Drug plan: Price control mechanism to hurt industry

Wednesday, December 17th, 2014 10:51:17 by


The current drug shortage in India due to a price control mechanism should be an eye opener for the Drug Regulatory Authority of Pakistan (DRAP), said an industry official.

Recently, anti-gout, anti-depressant pills and around half a dozen other drugs faced shortage in India as pharmaceutical companies decided against manufacturing them after incurring losses.

DRAP, in its meeting on November 26, has proposed an average pricing formula, along the same lines as in India, to determining drug prices in the country. This policy partially ignores the fact that Indian authorities set prices of formulation and not the brands, said the official.

‘‘DRAP wants to fix the prices of every drug separately, which is against market fundamentals,” said an official of a pharmaceutical company. “The industry will suffer and their profits will go down. This will discourage investment in this sector.

‘‘DRAP is not even following the Indian example. Their method increases competition among companies and the advantage of this is passed on to the masses.”

The official added that DRAP is introducing this formula in a bid to further decrease the prices of drugs, affecting the industry that is already bearing the brunt of stagnant prices for the last 12 years.

He said that this formula would pave the way for corruption and illegal practices to get price increase.

He said DRAP was told in the meeting that Pakistan cannot afford this price mechanism because it is tantamount to a penalty, rather than a policy.

“The average pricing mechanism may be successful in India to some extent but it is not going to work here because Pakistan’s economy (unlike India’s) has been unstable in the past 10 years and the investment cost in Pakistan has also increased up to 100% during this period,” he added.

“In India, prices of 348 drugs were not initially fixed by the government and average pricing was introduced on the basis of prices fixed by the manufacturers and importers themselves. In Pakistan, however, the initial price of every drug is fixed by the government, which is contrary to the method adopted in India.”

He said the pricing policy should be comprehensive as it will impact the availability of quality drugs in the market and should favour all stakeholders including the masses.

“Before the devolution of health sector to provinces, exports were on the rise but in the past three years there is a decline in these exports.”

Published in The Express Tribune, December 18th,  2014.

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