Medicines may not become cheaper, contrary to government claims

KARACHI: Contrary to claims made by the government in the budget document, medicines in local markets will not become any cheaper because of a reduction in duties on imports of raw material, claims the Chairman of Pakistan Pharmaceutical Manufacturers Association (PPMA), Mian Asad Shuja.

The government reduced the duty on medicines’ raw material to five per cent and claimed that this would reduce prices in the local markets and provide relief to the common man when they announced the budget for 2011.

“The government’s cut in duty is applicable on only five molecules which comprise only 0.1 per cent of the total pharmaceutical market share,” said Shuja. He insists that this cannot be termed a relief to pharmaceutical industry or the common man.

“The government has not taken any genuine measure to reduce prices,” said Shuja.

The government has created more problems for the local pharmaceutical industry by increasing the sales tax from 16 to 17 per cent, which companies pay on local inputs, on top of increasing the income tax rate from three to five per cent, he said. Not even a single proposal of PPMA was taken in into consideration by the government.

“It would have been more suitable if the government had introduced Value Added Tax (VAT) instead of the duty reduction. The VAT would have been more acceptable than all the measures that government has taken in the name of reducing drug prices,” said Shuja.

He explained that they had asked the government to allow them to increase drug prices which had been the same since 2001, as the companies overheads constantly increasing over the last10 years.

“There has been no increase in drug prices across the board in recent months,” he said explaining that with the government’s consent, some essential drugs prices had recently been increased. He added that local drug producers are not producing these medicines due to less profit margins.

Till now about 20 per cent of the local pharmaceutical manufacturers have stopped producing life saving drugs. This is because the government had to reduce the cost of manufacturing of life saving drugs, said Shuja.

Zahid Saeed, former Chairman PPMA said that the reduction of a five per cent duty would not bring any change in the retail market.

Published in the Express Tribune, June 9^th, 2010.