THE African National Congress (ANC) has instructed the Cabinet lekgotla to implement the creation of a state-owned pharmaceutical company in an attempt to improve access to medication at public healthcare facilities and cut government spending .

A state-owned drug maker might increase competition and persuade other pharmaceutical companies to lower their prices — which could lead to improved access to medicines.

The four-day lekgotla of the ANC’s national executive committee, which ended on Sunday, ordered the Cabinet’s lekgotla to work on the details of creating such a company. The Cabinet lekgotla is scheduled next week and its outcomes will influence the midterm budget.

ANC secretary-general Gwede Mantashe said at a press briefing yesterday a decision on how the state-owned pharmaceutical company would be established and how much it would cost would be taken by the Cabinet. "The ANC national executive committee is developing what I call physical budgets because you are talking to projects and actual programmes. But the actual financial budget is an issue that will be developed by the Cabinet," he said.

Mr Mantashe said the national executive committee also resolved that the Treasury and the Department of Health establish a National Health Insurance seed grant before December to facilitate the policy’s implementation.

The creation of a state-owned pharmaceutical company was a resolution of the ANC’s 2007 national conference in Polokwane. Since then the National Education, Health and Allied Workers Union (Nehawu), affiliated to the Congress of South African Trade Unions, has been pressuring the ANC to implement it.

Nehawu spokesman Sizwe Pamla said yesterday the company would cut public-sector spending on medication. "The cost of medication is ridiculously high."

Mr Mantashe said SA consumed 25% of the world’s anti- retroviral drug supply. He said according to a health report tabled at the lekgotla last week, the number of people tested for HIV/AIDS had increased from 2- million a year to 12-million.

The government has steadily pushed ahead with industrial policies to support a local pharmaceutical production industry. Lonza, one of the world’s leading producers of pharmaceutical ingredients, is negotiating to establish a plant at SA’s now largely disused Pelindaba nuclear facility outside Pretoria.

The government argues local pharmaceutical production will reduce dependence on imports, among the top five contributors to SA’s trade deficit. A strong local industry may also mean more security of supply.

Vicki St Quintin, head of the Pharmaceutical Industry Association of SA, which represents local and international drug makers, said yesterday it was difficult to assess the likely effect of the ANC’s plans without more detail. She said it was questionable whether investment in a state-owned drug company would be the best allocation of resources, since the state had freedom to purchase from "a wide variety of suppliers" without any investment.

Stavros Nicolaou, chairman of trade association Pharmaceuticals Made in SA, said a "key consideration" in the ANC’s report- back to its elective conference next year would be the "extensive consumption" of AIDS drugs.

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