Drug prices: need for fine balance

Amidst reports of illegal and unilateral hike in medicine prices, the government has confiscated the stock of some 226 different medicines manufactured by 59 companies worth tens of millions of rupees. The federal health minister has categorically stated that they will not tolerate any price hike and that they will heavily fine these companies as well.

The action in major cities of Karachi, Lahore and Peshawar is part of the government’s attempts to establish its writ against these companies which bypassed the government mechanism on pricing of medicines. Health officials and reports have indicated that these medicines were being sold at far higher rates than the prices approved by the Drug Regulatory Authority of Pakistan (DRAP).

However, the decision of the government has raised a host of questions, starting from the simpler ones regarding DRAP’s efficiency in controlling drug prices to the much more complex ones of whether seizing stock and fining companies would have any actual effect on controlling prices. In these inflationary times, the rupee has lost its value so much so that now it is 150 to the dollar and almost all input costs have increased manifold. Then there is the issue of India refusing to sell raw materials to Pakistani manufactures of medicines. The possibility of some profiteering by pharmaceutical companies cannot be ruled out and the authority is right to fine the companies, but to seize stocks appears a little harsh. While no medicine shortages have been reported as a result of this measure thus far, the government should be on guard against vested interests exploiting the situation to their advantage.

The government should ensure availability of affordable medicines and also ensure that nothing works as a disincentive for the pharma industry. The government should try to strike a fine balance between the needs of the people and those of the industry so that it can stay viable.

Published in The Express Tribune, April 9^th, 2019.

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