Drug-makers in crisis

Drug-makers unable to keep producing lifesaving medication due to raw material shortages and pricing disputes

Some 40 drug-makers, including a few of the industry’s big guns, have said they will not be able to keep producing lifesaving medication due to shortages of raw materials and pricing disputes. The industry relies on imports for many raw materials and companies have not been able to get their hands on the compounds and chemicals needed to produce medicines ranging from simple painkillers to advanced lifesaving drugs. The situation has been compounded by the unavailability of lines of credit and other payment processing problems with suppliers.

Pharma industry groups have been blunt in their critique of the government’s decision to allow some industries to open LCs, even though their products are purely for profit, while the lifesaving work of the pharma industry is not being facilitated. Meanwhile, companies are also blaming the government for forcing them to sell drugs at submarket values — record inflation and restrictions on price increases have made many drugs loss makers. They want an across-the-board increase of 28.5%, and even higher in some cases. Even before the disarray of 2022, the industry had been complaining about the government squeezing them to keep prices low despite the economic realities of the post-Covid-19 world, as transport, shipping, and production costs skyrocketed across the globe. Unfortunately, the PTI and PDM governments both opted for populist price restrictions, which began backfiring when some multinationals started pulling out of the country, and others stopped producing low-priced medicines.

At this point, while supply claims do merit an investigation, the government should focus on quality control and roll back several price restrictions, especially on drugs not considered ‘lifesaving’. Fair competition should ensure the prices of several common drugs become profitable but are still relatively low. In the long run, such deregulation may also foster new investment in the sector.

Published in The Express Tribune, February 9^th, 2023.

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