After a full year of heated debate, regulatory injunctions and legal battles that at times got sidetracked into racially tinged mudslinging, government's attempt to regulate the price of medicine now lies in disarray.

A full bench of the Supreme Court of Appeals found yesterday that not only were the pricing regulations "fatally defective", but that the legislation was so flawed "it will be extremely difficult, if not impossible, to draft sensible regulations unless the act is amended".

In effect, the court's finding, presented by Judge Louis Harms, is that government needs to go back to the drawing board.

The finding will be music to the ears of pharmacists around the country, who have long argued that the regulations imposed profitability levels so low they would have been forced out of business.

For consumers, however, the results will be an extended bout of uncertainty as government continues to try and force the regulations through, this time by approaching the highest court in the land, the Constitutional Court.

In the meantime, however, the existing regulations have been rescinded, and pharmacists are again entitled to charge what they consider the market will bear, while manufacturers are free to charge different prices to different buyers.

The court's finding does not immediately affect legislation banning the granting of discounts, which formed part of a different legislative package. Yet, both manufacturers and retailers remain on notice, with government indicating it intends to press on with its campaign to bring medicine prices down.

Even if the immediate legislative battles are lost, government's recourse will be the longer campaign, which will inevitably culminate in legislative action.

Consequently the industry has adopted a conciliatory response, calling for a "new beginning" of open discussions on how to go forward.

Pharmaceutical Society president Siddiq Tayob said that pharmacists "remain committed to the spirit of the legislation", which was aimed at making medicines more affordable to the public.

Pharmacists would work with "various stakeholders in the supply chain, including government, to ensure a win-win solution is reached for the entire pharmaceutical industry and patients in SA", he said.

The Pharmaceutical Society argued that the benefit of the judgment for consumers is that the separate administration fee charged by pharmacists will no longer be necessary. "This fee will now be incorporated into the price of the medicine."

Industry players deny their prices will rise due to the decision, but few doubt that the future drift will be upwards.

By yesterday some retailers were already recalculating some mark-ups.

Retailers and manufacturers' central concern about the legislation has been informed by a fear that government would overplay its hand in an effort to force medicine prices down so low they would effectively be forced out of business.

The empirical evidence seemed to support their case, and it got the qualified endorsement of the court yesterday.

"Except for a general statement that all factors were taken into account, there is no evidence or document that shows what those factors were, what weight they bore, whether any calculations were made and whether any regard was given to the viability of the dispensing profession," Judge Harms found.

He discussed the evidence from members of the health departments pricing committee and found it inconclusive and contradictory.

With acknowledgements to Tim Cohen and the Business Day.