Pharmaceutical Society of South Africa and Others v The Minister of Health and Another; New Clicks South Africa (Pty) Limited v Dr Manto Tshabalala-Msimang NO and Another

The Minister of Health promulgated regulations on 30 April 2004 relating to a Transparent Pricing System for Medicines and Scheduled Substances under section 22G of the Medicines and Related Substances Act 101 of 1965. The regulations defined a single exit price for manufacturers and importers, introduced a logistics fee for distributors, and prescribed dispensing fees for pharmacists (16% or R16 for non-prescription medicines, 26% or R26 for prescription medicines). The Pharmaceutical Society of South Africa and other pharmacy-related entities, together with New Clicks South Africa (Pty) Ltd, challenged the validity of these regulations. The Cape High Court dismissed the review applications. When the applicants sought leave to appeal from that court, judgment on the leave applications was reserved and ultimately delivered only after the applicants had approached the Supreme Court of Appeal directly. The regulations were promulgated following recommendations by a pricing committee established under the Act, purportedly to make medicines more affordable and eliminate the system of discounts and mark-ups that had previously existed.

• Whether the Supreme Court of Appeal had jurisdiction to entertain applications for leave to appeal before the court a quo had ruled on such applications
• Whether the delay by the court below in delivering judgment on the leave applications was unreasonable
• Whether the regulations were ultra vires the Medicines Act (doctrine of legality)
• Whether the regulations properly prescribed a 'transparent pricing system' as contemplated by section 22G
• Whether the regulations permissibly regulated the single exit price of manufacturers
• Whether the dispensing fees prescribed were 'appropriate' as required by section 22G
• Whether the regulations constituted impermissible price control
• Whether the regulations validly dealt with Schedule 0 medicines
• Whether the pricing committee and Minister acted within their statutory powers

Leave to appeal was granted in both applications. The appeals were upheld. The Regulations relating to a Transparent Pricing System for Medicines and Scheduled Substances (GN R553 of 30 April 2004) were declared invalid and of no force and effect. The Minister of Health (first respondent) was ordered to pay costs in both matters, including costs of two counsel.

The binding legal principles established are: (1) The doctrine of legality requires that all administrative action must fall within the scope of powers conferred by the enabling statute - what would have been ultra vires under common law is invalid under the Constitution according to the doctrine of legality; (2) All statutes must be interpreted in light of the Constitution, and section 39 requires courts to promote the spirit, purport and objects of the Bill of Rights when interpreting legislation; (3) While section 20(4)(b) of the Supreme Court Act requires that leave to appeal first be sought from the court a quo, a ruling by that court is a jurisdictional fact that can be fulfilled before judgment is delivered by the appellate court; in circumstances of unreasonable delay by the lower court, the appellate court may entertain applications for leave to protect its own processes and ensure parties' constitutional right to a fair hearing; (4) The right to a 'fair hearing' in section 34 of the Constitution includes the right to have applications for leave to appeal determined within a reasonable time; unreasonable delay can render the right to apply for leave illusory; (5) Where statutory language is clear and unambiguous, courts cannot rewrite or expand it, even to achieve laudable policy objectives; (6) The word 'appropriate' in the context of prescribed fees means 'specially suitable' or 'proper' and imports elements of justice and fairness; a fee can only be appropriate if it balances the interests of all affected parties - affordability for the public and viability of the dispensing profession; (7) Price control mechanisms require express statutory authorization and cannot be introduced through regulations purporting to establish a 'transparent pricing system'; (8) The right of access to healthcare in section 27 includes access to medicines, and the state has both positive obligations (to provide access) and negative obligations (not to impair access); regulations that threaten the viability of essential health service providers impair access.

The court made several significant observations not strictly necessary for the decision: (1) On judicial conduct: There is an ethical duty on judges to give judgment or rulings promptly without undue delay; litigants are entitled to judgment as soon as reasonably possible; delays destroy public confidence in the judiciary; the principle that 'justice delayed is justice denied' is not a mere platitude; parties are entitled to enquire about progress of their cases and to complain if answers are unsatisfactory; the judicial cloak is not an impregnable shield providing immunity against criticism or reproach; it is judicial delay rather than complaints about it that threatens judicial independence; requests for quick disposition of matters should not be met with judicial displeasure - they are legitimate exercises of litigants' rights; (2) On ubuntu: The concept of ubuntu appeared in the interim Constitution's endnote on national unity and reconciliation but does not expressly appear in the Constitution; its application to statutory interpretation is novel; ubuntu ought to apply to relationships between courts and the respect required of organs of state and courts towards citizens and towards each other; (3) On administrative justice: It is unlikely that the Promotion of Administrative Justice Act 2 of 2000, written in light of the Constitution to codify administrative justice principles, reduced the level of administrative justice previously available; (4) On separation of powers: It is not the function of the judiciary to 'second guess' the executive or legislative branches or interfere with affairs properly their concern, but adherence to prescribed forms and procedures and insistence that the executive not exceed its powers are important constitutional safeguards; questions of legality cannot be decided on the basis that the minister or committee acted in good faith; (5) On the Medicines Act: The viability of the dispensing profession is a matter of public interest and was a matter of concern to the legislature; dispensers are essential to provision of medicines to the public; the Act recognizes dispensers as primarily professionals, not traders in medicines; (6) On court procedures: When an application for leave to appeal is referred to oral argument, there is no reason to have two hearings - one on prospects of success and another on the merits; the practice is to hear all issues together.

This case is a landmark decision on administrative law and the doctrine of legality in post-Constitutional South Africa. It firmly establishes that: (1) The principle of legality (that state institutions may only act within powers conferred by law) is central to South Africa's constitutional order and is an implied provision flowing from the rule of law; (2) Courts have jurisdiction to hear applications for leave to appeal even before the lower court has ruled, in circumstances of unreasonable delay; (3) Section 34 of the Constitution (right to fair hearing) requires that applications for leave to appeal be determined within a reasonable time; (4) Regulations that exceed the scope of the enabling statute are invalid, even if motivated by laudable policy objectives (affordable medicines); (5) The concept of 'appropriate' in legislation imports elements of justice and fairness and must be assessed objectively by courts; (6) Delegated legislation must be scrutinized strictly to ensure it does not exceed statutory authority, regardless of good faith; (7) The right of access to healthcare (section 27) includes both positive obligations (to provide) and negative obligations (not to impair access) - regulations that threaten the viability of the dispensing profession impair access. The judgment also addresses judicial conduct, emphasizing that delays in delivering judgment undermine public confidence in the judiciary and that parties are entitled to enquire about progress of their cases. The case demonstrates the courts' role as guardians of the rule of law and their duty to ensure executive and legislative branches do not exceed their powers, even when pursuing constitutionally legitimate objectives.