The pharmaceutical industry in South Africa (sa) is threatening to shut up shop unless the country's government rethinks its new drug policy. The policy has been in place since January 2004. It controls the incremental rise in prices at different stages after a drug leaves the factory. The industry argues that all the entities are being tarred with the same brush, and that every manufacturer does not indulge in such practices.

The new regulation slashes the costs of drugs by as much as 70 per cent. The proposed policy stipulates that there should be a single exit price, not higher than 50 per cent of the manufacturers' net price. This figure is arbitrary, contend drug industry representatives.

Paul Stewart of Boehringer Ingelheim, a multinational drug-maker which provides sa with aids drug nevirapine, says: "The regulations would hamper investments.' While lowering prices of the drug would cost the industry us $624,119, it is likely that healthcare organisations would try to make up the deficit by increasing costs of hospitalisation and non-medical items.