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Drug Prices have been a cause for face-off between Pakistan Pharmaceutical Manufacturers Association (PPMA) and Drug Regulatory Authority Pakistan (DRAP) for quite some time. PPMA members continued to ask for price increase on the basis of continuous rise in the cost of inputs, partly due to rupee devaluation and partly due to increased cost of utilities, labor etc. DRAP and its predecessor Ministry of Health (MoH) sometimes agreed and sometimes did not. Across the board increases had been granted on several occasions, and hardship cases were dealt with separately. Usually, it had been fair dealing on both sides.
The problem started in earnest when drug prices remained virtually frozen for 12 years between 2001 and 2013. In October 2013, the PMLN government allowed price increase and then immediately reversed its decision. Several drug companies went to court and got a stay on the announced increase. The court cases piled up further and the court insisted that DRAP come up with a pricing policy, which it did in 2015, first time when such a policy was announced.
Due to inconsistent policy application, litigation continued, and cases piled up in high courts. Eventually, the Supreme Court took all the cases together on a suo moto notice. After due consultations and on the court orders, another pricing policy was introduced in 2018. The pharma companies were asking for 34% increase, but DRAP allowed 15% increase in early 2019 for 45,000 medicines, while the prices of 463 hardship cases have been increased up to 200 percent. It was also reported that some manufacturers increased prices by another extra 15% without any justification.
Even before COVID19 pandemic, Chinese government had asked pharmaceutical raw material manufacturing factories to interrupt production for three month in a year. It was mandated due to serious environmental concerns. The API manufacturers quickly increased material prices to compensate for their lost production. Pakistan Pharma companies, being entirely dependent on imports, saw a sharp rise in the cost of goods. Then came the steep devaluation of Pak rupee. Though the supplier did not increase prices, but the landed cost increased due to rupee-dollar parity.
From the beginning of 2023, PPMA and DRAP had been in talks about further price increase. PPMA wanted a massive one, which DRAP did not agree. At the beginning of April 2023, PPMA announced breakdown of negotiations and indicated that the manufacturers may consider stopping production of many drugs leading to acute shortages. Then on 19th May 2023, DRAP issued SRO 595(1)/2023 allowing price increase on the basis of CPI – Consumer Price Index. It said:
- As one time dispensation, manufacturers can increase their existing MRPs of essential drugs and biologicals (excluding lower priced) equal to 70% increase in CPI (with a cap of 14%);
- And MRPs of all other drugs and biologicals and lower priced drugs up to increase in CPI (with a cap of 20%) on the basis of the average CPI for current year;
- The Policy Board of DRAP shall review the situation after three months i.e., in July 2023 shall make its recommendations to the Federal Government for its consideration regarding price decrease, if Pak Rupee appreciates in value;
- Hardship cases that have been recommended by the Drug Pricing Committee and are under submission for approval from the Federal Government, shall be reviewed for adjustment.
The above SRO was an about-turn from the discussions going on at the time.
I would now take the case as to how the cost of imported goods beyond the rupee-dollar parity.
Kabeer Dawani is a researcher at the Collective for Social Science Research in Karachi. He is working on a SOAS-ACE research project on tackling private corruption in drug policy in Pakistan. He makes some very good arguments about over-regulation of drug prices.
There is a public pressure to keep (at least) drug prices in check, but research shows that there are significant negative consequences of the strict price control as it is practiced in Pakistan.
- Pharma companies stop producing essential drugs which are low priced and where the profit margin is negligible. Thyroxine, Neomercazole, phenobarbitone, phenytoin are just a few examples of perpetually short drugs. When GSK announced stopping production of pain drug Panadol, the government shook and increased their price quickly. Panadol is not a lifesaving drug, which many others are. The patients are suffering because they do not get what they need.
- As soon as the shortage is felt, the pharmacies and wholesalers hoard the drug which is then sold in the black market at a much higher price. I remember having once bought a short but much needed drug by paying ten times the actual price. The myth of controlling prices for the benefit of public is just a myth.
- Pharma companies also stop producing old, first-generation drugs which were always low-priced and for second/third generation products which have many times more prices. In many instances, the later generations do not offer any significant benefit. This is an international tactic also. More and more new drugs are introduced at much higher prices which are just a shade different from the existing one. The patients lose rather than gaining.
- In the hot debate on prices, the more important matter of access to medicines is badly ignored. The access is the first thing, price comes after that.
- The government healthcare system is forced to buy more expensive medicines because the more economical ones are out of market. It consumes lot of budget which would have been utilized more efficiently. Again, the patients are at loss.
- The priorities are mixed up. For sustainable development, the local production of APIs should be fast-tracked, so that the prices could be stabilized.
The matter of drug prices needs to be handled objectively and unemotionally, rather than politically and rhetorically.
Concluded.
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References:
https://www.dawn.com/news/1745988
https://www.thenews.com.pk/print/454864-increase-in-drug-prices-highest-in-last-40-years
