Govt allows increase in Panadol price

Tablets prices go up by 48 to 56 paisa per tablet and syrup by Rs12.8 per bottle

ISLAMABAD:

The government on Wednesday agreed to increase the price of Panadol – a drug used for pain and fever – by 25.5% after it could not find fiscal space to give subsidy to the manufacturer or waive 26% import duties on its raw materials.

The cash-starved government’s hands are tied due to spending limitations imposed by the International Monetary Fund (IMF) coupled with its preference to encourage domestic production of raw materials.

The government allowed an increase of 48 to 56 paisa in the prices of the essential medicine per tablet, and Rs12.8 per bottle it its liquid syrup, according to the decision.

The increase translates into a 25.6% surge in the prices of Panadol medicines and 12% for the Panadol syrup.

Finance Minister Ishaq Dar, in a meeting with heads of main pharmaceutical companies, discussed the retail price of Paracetamol products, according to a statement issued by the Finance Ministry.

The ministry stated that the pharmaceutical industry had agreed to the prices of Paracetamol 500mg tablets at Rs2.35 per tablet, Paracetamol extra 500 mg at Rs2.75 per tablet and Syrup at Rs117.6 per bottle.

The ministry added that the increase was almost half of the increase demanded by them and with the decision, the production of Paracetamol products had restarted.

The Health Ministry had proposed to increase the Paracetamol 500mg price from Rs1.87 per tablet to Rs2.67 –an increase of 43% or 80 paisa. But the finance minister agreed to increase 48 paisa.

Similarly, the ministry had recommended increasing the rate of the Paracetamol Extra from Rs2.19 to Rs3.32 per tablet –showing an increase of Rs1.13 per tablet. But the government increased it by 56 paisa.

The GlaxoSmithKline Pakistan, which produces these drugs, had declared the force majeure on the production of three Panadol variants -Panadol tablets, Panadol extra tablets, and Panadol liquid after the federal cabinet twice rejected the proposal to increase the prices.

The drug was short in the market after the company decided to reduce its output. Its demand has increased in recent months due to flood-related diseases and spread of the Dengue fever.

In January 2022, the Drug Pricing Committee had recommended increasing the prices of the Panadol in a range of 12% to 52%. But in August, the federal cabinet rejected the proposal.

The matter was again placed before the cabinet last month along with a recommendation to increase the prices of other drugs but the federal cabinet did not change its earlier decision.

Last month, the matter was also placed before the federal cabinet to waive off 20% custom duty and 6% additional custom duty on the import of raw material for the production of the Panadol.

However, the cabinet did not waive off the duties due to the reason that some local manufacturers were also preparing these raw materials for the finished goods.

The successive governments’ decision to protect the local industries has cost heavily to the consumers, from the medicines to the locally assembled cars.
Prime Minister Shehbaz Sharif had directed that the Ministry of Health and the Ministry of Finance should prepare a proposal to give subsidy to the manufacturer of the Panadol aimed at avoiding increase in the prices and a possible backlash from the public and his political opponents.

Health Secretary Fakhar Alam did not reply to a request for comments.
FBR spokesman Afaque Qureahi said: “This is right that there is high rate of duty on paracetamol because it is locally manufactured. However, the raw material of paracetamol ACETIC ANHYDRIDE PCT 2915.2400 and PARA-AMINO-PHENOL PCT 2922.2900 are chargeable to 0% CD and 0% ST under schedules 5 and 6 respectively.”
Pakistan has committed to the IMF that it would not give subsidies, irrespective of the fiscal impact, said a senior government functionary.

Although the IMF has put the government in a tight spot by placing a condition to generate Rs153 billion primary budget surpluses, it has still given the Rs100 billion subsidies to exporters despite having no fiscal space.

The government also released Rs410 million supplementary budgets to tackle the PTI’s long march and also approved Rs17 billion additional budgets for the parliamentarians’ schemes.

The Finance Ministry also approved Rs650 million supplementary budget for the Ministry of Information to celebrate the country’s 75th Independence Day despite having no allocation in the budget. There are 75 cabinet members, with more to come in a few days, despite the severe economic crunch.