A new drug policy

Pharmaceutical companies have either reduced their production levels, or in some cases, even left Pakistan

Now that the government has finally approved the new drug policy, only time will tell how much new investment Pakistan receives in the pharmaceutical sector. From the customers’ point of view, successive governments in Pakistan have not bowed down before pharmaceutical companies and did not give them across-the-board price increases since 2001. However, the other side of this rosy picture is that this state control has choked new investments and innovation in the sector.

After facing continuous pressure to reduce drug prices for over a decade, local pharmaceutical companies (including multinationals) have either reduced their production levels, or in some cases, even left Pakistan. Unlike the perception of a business-friendly government, the PML-N has been pushing the pharmaceutical industry to reduce drug prices by up to 30 per cent. The industry has long maintained that the very idea of freezing or reducing drug prices is suicidal for its financial health.

Fortunately, after several meetings with industry representatives, the government has partly fathomed the significance of maintaining a balance in drug prices and financial health of drug companies. While it is good to regulate the pharmaceutical sector, the government must understand that the production of an expensive, but a high quality drug is better than a cheap but fake drug. The customer will be better served with a few expensive locally produced drugs than facing an acute drug shortage that will eventually be filled by expensive imported medicines.

Because of this strict state control over drug prices, Pakistan does not have a single plant approved by the Food and Drug Administration (FDA) — a key quality benchmark to get international recognition that helps in exporting medicines. On the other hand, just across the border, India has 90 FDA approved plants, Italy has 40, China has 22, Taiwan has 10, Bangladesh has four and Jordan has three units. Like other sectors, Pakistan needs foreign investment in the pharmaceutical industry and this investment will only come when existing pharmaceutical companies in the country flourish.

Unfortunately, not much has been done to control the local factories that produce fake or low-standard drugs. Instead of taking populist moves, the government should do what is better for the industry and the customers in the long run. State control is not always good. Right now, this government, like its predecessors, is just trying to regulate drug prices instead of regulating the quality of medicines.

Published in The Express Tribune, February 12^th, 2015.