Govt approves increase in drug prices in line with inflation

Decides to amend Drugs Pricing Policy 2015 to avoid court cases

ISLAMABAD: The government has decided to amend the Drugs Pricing Policy 2015 in an attempt to burden consumers with the cumulative effect of price increases for life-saving drugs in the past two years to avoid court cases by pharmaceutical companies.

It has also decided that the increase in prices for these drugs should be automatic after the unveiling of the annual Consumer Price Index (CPI) by the Pakistan Bureau of Statistics (PBS).

These decisions were taken by the cabinet in a meeting held in the first week of the current month.



The Drug Regulatory Authority of Pakistan Act 2012 empowers the federal government to fix the maximum retail price of a drug to be sold in the market. The Economic Coordination Committee (ECC) had approved the Drug Pricing Policy in 2015 which provided a comprehensive mechanism for setting maximum retail prices of drugs under various scenarios.

According to this policy, the annual increase in drug prices will be linked with the CPI of the previous financial year with effect from July 1, 2016.

After the announcement of 4.16% CPI reading for fiscal year 2016-17 in the first week of July 2017, some pharmaceutical companies increased prices of life-saving drugs in line with the price index.

However, they were advised not to increase the prices by the time it was approved by the federal government.

Consequently, two pharmaceutical companies filed cases in the Sindh High Court, Karachi, which in its order on August 24, 2017 directed that the Drug Pricing Committee should hold a meeting within 20 days in order to consider the annual increase made under the Drug Pricing Policy 2015.

In compliance with the court’s order, the Drug Pricing Committee met on September 8, 2017. It recommended an annual increase in prices of life-saving drugs in accordance with provisions of the Drugs Pricing Policy 2015, which meant a 2.08% rise in prices of scheduled drugs, 2.09% increase in prices of non-scheduled drugs and 4.16% hike in lower-priced drugs.

The committee also considered increase in the threshold limits of lower-priced drugs and noted that the limits were not widened last year when the revision in maximum retail prices of drugs was allowed on the basis of CPI movement at 2.86% in financial year 2015-16 as announced by the PBS.

Therefore, the pricing committee recommended a 1.43% increase in the threshold limit for 2015-16 and 2.08% for 2016-17.



The Ministry of National Health Services, Regulations and Coordination proposed that the cabinet may approve a draft notification in respect of the increase in threshold limits of lower-priced drugs.

After deliberations, the cabinet decided that the increase in drug prices should be automatic after announcement of the CPI and if difficulties arose like the filing of court cases, the cumulative effect should be passed on.

Published in The Express Tribune, January 25^th, 2018.

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