The generic substitution measure compels pharmacists to prescribe a cheaper generic version of a medicine, if one exists, when presented with a prescription from a patient. Although some ethical pharmacists already practice generic substitution, many do not, especially when dealing with a population that is generally unaware of price differences between generic and brand-name drugs. Generic substitution does not apply to medicines under patent, unless a compulsory license has been granted for a generic. The Patent Act, a law which is undisputed and TRIPs compliant, contains provisions for obtaining compulsory licenses and it is this legislation, not the Medicines Act, which will have to be used in order to ensure substantial, sustainable price reductions of anti-retrovirals and other essential medicines under patent. The parallel importation measure has perhaps been the source of most of the confusion surrounding the Medicines Act.
Parallel importation refers to the purchasing of patented medicines from foreign countries.
It is based on the principal that once a product is sold, the seller loses all ownership rights over it. An example of a medicine that the government and private sector pharmacists would benefit from importing in parallel is Ciprobay, Bayer's patented brand-name version of ciprofloxacin, an essential antibiotic. The South African government purchases one 250mg capsule for R2.93. However, in India retail pharmacists usually sell this medicine for R0.65 per capsule. The reason for this price differential is that Ciprobay has to compete against generic equivalents in India.