Pharma companies want less taxes, more govt protection

Wish to be ‘saved’ from competition; seek more frequent price revisions.

KARACHI: The main theme of a press briefing held on Monday by newly-elected office bearers of the Pakistan Pharmaceutical Manufacturers Association (PPMA) focused on complaints that the pharmaceutical industry is heavily taxed and overregulated. The PPMA then called for greater government protection in the same breath, so as to ‘save’ local players from Indian counterparts in the post-MFN trade scenario.

“The pharmaceutical industry has been facing hardships after the (passage of the) 18th Amendment, which transferred the health sector from the federal to provincial governments. Although the ordinance for the Drug Regulatory Authority (DRA) has been promulgated, the parliament has yet to make it an Act,” PPMA Chairman M Jawed Akhai said, while addressing the press conference.

He complained that the industry has yet to receive a pricing mechanism, under which drug prices can be adjusted against inflation and the rupee’s devaluation. The pharmaceutical industry received its last across-the-board price increase in 2011. Under the current rules, the manufacturer has to request concerned authorities for a price hike for each drug separately. “Price increases awarded on a selected basis has affected sustainable growth in the industry,” Akhai said.

When journalists drew his attention to the fact that drug shortages have become common, even as Pakistan’s pharmaceutical exports touch $200 million a year, Akhai alleged that heavy price controls were responsible for the disappearance of everyday drugs from local medical stores.

“Just four companies are producing tuberculosis drugs because of the government’s unreasonable price control strategy. Had the pricing methodology been fair, at least 40 companies would be manufacturing the same drug,” he said. Akhai added that Section 12 of the Drug Act practically made the pharmaceutical industry the most regulated sector of the economy, with companies having no authority whatsoever in determining prices of their products.

“Even the prices of petroleum products are now revised on a weekly basis. All we’re asking for is a revision of prices on a yearly basis at least,” he said.

Speaking on the occasion, former PPMA chairman Dr Kaiser Waheed said that prices of 70% of the top 50 molecules used in Pakistani drugs were less than their respective prices in India. He also rubbished the government’s claim that there is no sales tax on the pharmaceutical industry of Pakistan. “We pay sales tax on 80% of the inputs we use in drugs. This reflects in our cost of manufacturing, and eventually in the market price that the consumer bears,” Waheed said.

While calling for an end to import duties and sales tax on the pharmaceutical sector, he urged the government to offer “free medical coverage to citizens who are not employed.” He said the health budgets of provincial and federal governments should be used to set up a national health insurance programme, in order to make healthcare more affordable in the country.

Published in The Express Tribune, October 2^nd, 2012.