Drug Price Hike: another better pill in the making

[niazikhan2]

ISLAMABAD: People are likely to be jolted anew: the health ministry is seeking a one-time seven per cent hike in prices of various medicines as part of its new drug policy, knowledgeable sources told The Express Tribune on Friday.

A proposal has already been sent to Economic Coordination Committee (ECC) of the cabinet for formal approval.

The summary in this regard was moved by the former federal health secretary, Khushnood Lashari, just before he was shifted to the Prime Minister’s Secretariat.

Sources believe that the government might try to overcome the reluctance of ECC members despite the recent fierce public and political backlash it encountered after a recent increase in prices of oil products. The government, they say, may succumb to the pressure of a “very strong lobby of pharmaceutical industry…and persuade them to approve the proposal”.

They said that if the government delayed the decision, the multinationals would simply resort to creating artificial shortages, making it almost impossible for the government not to comply with their demands.

According to official documents available with The Express Tribune, the price hike is primarily being attributed to deterioration in the parity of Pakistani currency against the US dollar and the euro.

The ministry of industries and production has, however, raised serious objections in the matter of non-existent regulatory control over the pharmaceutical sector.

In its comments on the proposal, the ministry for industries pointed out that to-date, there was no independent authority to oversee the structural development of the pharmaceutical sector, including pricing and maintaining a level playing field for domestic and foreign manufacturers.

The health ministry also tried to justify the price hike by maintaining that no across-the-board increase had been allowed after 2001. It contended that during this period, the manufacturing cost had increased manifold because of the increase in the raw material costs and the cost of imported items had gone up because of the devaluation of rupee against the US dollar and euro.

According to the health ministry, the pharmaceutical industry had been demanding of the government to allow it to make adjustments in prices in “hardship cases” which, in their opinion, had become “necessary” to ensure the continuous availability of drugs.

The ministry also pointed out “discrepancies and disparities” in prices of drugs manufactured by domestic and multinational firms in Pakistan and across the region.

“It has, therefore, become imperative that the prices of drugs are revisited in a policy framework,” the ministry said.

The federal government, it said, had formed a board for formulating the drug policy on the orders of Prime Minister Yousaf Raza Gilani in December 2008.

The board has so far held five meetings and the ministry of health’s draft drug policy is based on the outcome of these deliberations.

The policy has been circulated among ministries of industries and production, finance, commerce and planning development division for formal consultation.

The documents also showed that the health ministry also called for increasing the price of other drugs, except for new chemical entities registered after December 2007, and expensive drugs for the treatment of hepatitis, cancer, HIV, organ transplants or whose price increase “is not justified”.

The health ministry also pointed out that the proposed increase would not be applicable on drugs whose prices have been increased under the ‘hardship category’ since January 2010.

What the ministry has proposed

1 A 20-paisa per unit increase in prices of drugs which are priced less than Rs2 per tablet/capsule

2 A 20-paisa per 1gm increase for creams, ointments and gels which are priced less than Rs2per gram

3 A 20-paisa per 5ml for syrups/suspensions or drops which are priced at less than Rs2per 5ml

4 A 40-paisa per sachet increase for drugs whose prices are less than Rs4per piece or in specialised dosage form

5 Rs1 per injection increase for injections priced less than Rs10 per ampoule

6 Rs1 per piece of medical devices which are priced below Rs10 a unit.