Author: Muhammad Bilal Khan
Lately, there has been a lot of confusion with regards to the increase in prices of medicines in the country. Several news and discussions both on print and electronic media have come across in last few weeks however there has been no coverage that could have given me a complete sense of the issue. I, therefore, decided to do some research and find out what this fuss is all about.
In order to find the truth, we have to go back to 14-Feb-2002 when Pakistan Drug Regulatory Authority (DRAP) allowed an increase of 3% in prices of 821 medicines via issuance of SRO100(1)/2002. Since then, till 2013 DRAP did not allow an increase in the price of any medicine. During these 11 years, input costs increased tremendously and the manufacturing of various medicines became impossible and they were discontinued causing trouble for the public.
Pharma companies then approached the Health Ministry with an objective to fix prices that were viable for manufacturing and affordable for the public. As a result, the parties agreed to formulate Drug Pricing Policy with the introduction of hardship cases category.
On 27-Nov-2013 an interim increase of 15% was allowed through DRAP’s SRO1002(1)/2013 that was applicable until a Policy was formulated. Unfortunately, the SRO was suspended after just 2 days on 29-Nov-2013. The decision was challenged and the High Court passed an order to reinstate the SRO and increase of 15% was therefore granted. Later in 2015, Drug Pricing Policy was finally formulated.
In 2018, price increase applications filed with DRAP under Drug Pricing Policy 2015 reached 1,500. Due to this delay, various pharma companies once again opted for legal recourse. Later in 2018, in a separate case (HRC No. 2858/2006), Supreme Court on 3-Aug-2018 ordered DRAP to decide all the pending cases within 10 weeks and for the interim period held the prices of all medicines at their levels as of the date of order. DRAP decided all the cases within 10 weeks but did not send the same to Federal Government for issuance of a notification.
On 14-Nov-2018 Supreme Court took a suo moto notice of this delay and ordered DRAP and Federal Government to fix the prices within 15 days. Supreme Court also ordered the Policy Board of Government of Pakistan to review the price of medicines in light of the increase in the USD exchange rate.
In accordance with the Court Order, with approval for Policy Board of Federal Cabinet, DRAP issued SRO1610(1)/2018 on 31-Dec-2018 increasing prices of around 450 medicines that were under the hardship cases category. As to the order regarding price review against the USD exchange rate, the Policy Board also allowed an additional increase of 9% and 15% under section 12(8) of the Drug Pricing Policy 2018. This was implemented by DRAP via SRO34/2019 on 10-Jan-2019.
Though this thread should have completed here but there was an uproar in the media on the sudden increase in medicine prices which created unrest in the society and undue pressure on the government. As a result, after discussions on these concerns in meetings with Health Minister and Advisor to PM on Trade, Pakistan Pharmaceuticals Manufacturers Association (PPMA) announced a voluntary decrease in prices of more than 800 medicines on 17-Apr-2019.
The fact of the matter is that Pakistan’s pharma industry is one of the most regulated in the world and the prices of medicines in Pakistan are one of the lowest amongst the neighboring pharma manufacturing countries. This industry is heavily dependent on the USD exchange rate as most of the raw material used by the industry is imported.
In addition, prices of other input costs such as electricity, gas and petrol have increased tremendously over the past few years. Due to all these factors, it has become impossible for the pharma companies to produce certain medicines at current prices and they claim that a price adjustment is inevitable. Therefore, the need of the hour is that this situation should be addressed rationally rather than politically otherwise most local medicines will probably not be available in the market.
About the Author
The author worked for 20 years in multiple sectors including Aviation and FMCGs in IT leadership positions.
He is a freelance writer, amateur golfer and loves traveling.