CMS & SAHPRA 2021/22 Annual Performance Plans

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Health

05 May 2021
Chairperson: Dr S Dhlomo (ANC)
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Meeting Summary

Video: Portfolio Committee on Health

Annual Performance Plans

In this virtual meeting, the Council for Medical Schemes and the South African Health Products Regulatory Authority presented their performance plans and 2021/22 budget. The key focus areas for 2021/22 were presented, challenges as well as the various programmes they had across their units.

In respect of CMS, the Committee expressed concern regarding the out-of-pocket expenditure. Clarity was requested regarding the alleged corruption and unethical behaviour and the Special Investigating Unit’s progress. The Committee asked for clarity regarding the levy. What measures had been put in place to prevent fraud, theft and abuse? Clarity was requested about litigation costs. The Committee asked for further information about the vacancies. It was asked how fraud in the medical aid scheme affected people on the ground. Clarity was requested regarding the authorisation of pre-exposure prophylaxis to risk groups. A case was brought to the attention of the Council in terms of a patient whose medical aid was not covering their Intensive Care Unit admittance. Questions were asked regarding the publication of research studies relating to COVID-19 and vaccinations.

In respect of SAHPRA, the Committee asked questions relating to sources of external funding and donations from other entities. Clarity was requested regarding the provision of sufficient information to vaccine trial patients. The role of Ivermectin was queried. Questions around the backlog were asked as well as the number of vacancies. Clarity was requested regarding the investigations into maladministration. The Committee asked whether any trials had been run in relation to the vaccines effect, in terms of the variant identified in India. It was asked what measures were put in place to reduce registration backlogs. Questions were asked regarding the Black Farmers association and cannabis licensing. The Committee also asked how decisions regarding border closure and prevention of variants were considered.

Meeting report

Opening Remarks
The Chairperson referred to the presentation that was given to the Committee the day before. The Financial and Fiscal Commission (FFC) had presented about the Council for Medical Schemes (CMS). He would outline what was presented and requested that the CMS respond to this later in the meeting. He referred to the following information that was presented the day before:

The regulatory authority responsible for overseeing the medical schemes industry in South Africa, set out in section 7 of the Medical Schemes Act (1998), to protect the interests of the beneficiaries in line with the provision of the National Health Act (2003). On 4 December 2019, CMS issued the Circular 80 of 2019: Low-Cost Benefit Option & Demarcation Products, that no Low-Cost Benefit Options (LCBO) would be allowed for low-income market segments going forward, and no products based on the Demarcation Exemption Framework and/or the Medical Schemes Act would be allowed beyond 2021. Over the medium-term expenditure framework (MTEF) period, CMS intended to develop a guidance framework for low-cost benefit options and finalise proposals for the Medical Scheme Amendment Bill and the health market inquiry. CMS reported substantial additional reserves and budget surpluses in 2020 across South Africa’s medical schemes, as members avoided health care of all kinds. Furthermore, out-of-pocket expenditure had increased over recent years for medical scheme members. Combined with rising costs of medical scheme cover, this may indicate that health schemes were not serving their intended purpose in the Covid-19 pandemic, this was confirmed in Competition Commission Health Market Enquiry Report (2019).

Unexplained performance issues and volatility in “percentage of category 1 clinical opinions provided within 30 days of receipt of complaints adjudication” – from 98 percent in 2017/18 to 54 percent and 69 percent in 2018/19 and 2019/20, respectively, before estimated to be 90 percent in 2020/21. Relatively stable financial statements of income and cash flow. Turnaround of the budget deficit of R26.6 million in 2019/20 to a surplus of R4 million in 2020/21, where total revenue is R177 million and R201 million in 2019/20 and 2020/21, respectively. Budget surpluses are projected to continue over the MTEF period.

He requested that these be responded to in writing or when CMS provided responses later in the meeting.

CMS Annual Performance Plan & 2021/22 budget presentation
Dr Memela Makiwane, Chairperson of the Board, Dr Sipho Kabane, Registrar and Chief Executive Officer (CEO) and Ms Andisa Zinja, Chief Financial Officer (CFO), of CMS presented to the Committee.

 

The regulations that accompany the efforts to combat the COVID-19 pandemic will continue to have an impact on humans, services and goods movement, employment, poverty, and inequities. These in turn will have a considerable impact on scheme membership, regulation, and sustainability of the medical scheme industry in the short, medium, to long term.

 

The revelations of governance failures, unethical behaviour, and corruption that is in the public domain will impact negatively on the ability of the government to fund public health entities such as the CMS as well as public perceptions about its ability to deliver on the National Health Insurance. The collapse of the economy that has been exacerbated by the COVID-19 pandemic is likely to ensure that employment, poverty, and inequities will worsen in the next five years. The fact that medical scheme membership is associated with employment and a growing economy means that scheme members are likely to decrease in the medium to long term, rendering the sustainability of the industry questionable. The redirection of resources to address the immediate impact of COVID-19 means that less attention will be paid to other serious public health priorities such as TB, HIV and non-communicable diseases. We are likely to see an increased incidence and prevalence of these ignored diseases, including gender-based violence in the years to come. This increasing burden of disease is also likely to affect the funding of schemes and affordability negatively. The epidemiologists and other experts have been at pains in indicating that the effects of climate change, energy, and water shortages will result in more similar pandemics in the future. In terms of scenario-planning, it appears as if we are moving into a scenario of a difficult economic recovery coupled with significant challenges to the implementation of the National Health Insurance. This scenario emanates from an analysis based on the economic recovery and NHI implementation as key uncertainties in the CMS environment over the next 5 years.

 

The important observed industry trends that influence scheme member welfare in the past five years include: On the positive side

• The schemes have maintained an average solvency ratio of 35.61% compared to the statutory requirement of 25% throughout the period under consideration

• The number of schemes that failed to meet the 25% statutory solvency remained at seven between 2014 and 2019

• The number of Efficiency Discounted Options (EDOs) increased from 40 in 2014 to 69 in March 2019

 • The proportion of the beneficiaries covered by the EDOs increased from 25.3 to 28.8% throughout this period These positive industry trends essentially mean that medical schemes have largely been successful in compliance with the 25% solvency requirements during this period. The scheme beneficiaries are expected to have benefited from an increase in the number of EDO options through lower annual contribution increases during this period. It is, however, of great concern that the proportion of beneficiaries covered by the EDO’s has not changed during the past five years and remains at 23.50%.

 

On the negative side:

• The number of scheme beneficiaries only grew by 0.8% between 2014 and 2019

• There was a reduction in the number of schemes from 83 in 2014 to 76 in 2019

• Poor governance and financial management of schemes resulted in a number of schemes being placed under curatorship in this period

• The number of accredited administrators decreased from 28 in 2014 to 19 in 2019

• The number of accredited brokers decreased from 10 780 in 2014 to 10 103 in 2019

• The number of accredited managed care organisations increased from 39 in 2014 to 41 in 2019

 

The main conclusion that can be drawn from the above observed trends is that the medical aid industry is faced with serious sustainability challenges. These challenges are characterised by low beneficiary growth, reduction in the number of registered, regulated entities, increasing beneficiary dissatisfaction, and an increase in the number of non-EDO scheme options. Apart from the trends indicated above, other significant developments have characterised the industry in the period under consideration that is noteworthy. There have been products and players that have entered the medical schemes market without obtaining the necessary approval by the CMS. The CMS will spend significant time and effort in ensuring that these entities are brought under its regulatory umbrella or declaring them illegal in terms of the Medical Schemes Act, as amended. There has also been an increase in the complaints related to diagnostic and procedure code disputes between schemes and service providers. The CMS will establish a mechanism to address these disputes with the support of other regulators. The disputes between schemes and service providers in the management of alleged fraudulent transactions are of great concern to the CMS. The CMS believes that it can play an active role in developing and implementing interventions to address these disputes. These will, however, require support by the industry and fellow regulators.

Key focus areas for 2021/22
-Standardisations of medical schemes benefit options
-Development of a guidance framework for the Low-Cost Benefit Options (LCBO)
-Review of the Prescribed Minimum Benefits
-Consolidation of medical schemes with less than 6 000 members
-Consolidation of government funded schemes
-Development of a Central Beneficiary Registry
-Prevention of fraud waste and abuse
-Collaboration with local, regional and international regulators.

The CMS is currently faced with significant financial difficulties due to resource constraints. The proposed increased levy tabled for the 2020/21 financial year of R42,54 per principal member per annum (ppmpa) has not yet been approved. CMS is therefore operating with a levy of R38,67 as approved in the 2019/20 financial year that does not consider the inflationary adjustment and current financial pressures of the Regulator in achieving its mandate. The CMS has revised downwards and resubmitted its 2020/21 levy increases to be in line with inflation, R40,41 ppmpa. This revised submission is not sufficient to fully fund CMS’s mandate as a Regulator. Based on the resubmitted 2020/21 budget, CMS’s total budget is planned at R186,5m in 2021/22 financial year. This assumes an approved levy of R42,27 ppmpa. The other revenue that the CMS collects, outside of levies, has declined by more than 40% over the past 3 years. This can be attributed to our enabling Legislative documents that are outdated and have not been reviewed to enable CMS to be adequately resourced to carry out its Vision fully and effectively and be an agile and transformative Regulator. Considering the above, the CMS will be engaging further with the Department of Health and National Treasury on its funding strategy moving forward.

 

In the 2021/22 budget, CMS proposed a levy of R42,27 per member per annum (pmpa), which is an increase of R1,86 per family per year compared to the levies collected in 2020/21. In percentage terms, the proposal amounts to a 4,6% increase which is within CPI. By comparison, the increases in the preceding three years were 6.30%, 7.03% and 4,5% respectively. An inflationary increase of 4,5% was applied for goods and services and capital expenditure as per Treasury guidelines. In respect of the cost-of-living adjustment for employees, the CMS applied the guidelines as per Treasury guidelines for costing and budgeting for compensation of employees.

 

The CMS currently has a total personnel headcount of 132 including temporary and contract personnel which is below the required numbers based on workloads. The CMS is understaffed and relies on interns and temporary personnel to carry out some of its core regulatory functions. Additional resources will enable this organisation to have reasonable staffing levels to effectively carry out its mandate. The recently completed Business Process Mapping exercise has indicated that an additional 16 posts will be required by the CMS for optimal and efficient operations.


Discussion
Ms A Gela (ANC) noted that in one of the slides it stated that members were paying a lot, which was concerning. The R32 billion out of pocket expenditure was too much for members. She requested that CMS provide the Committee with a full report regarding the seven senior management personnel who faced allegations of unethical or corrupt behaviour. Did this take place within a single case - were the seven jointly accused? How much money was involved – was it recovered? Were criminal charges laid against the seven senior management personnel? How far were they with the investigation? Had any investigations by law enforcement agencies been conducted?

She asked what the impact of COVID-19 had been on the function of CMS as well as the medical aid industry and its members. In terms of the levy, she realised that the Chief Financial Officer (CFO) had done a presentation but she thought they needed to look into that issue, given the status of the country’s economy. What was the current approved levy? In terms of the report on the section 59 investigation, she requested that this be shared with the Committee once completed.

Ms H Ismail (DA) asked what the total cost of the SIU investigation was. What were the total litigation costs for the previous year? She referred to slide 57, CMS mentioned that due to lack of funding, it would impede its ability to support urgent NHI projects and would be severely compromised. What did this mean? Would these projects not go ahead? Would they be delayed? She requested clarity on that. Were there any mitigation strategies being implemented or planned to prevent such delays. She requested an update regarding the progress of the introduction of standardised packages across all medical aids.

What measures would be put in place to prevent fraud, theft and abuse? Did it have a plan that could be shared with the Committee? R28 billion was shocking! What were the loopholes for this? She referred to the review of prescribed medical benefits, could the Council update the Committee on the review of benefits in line with the health market enquiry and its recommendations?

Mr P van Staden (FF Plus) requested more information regarding the notice 214 of 2021 which was gazetted on 23 April 2021. Certain practices were declared as regular in relation to the activities of medical schemes – he requested more information on that. He asked that they explain the decision-making process within the Council and the process followed to make such a decision in the above regard.

The guidelines needed to be published within 180 days; he presumed that the Council was busy with those guidelines. He requested clarity on that. He referred to slide 5 – the R32 billion out of pocket expenditure – he asked that more information be provided about that. Was the Council currently involved in any litigation – if they were could the Council provide more information on that. He supported the report regarding the corruption relating to the seven senior management members and section 59 investigations.

Ms D Hlengwa (IFP) stated that according to the presentation, the Council was exploring alternative funding models to contain costs in the long-term for the entity – were there any details/models available for the Committee to consider? Only nine out of 14 vacancies were filled during the 2019/20 period. Considering that the Council seemed to struggle to build sufficient internal capacity, why were only nine positions filled? What was being done to address the internal capacity struggle in light of inadequate financial and human resources. She requested clarity regarding the consolidation of the government funded scheme – when would it be implemented? In terms of fraud in the medical aid scheme, how had it impacted people on the ground.

Ms N Chirwa (EFF) requested clarity regarding the issue of pre-exposure prophylaxis (PrEP). She knew that a lot of medical aids rejected PrEP applications/claims for various reasons. It had been suggested that they rejected claims for sex workers. They gave ludicrous responses. Even the Parliament Medical Aid (Parmed) rejected claims for PrEP if the person was not in a relationship with someone who was confirmed to have human immunodeficiency virus (HIV). She wanted to understand what the conversation around that issue was. What was the position of the Council and what legislation/regulations did it act according to, in that regard? Even people who were in risk groups were being rejected for PrEP applications.

There was a case they got from a patient at Netcare Garden City Hospital; during his stay in hospital in the Intensive Care Unit (ICU) he was not informed, nor was his family, that he was not covered for that. He received a bill of half a million Rand that he needed to pay off. He was also paying legal fees. How did they resolve such issues when hospital stay was indicated as being covered by the medical aid scheme? Did they need to lodge a complaint with the CMS? If so, what was the process around that? If possible, she wanted to share the information of the person with CMS, so that it could be carried forward.

She highlighted the issue of insourcing – the Council was paying R30 million for consultants. Why was that? The Council had raised the genuine issue of under-staffing for quite some time – what was being done to expand opportunities and cut-costs? Why were these services not in-sourced? With respect to security and cleaning were they in-sourced?

Dr K Jacobs (ANC) stated that it was important that the Council regulated the schemes. It was important that they remained fair, given the vast amounts of peoples’ monthly incomes that were contributed toward such schemes. The amount of contributions annually was around R174 billion – that was a lot of money. That was only to 76 medical schemes. The poor members had to contribute to out of pocket contributions. This discussion had taken place over a long period of time – it did not seem to be going anywhere. Members contributed such large amounts of their income. They needed to review what was happening, specifically with regard to the cost of administration, the role of the brokers and organisations. They needed to review where the costs were really going. He requested that CMS provide a breakdown of the costs that the medical aids stated they incurred in order for the Committee to consider how to assist CMS to get a better outcome for members.

In terms of the levies raised as contributions to CMS, those levies should really come from the medical aids and not from the members themselves. It was something they should really look at as a matter of urgency so as to assist members of medical schemes. What was the outlook regarding the programmes they put forward and engagements they had with the National Department of Health in that regard? He requested that they provide an example of what they were looking at. The Council should indicate to the Committee how they should assist CMS with those challenges – they continued to have the same challenges.

Dr S Thembekwayo (EFF) stated that her question related to programme 4. Human resources played an important role, not only in the CMS but in all the entities that reported to the Committee or the National Department of Health. Yet there was mention made of some staff not being available. How did they handle situations where staff were not serving them well? In terms of the establishment of the Council of Secretariat, she asked for more concrete reasons behind the establishment of the Council – apart from the one that was mentioned, in terms of support of the annual plan.

In terms of the research and monitoring, one of their roles was publishing in international journals. Were there any papers published in connection with the COVID-19 related matters? If so, did they include the trials that were taking place and/or the vaccinations.

Based on the slide that spoke to the levy amount – the levy amount approved for 2020/21 and 2021/22 stood at zero – there was nothing reflected there. While the levy increase from 2020/21 and 2021/22 stood at R1.74 and R1.86 – she asked that they explain that situation. How did they write information on levy increases that were not in actual fact approved?

Chairperson Dr Dhlomo requested clarity on the levies – whether they should not be sourcing that from the medical schemes, rather than from individual members. He stated that they seemed to do well on the unqualified audit outcomes. Was it not time to try their best and work hard to get a clean audit so that they could show other institutions that it was possible to get a clean audit.

Dr Kabane responded to the questions relating to the executive and senior managers and the allegations made against them. The allegations were public allegations made in newspapers and other forms of media. The CMS had no option but to investigate them. The allegations came in various instalments. The allegations were more in line with unethical behaviour than money. There were instances relating to money. The CMS would provide the report that had been requested. The CMS had noted the key elements that needed to be covered in the report – it would complete it and submit it to the Portfolio Committee as soon as possible.

In terms of COVID-19, the CMS had played a very active role since the declaration of the Disaster Management Act regulations in relation to COVID-19. The first thing it did was declare all screening, diagnosis, investigation, treatment and rehabilitation costs, related to COVID-19, as a prescribed minimum benefit. Any scheme and option that people belonged to was obligated, by law, to pay those in-full. It issued guidelines to funders, service providers and members of the public in terms of how they should conduct themselves in that regard. That was a continuous process that they engaged in. When the discussion around COVID-19 started it was proactive and got the Minister’s concurrence in declaring the provision of the vaccine to be a prescribed minimum benefit. This meant that if one was a scheme member, irrespective of the type of scheme one belonged to, or the option, that vaccine needed to be paid, and paid in full. By doing that it had obligated schemes to cover the COVID-19 vaccines over and above previous treatment.

CMS engaged with the entities that it regulated, to state that as a result of COVID-19 there were certain things that they needed to ensure were given to people in terms of exemption from certain parts of the Act, so that they were able to manage COVID-19 with their members. As result it had entertained quite a number of exemption applications, mainly relating to smaller schemes. Schemes had come to them and said that here were sufficient reserves and asked whether they could be given a contribution holiday of two to three months. The CMS worked out the financial implications of that. If the scheme was still healthy after that, it would have said yes. There was a report they had compiled that demonstrated the overall benefit that they had extended to scheme members as well as the schemes themselves. They were happy to share that with the Portfolio Committee.

There were some questions they could not answer immediately but they would go back and provide the details, such as the questions that related to the total cost of the SIU investigation as well as the costs of litigation in the last year. In terms of the NHI projects – it was not that the CMS would not do any of them. For instance, with respect to the central beneficiary registry and the standardisation of options etc, it could only move as fast as they had resources to do so. The CMS would execute those projects; it would not cancel them – it was essentially the pace of delivery that would be affected by the funding. Once they were able to unlock and bring in more resources, some of the projects could be accelerated.

The CMS was asked to say something about the standardisation of options and the detail of the work that it was doing there. In the medical schemes industry, there were up to 300 plus scheme options. Each governed by different rules that resided in the 76 schemes that were part of the industry. Even the most educated individual would find it difficult to make a clear comparison and rational purchasing choice. What the CMS was trying to do was to – in the medium to long term - reduce those options and standardise them to about four or five. The CMS specifically wanted the basic options to be standardised across all schemes, as recommended by the Health Micro-Insurance HMI. Once it had that basic option across all schemes and everyone knew what benefits there were, there would be less confusion and members would be able to make rational choices in purchasing. The CMS believed that schemes needed to compete – not on the complexity of their benefit packages but rather on other additional services.

In terms of fraud, waste and abuse. This was a priority that the CMS had elevated since 2018 and were continuing with. That was based on the magnitude of the problem. It was estimated to be around R28 billion. The CMS was mainly talking about overuse of the service where there was collaboration between members and patients and people were given medicines even when they were not sick. Non-medical items were bought using the cards. People shared cards with non-scheme members. Doctors and other professionals claimed for services not provided. That was the kind of waste, abuse and fraud that they wanted to combat. The CMS had started to do so in 2019; it had a summit where it brought all the key players, including members, and agreed on the rules of the ‘game.’ It developed an industry charter that was signed by all key stakeholders, they agreed on the key definitions. It had a second summit where they agreed on the codes of conduct for schemes, administrators, service providers and members. This was the kind of guideline that they wanted to provide. This was also a platform where they wanted to collaborate with the Health Professions Council of South Africa (HPCSA). Specifically, where there was, for instance, unethical and unprofessional conduct by specific professional groups that they could jointly handle.

Where the CMS believed there was fraud it would engage with SIU and law enforcement agencies. It was a journey for it; it believed that it had reached a few milestones but there was still room. In terms of the review of the HMI, the recommendations stood very clearly. The CMS understood the role that it needed to play. What was problematic at that stage was the establishment of the supply-side regulator. It was problematic because some of those functions already resided with the CMS. The CMS believed that in the transition toward the establishment of that supply-side regulator there were certain issues that they could address. For instance, it could establish a coding authority, being involved in the standardisation of protocols and guidelines as well as addressing the movement of service providers.

In terms of an alternative funding model, the CMS was creating a framework. It was still putting together the details. The CMS sought to have its tariffs updated. Those had not been increased for a long time and needed to be in line with the CPI. If that happened, on an annual basis they could be updated. The CMS wanted some of the tariffs that they charged to be in line with some of the benchmarks. It could also look at cost recovery – they were currently under-recovering in some areas. There were also other areas identified for revenue generation – like the training of brokers which they were currently doing at no cost.

The CMS had engaged with a few officials, the better part of the National Department of Health, those that they had spoken to had actually welcomed and supported it. It had not had decisive, detailed discussions. It was hoping to have this when it had the MTEC Hearings between June and July 2021. It would be able to provide detailed proposals around that. They had already spoken to the Council and they were supportive of that.

In terms of the filling of vacancies, the CMS had to adjust its turnover in terms of staff employees. COVID-19 and the associated economic situation as well as some of the outstanding litigations had contributed to it not filling some of those posts or delaying the filling of some of those posts. One of the key factors that it needed to take into account was that it was busy with a restructuring process and business process mapping. It did not want to fill posts and then introduce a process that might direct them in a different direction and create problems for the implementation of that process. Those were the key reasons why they had not filled the posts. The CMS was able to bring in temporary employees, as presented by the CFO, where they had people with limited contracts. This had not impacted negatively on their ability to deliver on their mandate.

He addressed the questions around PrEP, sex workers and what regulations existed. The CMS had identified prescribed minimum benefits; it had tried to align that basket with some of the policy initiatives. It had enforced schemes where anything that was related to some of the key public priorities needed to be accommodated. It was also busy with the review of the prescribed minimum benefits. A key element to that was that they wanted to bring in all the primary healthcare initiatives that would result in disease prevention and health promotion. When schemes rejected some of the claims related to these – they needed to have a formal complaint that went to CMS. If a scheme rejected claims – then a member needed to engage the scheme. If they failed to get a satisfactory resolution, that was when members should go to CMS. The Council did not have a view of all the complaints levelled at scheme level. Once it came to CMS, it gave it a case number and worked on it. The CMS would engage the scheme and affected parties. He requested specific details be provided by Ms Chirwa in that regard. The same thing applied to the case regarding the ICU patient.

The issue of insourcing was something it was looking at CMS. The structural review was aimed at doing that. The CMS needed to expand the legal unit, for example. In other instances, it believed it could shift things around and maybe bring in some of the resources it was currently using external people for. The constraints related to specific functions that CMS could not perform by itself. For instance, if they went to the High Court and they were challenged there, they needed to appoint external legal people. Some of those cases were very complex. They did not have capacity for inspectors, they hoped that as they restructured, that part would be expanded. It was important that it looked at that during the internal audit. The cleaning services were already in-sourced. For a long time, the cleaning personnel were sourced from an external service provider. As early as 2018 all of them were absorbed by the organisation. They had been placed on a medical aid scheme at the cost of the Company.

Shifting the burden from the members to the schemes was quite complex. Schemes by their very nature did not have money – the funds that were sitting with schemes belonged to members. When one raised levies, the people that would ultimately pay would be the members. The members fit the bill of levy related increases. CMS proposed that instead of coming up with a levy increase well above the CPI that they leave the levies at the level at which they were and agreed on an annual CPI increase. They should focus their energy on areas where the profit-making entities within their schemes were involved. Tariffs could be increased – which would mean that CMS would be less reliant on the levy increases.

As a result of the work that CMS did, it sat with a lot of highly technically skilled people. For instance, in the financial supervision unit, it had a lot of chartered accountants. In the compliance and investigation unit, it had auditors, legal personnel as well as forensic auditors. When it lost any of those people, it was very slow to recruit – particularly because it was competing with the entities that it regulated. When it said ‘zero salary increase,’ many of them jumped ship. He hoped that as the economy improved and government was able to allow CMS to correct levies, at a level that was appropriate, it would be able to regain/retain those functions.

The Secretariat was a separate programme that came out of the diagnostic report that was commissioned by the Council. It basically said that in terms of best practice, one could not have the Secretariat of the governing body residing under the wing of the Chief Executive. That individual reported directly to the Chairperson of Council and was there to support all the activities of Council, whether it was training or preparation or attendance fees etc. It was prudent to have a separate cost centre that was accountable to the budget that would be allocated. If it sat under the Chief Executive Officer (CEO), who had no control over the Council activities, it created accountability problems.

Ms Zinja stated that for the levies for the financial year, they were sitting at R40,41. The reason there was a blank space on the presentation was that they only recently received the letter confirming the approval, of the increased levies for the new financial year. For the 2020/21 financial year that just ended, they only received that approval at the end of April 2021 – it was significantly delayed. It was one of the issues that caused some problems for them because they could only collect on the approved levies from the 2019/20 year. They would be invoicing schemes that week. They had submitted their proposal for the 2021/22 financial year and they were waiting for a response to that.

They were working hard as Management to ensure a clean audit. They had discussions with the Auditor General (AG) to identify areas where they needed to strengthen. They had introduced new controls. The auditor had started that week and they hoped that they would receive a clean audit. There were some improvements associated with the controls they had introduced as Management. There were areas they still needed to tighten up as an organisation.

The questions were addressed regarding the undesirable business practice that was issued. She spoke to the process that took place up until they issued the declaration in terms of section 61 of the Medical Schemes Act. It was important for Members of Parliament to understand the process of promulgating a section 61 process. It was legislated and the Registrar and Council, together with the concurrence of the Minister, needed to act in accordance with the strict requirements, as envisaged under section 61. In 2012, the Registrar, through the complaints division, received numerous complaints from service providers and members of medical schemes who complained to the Council in terms of section 47 of the Medical Schemes Act. They had said they were charged exorbitant/excessive core payments, which they believed were contravening the provisions of the Medical Schemes Act. The Registrar, through Council, then issued a notice of intention to declare their practices undesirable in consultation with the industry in terms of section 1(2) of the Medical Schemes Act, read with the Protection of Funds Act. The industry provided comprehensive inputs, comments, data and analysis, which took CMS almost two years to analyse and consider. It became glaringly obvious through that analysis of the comments from the industry and members that there were practices that were discriminating against independent service providers who were finding it very difficult – if not impossible – to be able to participate fairly with other designated service providers. It became clear that there were rules in terms of sections 33 and 34, where schemes were using the rules to impose excessive core payments which were discriminatory to people who were not using designated service providers. There was evidence that these practices were taking place and CMS wanted to engage the Competition Commission because some of the elements fell under their control.

While CMS was engaging with the Competition Commission, the complainants who had brought the complaints to CMS appealed their ‘hesitation’ to the appeal Board. There was an Appeal Court judgement, where the Judge imposed that CMS had a duty to comply and finalise the process that was started.

As a result of this, the CMS finalised a draft declaration with the Registrar’s concurrence and Council to concur that it was the right approach to prohibit such practices. It put into the gazette a timeframe of 180 days, in which CMS would publish proper guidelines and criteria which would properly inform industry in terms of the Act’s modalities. It would state how schemes needed to impose core payments and the methods they needed to employ so that excessive core payments were prevented in future. In terms of the 180 days, one needed to count from the 24 April 2021 onwards which took them to the final week of October 2021. There was already a legislated duty on the Registrar, Council and Minister to ensure that those guidelines were entrenched and were in place before the lapse of that date.

Dr Kabane stated that he would address the questions relating to the out-of-pocket expenditure. Everyone was concerned about that level of out-of-pocket expenditure. It was an estimated figure. It was based on the claims that had been submitted to schemes that had been rejected. The presumption was that the service provider would then go back to the member and say ‘pay us this amount.’ This was an under-estimation of the real figure. It might be more. The out-of-pocket expenditures that scheme members were asked to included when one went to a pharmacist and wanted to order over the counter (OTC) flu medication. It was rare for them to state that the scheme was covering everything. They would ask the member to pay R100 or R50 etc. Those amounts, as no one reported on them, never made it to their annual reports. They were trying to figure out a way to collect some of them. In terms of the figures that related to members accessing services outside the network – they were trying to curb those amounts. Currently they had schemes that collected up to 40 percent of what should be paid out. It was a major problem as it led to members being forced to pay ‘out of their pockets.’

The case of the person in ICU whose cover ran out and was sitting with half a million Rand in claims – was part of that out-of-pocket expenditure. If nothing happened, that person would be forced to liquidate some of their assets and take children out of school to be able to cover that. This was something the CMS did not want to see. This was one of the things that they believed NHI, through the Universal Health Coverage should be able to address.

In terms of the kinds of research outputs related to COVID-19 – the CMS would supply the Committee with a list of all the publications it had made locally and in international journals as well as other platforms. This would include publications on prescribed minimum benefits, circulars it had issues as well as scripts. He recalled one survey it had done recently, after the SARC published a survey that indicated that up to 57 percent of the general population were ready to present themselves for a vaccine – a number of explanations were given for that low percentage. CMS decided to do a similar survey but confined it to scheme members. The CMS was surprised that up to 82 percent of scheme members were ready to accept the vaccine when it was presented to them. It needed to engage the policy makers around the vaccine and improve the uptake rates both at scheme level and also in relation to members of the public.

Ms Agnes Sethogoa, Human Resources Manager, CMS, stated that in terms of the delay in filling vacancies – this was due to the budget constraints that Council experienced. At times they struggled to convene a panel to sit on the Selection Committee for the interview process. The time at which a vacancy became available contributed to the delay in filling the vacancy - as the National Treasury guidelines did not allow them to publish any adverts between the 15 December and the 15 January.

Ms Thembi Phaswane, Senior Manager Complaints Adjudication, CMS, responded to the complaint regarding the patient that ran out of benefits while in hospital. It was important that CMS got the full details relating to that complaint in order to investigate and come up with a decision. They needed to do that to find out information relating to the admittance. Was the person admitted for one of the conditions listed under prescribed minimum benefits? She asked that Ms Chirwa communicate this to CMS so that they could follow-up with it.

In relation to PrEP, it was important that if a member of a medical scheme stated that they had been exposed to unprotected sexual intercourse, a doctor could not just dispense medication. The doctor could not just give the PrEP as there had been a number of negative instances in the past. They knew that PrEP was mainly for sex workers, unlike post-exposure prophylaxis (PEP) which applied to situations where a condom broke or there was a rape. In instances of PrEP the doctor needed to contact the medical scheme for authorisation because every medical scheme had formularies. The medical scheme would inform the doctor of which regiment was applicable for that scheme – so that they could give the member the correct medication that was prescribed and approved. Authorisation was important as there had been a lot of abuse in the past. That abuse led to financial constraints in medical schemes and resistance.

The Chairperson stated that Ms Phaswane’s response was indicative of some of the trouble people experienced with medical aid schemes, where coverage was outlined in the fine print. He hoped that CMS would support the protection of the community – many of these things were not well-known. It was only when one started needing the service that one faced extremely difficult challenges.

Dr Memela Makiwane hoped that the day’s discussions had been clear to the Committee. The management of CMS had demonstrated a clear thought process in their discussions and delivered what they were requested to. He appreciated the Committee’s ‘friendly’ approach in seeking to understand and get answers, as opposed to a challenging one. They would respond to all the unanswered questions in writing.

The CMS members were excused.

Opening Remarks relating to SAHPRA presentation
The Chairperson stated that he had received a letter from the South African Health Products Regulatory Authority (SAHPRA), the letter was addressed to him and dated 28 April 2021. The letter was from the leadership of SAHPRA with regard to a complaint about two of the Portfolio Committee members. He had since indicated to those members about the complaint. The letter was communicated to the two members. He had sought advice on the matter from the House Chair, who guided him to process the letter through the Parliamentary Rules process. They would then be able to inform the Portfolio Committee at the relevant time. He did not want to discuss it during the meeting. He simply wanted to note that he had received it and that it was being attended to. When it was appropriate, they would communicate with SAHPRA.

SAHPRA annual performance plan & 2021/22 budget presentation
Ms Helen Rees, Chairperson of the Board, Dr Boitumelo Semete-Makokotlela, CEO and Mr Gordon Mtakati, Executive Manager of SAHPRA presented to the Committee.

Revisions of the Strategic Plan
-The main focus for the 5-year period is on achieving stabilisation and momentum out of the transition phase towards greater autonomy, effective governance and operational efficiency.
-The number of outcomes have been reduced from 9 to 7, to ensure that the focus is on core business.
-The 5-year targets linked to the outcomes have been revised to support SAHPRA’s approach towards the incremental reduction of the time taken to finalise its regulatory activities such as the approval time taken to register new medicines.

Overview
-In the previous financial year, the Portfolio Committee raised concern on the number of targets in SAHPRA’s Annual Performance Plan.
-For the 2021/22 financial year, SAHPRA has only reduced the number of targets by 1.
-SAHPRA will gradually reduce the number of targets as the Authority matures over the years.
-As SAHPRA works towards deepening its scientific review base and build globally aligned review methodologies and practices, it will focus on the following priorities:

-Applying global standards of Good Review Practices;
-Applying reliance on a risk-based approach;
-Working towards being a member of the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use; and
-Becoming a World Health Organisation Listed Authority.

Key Budget Considerations
-The impact of the significant reduction in expected revenues has resulted in the comparative reduction in expenditure, the most significant of which is for cost of employment where it will not be possible to fill critical core vacancies which has an impact on SAHPRA’s ability to deliver on its mandate.
-Due to limited data available, it is a challenge to determine how much revenue will be generated and recognised in a particular financial year which may result in fluctuations between year-on-year accounting deficits and surpluses as fees received where services are not yet fully rendered is “locked up” as a liability.
-Deferred revenue for the backlog project is similarly “locked up” as a liability and can only be recognised as revenue per completed process.
-The lack of historical supporting documentation, current internal system and capacity challenges and significant volumes of new applications is placing strain on SAHPRA’s ability to timeously recognise revenue and accurate reporting.
-To overcome these significant challenges SAHPRA is in need of a financial injection to capacitate and develop appropriate internal systems to operate at the most optimum level.

Conclusion
-SAHPRA’s strategic documents aim to comprehensively respond to the priorities identified by Cabinet of 6th administration of democratic South Africa.
-The advent of COVID-19 saw an increasing dependence on SAHPRA for its science-based regulatory decisions and leadership in ensuring that all health products including those for the treatment of COVID-19 are safe, efficacious and of high quality so that the health and well-being of South Africans are protected.
-While SAHPRA responds to the COVID-19 pandemic, it will continue supporting key national priorities such as the implementation of National Health Insurance Scheme aimed at ensuring universal health care access.
-Significant support/investment is required from National Treasury to enable full capacitation of the organisation as well as digital transformation in an effort to ensure it meets its targets.

Discussion
Mr A Shaik Emam (NFP) stated that in terms of efficiency, he wanted to know why SAHPRA did not respond to correspondence. He had sent a letter on 14 April 2021, it was sent to the Committee as well, and he had not received a response to it. He had posed a lot of questions to SAHPRA when they previously came to the Committee- these were not responded to. In terms of their oversight responsibility, SAHPRA was not above the Portfolio Committee – SAHPRA needed to respond when questions were asked and they needed to do so timeously.

How did SAHPRA account for external funding and donations that they received from other entities, particularly entities that might be conflicted, or manufacture and distribute drugs and vaccines. What mechanisms did they have in place to ensure ethical governance at SAHPRA – that there was no conflict of interest, particularly with companies that might fund them. He highlighted concerns around the effects of the Johnson and Johnson vaccine – he had sent them questions on that, that were not responded to. He requested an update on the situation.

Did they endorse blanket indemnity for the corporates for harm to people? Were full information leaflets being given to vaccine trial subjects? Were they translated? Could they get copies of them? In terms of the issue of polymerase chain reaction (PCR) tests highlighted by the World Health Organisation -SAHPRA had not come up in addressing the challenges in terms of the PCR tests – he requested clarity on this.

What was their position on the carcinogen Ethelyn oxide on the PCR swab tests? As the regulator – could they tell the Committee what the effects of methanol in sanitisers was – which had already caused breathing problems. Toxicity of graphene-family nanoparticles in widely used masks? As a member of Brazil, Russia, India, China and South Africa (BRICS), what was their position on India’s Health Ministry adding Ivermectin to the treatment regime? What changed their mind – with no further evidence – that they would allow it? Did SAHPRA leadership take a vote on not recommending Ivermectin and where could they get the details of that public interest information? What was SAHPRA’s employment policy on hiring employees who worked at multi-national corporations with shocking track records of fraud, corruption etc? Was SAHPRA going to invest any of its public purse budget allowance into being proactive on repurposing drugs or still stick to ‘lucrative cash cow novel treatments’ that experts warned against?

Mr van Staden asked whether SAHPRA currently had any medicine registration backlogs – if so, what were the numbers? Did they have any backlogs with the registration of medical devices? He requested numbers in relation to that as well.

Dr Semete-Makokotlela addressed the questions regarding the backlog. In terms of the medicines backlog, there was a backlog project that aimed to clear all the applications that were inherited. SAHPRA tracked that on a bi-monthly basis. As executives they were concerned that they could be building up backlogs – but they picked that up quite early and had strategies in place to ensure that the backlog did not grow. The key issue was around the capacity constraints that they had. SAHPRA had engaged with the National Treasury to state that they needed support around that. There were other operational mechanisms that it was dealing with together with the CEO. When it came to medical devices, SAHPRA did not have a backlog, the challenge had been that they took the decision that they would conduct validation of the products locally. In some cases, there had been delays in terms of validation. Some of the matters were indeed internal but the bulk of it was that applicants were not able to give them the material that was required for the validation time. Where there were delays they had been in constant communication with them. SAHPRA knew what the challenges were and they were working together with the National Health Laboratory Service (NHLS) to address those. They had brought in other NHLS labs, specifically the one at the University of KwaZulu-Natal (UKZN) to assist some of the companies. Some companies did not provide all the information that was needed. She was confident that the approach they had taken to state that all the tests needed to be validated locally was the right one. About a month before, an article was published that highlighted the number of serologic tests that had to be recalled because they had varying performance in the US. As a result of the thorough process they had, they had not experienced this problem in South Africa.

In terms of the letter referred to by Mr Shaik Emam, she had contacted her office to look for that – she missed that email, but she would look into that.

 

In terms of the funding that SAHPRA received, they had been very transparent, they needed to declare all the funding they got. In the last financial year, they had received funding largely from the Gates Foundation and Centre for Disease Control Prevention (CDC) etc. This was primarily for the clearance of the backlog project. It was not used outside of what had been earmarked for funding. In terms of ethical governance, they had a conflict of interest mechanism, wherein they had external evaluators. Whenever they discussed a specific application or matter, there was a declaration of conflict of interest. Where there was conflict, the member was excused. That member would not be given a dossier to review. It was audited that they had not had any challenges around this. A few years back, there was an industry association, this was declared in their annual financial statements, whom provided a small amount of support. They had been cautious about this. They did not receive funding from a specific manufacturer.

In terms of the side-effects, when they first looked at the blood clotting effects, during the time that the US Food and Drug Administration (FDA) paused the roll-outs in US, they received data from the Sisonke study. They went through that in detail. They issued a public statement about that. They required that the study team strengthen the informed consent form so as to add additional information on the side effects. That was done. Every participant in the Sisonke study had received an updated informed consent form that spoke to some of the side-effects, as well as some of the rare conditions that were reported with the vaccines. If one looked at the numbers in a total of about seven million Americans that were vaccinated, six people experienced conditions. They were rare conditions that needed to be managed thoroughly. They had built that into the protocol – they were confident that the matter was addressed and they would be reporting to them. They had strengthened the screening as well as the reporting timeframes. The reporting on the Sisonke study would be more frequent than in the past.

In terms of the sanitisers, that was something that the South African Bureau of Standards regulated as well as the National Regulator for Compulsory Specifications (NRCS). They conducted the tests to see whether the products complied with the published standards. They issued a certificate that would state that the product complied. They applied reliance on the issued certification.

Their position on Ivermectin remained as they had previously communicated to the Committee, the last time they engaged. They previously presented a study that was conducted in Columbia; within that publication they indicated the gaps within that study. They continuously looked for more information on that. There had been a recent statement by WHO on that, and all the regulatory bodies were aligned on the matter. Until they got better data, their position remained. They would monitor the use of the product. They had a topical formulation that they had authorised – not for COVID-19 but for treatment of a skin inflammatory disease. They had reached out to all their manufacturers to bring in the tablet form of Ivermectin for use on prescription. They continued to monitor this, however their position had not changed.

SAHPRA had numerous Human Resource (HR) policies that it applied when it employed individuals. It would do reference checks, check certificates etc. She was of the view that they were applying their HR policies correctly.

Ms Rees stated that in terms of the backlog, they had to source funding outside of Treasury as they were sitting with half the personnel that they required to be an effective regulator. That was why they needed to have a separate negotiation with Treasury. She appealed to Parliament to really take note of that. It would be extraordinarily difficult for them to maintain the level of work and demand on the staff without a larger staff contingent. Specifically, a skilled staff contingent. They wanted to hire young people. Once hired it took at least two years to train them. That was the bulk of the income. They were understaffed. Speed was important – that was why they had to source alternative funding to address the backlog. They were trying to avoid a ‘new backlog.’ They needed support for additional funding for additional staff, without that they were at 50 percent capacity.

In terms of Ivermectin, regulators had a tough reputation all around the world. Regulators were there to make decisions within a framework of rules, legislation and clinical and medical rules. They were there to do it independently. It was inevitable that some of the decisions they took would not be popular. The decision to allow importation of the human formulation came before any court case. That was already looked at because they were worried about the safety of what was going on. This happened at the peak of the second wave. The veterinary sector was telling them they were running out of Ivermectin because it was being diverted for human use. There was importation of human products specifically from India. There were many impurities in them, when tested, and these were illegal importations. Veterinary medicines were designed for animals that could weigh five times as much as humans. There was no calculation if one got a medicine from the veterinary side of how much there was in it. It was ‘positively dangerous’ to put them into humans. At high doses Ivermectin did have danger signals. Thus, based on that they came to the decision to make it available only through a prescribing doctor. There would be differing views. If one looked at who in South Africa was saying there was insufficient evidence to support the use of Ivermectin, it was the Ministerial Advisory Committee, the National Essential Medicines Committee (who had done a systematic review of all the evidence out there), SAHPRA and some other bodies. There was insufficient evidence.

Ms Ismail referred to 2019 where Cyril Ramaphosa had issued a proclamation for the SIU to investigate serious maladministration in connection with the affairs of SAHPRA. President Ramaphosa signed a proclamation in October of 2019 after two members of SAHPRA Inspectorate were pointed out in fraud allegations related to an external stakeholder. What was the outcome of the report?

Mr Munyai raised a point of order for Ms Ismail to address the President as such.

Ms Ismail apologised, it was not intentional. She asked that the report be provided to the Committee. Had SAHPRA started with any studies relating to the variant identified in India in terms of the vaccines procured? She requested more detail about the vaccine approval process thus far. Which vaccines had been approved so far and what stage were the others? What measures had been taken to assist entry level manufacturers? She requested clarity regarding why Administration received the largest portion of the Budget as opposed to programmes two and four, which dealt with medicine registration and backlogs etc. She thought that would have been more aligned to the mandate of the entity. What measures had been put in place to reduce registration backlogs? What was the current backlog for registration? If possible, could the Authority give a breakdown for generic and new applications?

Ms Chirwa requested clarity regarding Sisonke, was it still referred to as the Sisonke Trial or extended study? How was it affected following the Johnson and Johnson approval? The issue raised by the Black Farmers Association spoke about the exclusion of Black farmers from medicinal cannabis licensing. In 2019, Members had raised this issue in the Portfolio Committee and she asked who the five manufacturers were that were granted licenses. All of them were white-owned. Refuting the claims of ‘racial bias’ and racism was not in the best interest of SAHPRA and/or the people that were raising the issues. What happened – did they just ignore the allegations – why were they not investigating them? Why were there no engagements taking place with various stakeholders? How many eligible medicinal cannabis growers had been issued licenses so far? How many of them were Black?

Ms Hlengwa requested clarity regarding some of the financial statements. She had not understood why there was more under expenditure than estimates – it worried her as there was no consistency. In the presentation it was stated that the reduction in expenditure would inevitably have an impact on the cost of employment, however it was critical to know how many vital vacancies remained unfilled. What did the Institution propose to do about that matter? One of the threats indicated in the strengths, weaknesses, opportunities and threats (SWOT) analysis of the annual performance plan was that there were currently no documented processes that regulated the working relationship between the Department of Health and SAHPRA, this was a serious lack of organisational administration. It was vital for transparency and accountability. What was being done to rectify the situation? What was the reason provided for that? Seemingly, this was a clear lack of administration. Furthermore, the SWOT analysis indicated that there was a lack of skills transfer which caused an unnecessarily cost on external experts. What active steps were being taken to address the problem?

Ms Gela raised the issue of SAHPRA being understaffed. They clearly needed funding. How much did they need in that respect?

Ms Gwarube stated that it was absolutely crucial to address the staffing issue. They were operating at 50 percent of their capacity, given what was happening globally in terms of COVID-19 and the reliance on the regulator they needed to address this. Despite the historical backlogs, it was incumbent on the Committee to address this issue with the Department.

She had asked the MRC the day before about the possibility of the variant identified in India being imported into South Africa. The MRC had said they were monitoring the situation. What work was being done from a regulatory point of view to test the vaccines that were in the pipeline in terms of being effective against such a variant? Was efficacy against a dominant variant a big part of the consideration of vaccines in the pipeline? If so, was the regulator prioritising manufacturers that could have a solution to the problem. They did not want a situation where they were caught off-guard. She wanted more information about the stages of the vaccines that were in their trial stages.

Mr Munyai wanted to make a concrete proposal that they consider conducting oversight of SAHPRA so that they were able to see the work that they did. Did the so-called Black Farmers Association own their own land or was the land owned by whites? Such fronting could end up looking like racism, which it was not.

Dr Jacobs stated that the proposed filling of staff was a concern. What were the challenges and constraints with appointing people to the post? They had heard of one challenge from Professor Rees about the skills which were required. Could they mention the other challenges, so that they got a proper understanding and could support them? 

Mr M Sokatsha (ANC) queried the 30 percent work-place skill plan that was implemented. Was there any room for improvement? Could they improve that to 70 percent? In terms of finances, it was at negative 14 percent – he did not know what this meant. The presenter had indicated that they had filled 24 posts out of a potential 500 and something. Was this not affecting service delivery? What challenges were they experiencing in terms of the limited data? In terms of historical documents, there was a challenge in terms of collecting historical documents – what was the challenge? This would affect their audit outcomes.

The Chairperson asked what level they were presently at. One slide said they wanted to achieve maturity level three – what did that mean? Despite their challenges of human resources, he commended them on always prioritising issues like COVID-19 and the vaccines etc. What guided them to prioritise these things despite the backlog they had. It was very responsive – what guided them in terms of the vision to do that?

Prof Rees addressed the questions relating to the SIU. When the whistle blowers first reported to SAHPRA about possible misdemeanours of two inspectors that appeared to be involved with an international pharmaceutical company, they immediately instituted forensic investigations themselves. At the request of the previous Health Minister, they turned it over to the SIU for investigation. They suspended the two employees in question. The information from their internal investigation was handed over. SAHPRA shared the concerns of the Committee – in terms of having no report – especially as significant charges were being levelled at SAHPRA. The CEO had a couple of in-depth discussions with the head of the SIU. The head of SIU and his colleagues had recently presented to the Board. They were really pushing to get a formal report to SAHPRA. It was probably going to be hard – even with the individuals. HR administrated processes in relation to the individuals – one was for receipt of a gift (a cellphone); the other ones had not fallen under the SIU because they had fallen under ordinary HR administration. It would be difficult to prove anything against one of the individuals, in particular, as a lot of it was hearsay, there appeared to be no systemic issues coming out. They had also looked at SAHPRA’s processes. There were no serious systemic reports coming out with regard to the operations of SAHPRA and nothing in terms of the functioning of the Board. The report might find something but would likely say that there was ‘insufficient evidence.’ It was reassuring that there was no widespread systemic problems found. The issue of conflict of interest was taken very seriously at all levels of the organisation.

The delay relating to SIU was very damaging implicitly as people asked what was going on. If they were isolated incidents – whether or not they could prove them – it would be important that the public knew that. Undermining of the regulatory authority undermined public confidence in the medicines and vaccines they took. It was important that if they did do such investigations, they were done quickly, properly and no stone was left unturned. Otherwise it undermined the integrity of the regulatory authority by implication and the authority thereof. They were happy to come back and present on the report once it had been finalised by SIU.

In terms of the variant, the MRC were supporting the Variant Consortium in South Africa. The regulator did not do research; it approved clinical trials and others to do research. In terms of the variant – this would not come to a drug regulatory authority, it would go to ethics committees. It would come to the regulatory authority if the question was asked whether vaccines worked against the variants. It was important and it was something the entire world was struggling with. SAHPRA was looking at laboratory tests and antibody tests at present. It was looking at other measurements of the immune response to the vaccines and variants. They did not know how the laboratory tests translated into clinical impact. If something dropped, for example the antibody response, with the variant – did it relate to the clinical impact? It did not have enough information to know that. It appeared that even if it saw anti-body drops, it would appear that at least some of the vaccines retained their effectiveness against severe disease and hospitalisation. This was something SAHPRA would continue to look at. The Ministerial Advisory Committee was looking at a request from the Minister as to what kind of guidance they should be offering – what they should be doing as a country. In terms of the variants, they needed to monitor global countries – where did they have a lot of people coming into South Africa – from which countries. If they saw big waves in a country – high levels of spread within a Country with many visitors coming into South Africa – they needed to decide what to do to minimise the risk – particularly a new variant. The jury was still out as to whether the variant identified in India was indeed more infectious or whether it was because India let their guard down – in terms of the mass gatherings that allowed it to spread. That had not been decided. They needed to find out whether it was indeed causing more severe disease – or whether the health services had simply been overwhelmed.

They were looking at all the vaccines in terms of efficacy and asking all the vaccine manufacturers whether they had laboratory data that showed the impact. A few of the laboratories had clinical data that they were able to share.

Dr Semete-Makokotlela stated that SAHPRA continued to monitor any scientific data that was made available. It had pre-submission meetings with a number of companies, even though they had not applied. Those that had vaccines in the pipeline reached out to them and shared that data they had with SAHPRA. They were then able to advise in terms of what they needed for South Africa.

In terms of the Sisonke trial, it was approved as an implementation study with a specific number that they intended to target. They would aim to complete that study with the 500 000 that was authorised. That would continue. It continued to generate data that they were able to then reflect on as a regulator, which would then inform the roll-out. For example, SAHPRA had received the data on adverse side-effects and continued to monitor that.

She responded to questions regarding the Black Farmers Association. SAHPRA had proactively engaged with the BEE Commission to look into the BEE Act, and continued to review and assess itself in terms of procurement, staffing and employment etc. It had engaged with the Commission around the part of the BEE Act that talked about compliance with the Act when one issued licenses. It had consulted with them and they had given SAHPRA their opinion on the matter. SAHPRA had also received a legal opinion on it as they needed to make sure that whatever it implemented did not contravene the Medicines Act. Nowhere in the Act did they discriminate against different applicants. They addressed the issue around the cost of licenses and issued a mechanism around a reduced fee for the smaller farmers – they were consulting with other stakeholders in this regard i.e. Department of Agriculture. They had created an interim mechanism for those applicants that did not meet the requirements for licensing. It was important that any product that was authorised had met the requirements. The interim measure, instead of rejecting the application, allowed them two years – they provided feedback to the farmers in terms of the gaps – and they were happy to provide assistance where required. In terms of the ownership of farms, the act required that some of the matters be kept confidential. They had inspected the farms; the allegations were not correct. They were not exclusionary as a regulator. They had no business in being exclusionary. Their mandate was to focus on safety, quality and efficacy.

In terms of the HR matters, if they did not have the resources, they battled to fill some of the positions. They were at a point where they were looking for skills in pharmacy, in the medical devices area. They were looking at quite advanced skills. The offers they had made to some candidates were rejected as they were unable to meet whatever salary they were getting elsewhere. They had started the benchmarking process.  The HR team was leading it. That would give them an indication of whether their salary scales were outside the market. If they were, they would need to review them and balance that with their financial position.

In terms of the skills transfer, they had put mechanisms in place – they would be instituting a mentorship programme between their internal staff as well as their external evaluators. It would be a formalised programme where they mentored them and assessed how that was going. They had trained a number of staff through various training programmes – Swissmedic had offered training that they had sent some of their staff members to. WHO and other initiatives had opened up training opportunities – the virtual platforms had facilitated more training than they typically would have been able to attend. They were currently understaffed and it was impacting their deliverables, efficiency and speed to make some of the regulatory decisions. Any support in that regard would be appreciated.

In terms of limited data, they had been in conversation with the Department of Health and they also had the Board write to them to ask for support on this. It would impact the outcome of the audit. They had a meeting with the Director General (DG) where he brought his team onto the call and committed to assisting them, particularly with finance information and HR information they still needed. They had started to see some progress. The Department was currently undergoing a move of buildings – this had caused some delays – but they had pushed really hard around that to ensure that they had the data in time for the audit that was taking place presently.

At the moment, they did not have a maturity level status, because they had WHO coming to assess them in November of 2021. They had intended to come in February 2021, but with COVID-19 and the travel restrictions they were unable to.

Mr Mtakati stated that SAHPRA did have recruitment and selection policies. A reference check was done, qualification checks were done, ethical assessments as well as integrity assessments. The individuals they appointed in the organisation were aligned with the pillars of the organisation which were safety, efficacy and quality. When it came to the workplace skills plan. They needed to join a new services sector education and training authority (SETA). They had gotten a profile the day before from SETA on how they could register to ensure that the skills of the people in the organisation closed the gap between what was wanted and what they possessed. They were doing benchmarking for the market of the medicine side of the business. Their employees were demanded by everyone. They were using the Department of Public Service and Administration (DPSA) salaries which were public – people were aware when they negotiated.

Mr Regardt Gouws, CFO, SAHPRA, stated that ‘programme one’ supported all the other units. It was positive that it only accounted for 35 percent of the total budget. He referred to slide 24, programme 2 for example, in terms of the compensation of employees, it was lower in comparison to the other programmes. He addressed the question regarding the consistency of figures – the figures were consistent, they tied up to the total amounts in the annual performance plan.

He addressed the question regarding the unqualified audit – the audit was in its planning stages, they only submitted the financials on the 31 May 2021. They had not had an opportunity for an interim audit. There were no findings to date on that.

He addressed the question regarding the cost of employment and why it was at 14 percent. He referred to slide 22, and the total revenue, they needed to reduce their total expenditure on that. Hence the impact was about 14 percent less spent on the cost of employment, hence the reduction in the budget. SAHPRA had to reduce its expenditure because its revenue was less than expected. In the 2021/22 budget, it had budgeted to fill 24 posts that were currently vacant. As a result of the limited historical data / access to that data it was difficult to project, based on the potential inaccuracy of that data.

In terms of the vacancies, it had about 148 vacant positions – this would cost approximately R90 million to fill. It had planned to do this in a phased approach, with the compensation reduction and budget reduction of R30 million – there were about 24 posts that they would not be able to fill. SAHPRA should have filled an additional 48 posts in 2021/22 but at this point it could only do 24 posts. HR was engaging with the core-units as to what the critical functions were to fill. The other option was to obtain additional funding as they could not afford the total structure that was envisioned for SAHPRA.

Prof Rees stated that clearly everyone was constrained, the budget was one thing they needed to tackle in terms of the human resource shortfall. SAHPRA had progressed despite the constraints. In terms of transformation, the vast majority of the leadership in executive and senior management positions were Black and a small minority were white. It was a transformed organisation in that sense, however it wanted to capacitate lots of young people to become regulators.

In terms of the Black Farmers Association, SAHPRA really had tried to support and facilitate small Black owned farms – who were appealing for support. They wanted to assist them. The Department of Agriculture had facilitated the farming of hemp products and licensed those. They were constrained as the regulator in terms of the high-level licensing for medicinal use. This was a highly technical process. They had reached out with the offer of two years to get everything in place. They were talking to the Department of Trade and Industry to see how they could come in and support that. Various departments were working together. They needed a consolidated policy that really took into account what the Country wanted; that took into account the demands of small farmers in areas where cannabis grew well. A policy that took into account the global thinking around cannabis. The regulator should not be setting the policy – it was not their mandate. They had gone as far as they could and they continued to do that. This required a national framework, a policy framework. The DG of Health was leading this with the mandate from the Minister.

The Chairperson stated that one of the biggest anxieties was the issue around the closure of borders and why that had not been done. It was a government call, not the Minister’s call – he thanked them for that clarity. He realised the justification would be in the science. He asked for more clarity around these decisions and processes.

Prof Rees stated that it needed to be supported by science and epidemiology. One could divide the countries up in terms of severity i.e New Zealand where there was no circulating virus at all, countries where there were small clusters but no community transmission like Australia, then there was significant community transmission in the US and countries where there was a variant. The variant identified in India, was a variant of interest and not one of concern because they did not understand enough about it yet. SAHPRA took those factors into account, whether there was a variant and the level of community transmission.

They then needed to decide on what was a sensible testing strategy. Did they need to ask people to test before they got onto a flight, which excluded some people who would test positive, and then did they ask them to test at airports. If they went into quarantine because they had come from a Country where there were high levels of community transmission – when did they ask them to test – was it at three days, five days? Did they ask them to wait 14 days? Each time they did that, they re-modelled how many people it excluded – in terms of positive cases. One also had to take into account the level of transmission of the virus from the countries they were coming from – it was a story.

SAHPRA had to decide what was a science-driven sensible approach and testing strategy that would protect them from having a lot of imported cases. That was the overall approach they were looking at. In some settings, such as Europe, it was asked whether they should take into account whether someone had already had an infection – because they would have antibodies. Or should they take into account people who were immunised because they were less likely to be infected. At the moment globally, from the Emergency Committee of WHO there was a reluctance to do this. A huge continent such as Africa, had not rolled out vaccines yet. If they said they would institute exceptionalism for people who had been vaccinated at this stage – what did it mean for countries that would be delayed in getting comprehensive access. Did they become second class citizens? From a global equity point of view, there was reluctance to consider the status of the person coming in. With time, this might change as vaccinations worldwide went up, it might become a consideration.

Closing Remarks
The Chairperson briefly clarified scheduling for the next two days.

The meeting was adjourned.
 

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