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Continued from Previous……

Prices of Medicines are Very High in Pakistan – this is another strong perception, just like the first two we looked at.

I can say upfront that the prices of medicines are not very high. Prices of nutraceuticals, supplements etc. which have come into fashion lately, are not regulated at any stage and many of them are being sold at exorbitant prices.

Let us examine it further without debating on it. Following factors influence the drug prices in Pakistan.

Medicine Prices are fixed by DRAP – All prices, of all types of human medicines are fixed by DRAP. The manufacturer does not decide the price at any stage; neither at the time of registration nor at any time later.

Pricing Mechanism Causes Disparity – Pricing mechanism of drug prices fixation has caused various levels of disparity among prices. At the beginning of generic drugs boom, the then MoH – Ministry of Health fixed prices rather arbitrarily. In some cases, the generic drugs were given 15% less price than the innovator; in other cases, the difference would be 50% or even more. The exercise was discretionary and the MoH concerned staff used their own wisdom for fixing prices. So, a generic drug registered in 1988 got a higher price generally than the one registered in 2008.

The MoH then strengthened the pricing section and mechanism. The concept of basket prices was introduced, i.e. taking prices of same generics from a basket of countries around us and then fixing our price. This caused awarding of comparatively lesser prices to new applicants.

The pricing section was further changed; Drug Pricing Committee – DPC came into being which fixed the prices on the basis of some working and basket prices.

Since then, DPC has issued new fixed prices for several drugs. For example, a list of 94 drugs with new fixed prices is in circulation right now but no one is claiming authenticity.

Problem is that the new prices are always applied for future; previous registration holders were not asked to reduce the prices. If you go to market, you will therefore find that the same generic product from different manufacturers has different prices, which in some cases is seriously significant.

DRAP rules allow to market a drug at less than approved price, which can be raised later without getting fresh approval. Suppose, a drug is awarded 300 rupees price for a pack of 10 tablets. The manufacturer decides to market it at 200 rupees for any number of reasons. Now the manufacturer has the opportunity to increase 100 rupees in one go at any later date. The customers do not know this detail, but they see a 50% increase from one day to the next.

The new prices fixation in several instances is not workable; means the cost of making the drug is higher than the awarded prices. There are appeals and grievances which mostly fall on deaf ears. The result is that the higher price company keeps selling while the lower price company keeps complaining.

Across the board price increase was approved in 2018 after many years and after long litigation. It has deepened the disparity. Those will older, higher prices ended up with fatter price increase as per formula. As a result, disparity increased further.

Lastly, it is common knowledge that many lifesaving drugs remain out of market due to very poor prices awarded in 1950s and 1960s. The production has become unviable and the patients are suffering due to shortage. The unit prices are really small in these cases. Products like thyroxine (thyroid deficiency), nitroglycerin (heart), phenobarbitone (epilepsy) remain perpetually short, or available only on black market. Despite repeated requests, DRAP has not given any raise, or has given a little, insufficient raise which is of not much use. The shortages remain. DRAP would do great service to patients by rationalizing prices of lifesaving drugs so that free availability may be ensured.

The summary is that the drug prices scenario (problem/debacle) is an outcome of too many changes in price fixation mechanism and applying it forward. Simply speaking, DRAP is causing the rich to become richer and poor to stay poor. DRAP can and should work towards removing disparity in the interest of public.

Pharma Manufacturing is Import-Dependent – Most materials required for drug manufacturing and packaging are not manufactured in Pakistan and have to be imported. Fluctuating international prices and exchange rate volatility impacts product cost seriously. The finished imported products add the increase to selling price immediately while local manufacturers try to find other corners to compensate. Government has never formulated a policy to encourage manufacturing of local manufacturing locally. We shall not be able to stabilize our prices till we build local capacity for manufacturing of materials.

Drug Prices in Pakistan are not much different from neighboring countries. The whole noise about drug prices at the government level is an effort to mislead people so that the root cause may not be identified.

The ironic summary is that the government fixes the drug prices, government increases the drug prices, government controls the drug prices at every stage, and then government puts the Pharma companies in negative light to face public wrath.

May the truth finally prevail.

To be Continued……

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