect to the Current Draft B-BBEE Licence Policy. Notably, the Current Draft B-BBEE Licence Policy provides that SAHPRA will utilise the information gathered from applicants to understand the industry landscape and inform the development of criteria to be applied in a future policy document. Accordingly, the development of a sector code/criteria will consider the information/learnings gathered about the industry landscape in phase one, in which consultation with relevant stakeholders shall take place in phase two.
The Current Draft B-BBEE Licence Policy is open for submissions and comments until Monday, 9 September 2024.
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