New policy lays down formula for annual increase in drug pricing

Islamabad
The government on Wednesday announced the country’s first-ever drug pricing policy, which stipulates a freeze on prices of drugs till June 30, 2016 at the current approved level. Thereafter, an annual increase will be affected in prices of scheduled drugs at the rate of 50% of the Consumer Price Index (with a cap of 4%), and in prices of non-scheduled drugs at the rate of 70% of the CPI (with a cap of 6%).
Sharing the salient features of the policy at a press conference, minister of state for National Health Services, Regulations and Coordination (NHSRC), Saira Afzal said, price reduction of up to 30% on originator brands has been introduced with staggered annual reduction of up to 10% every year if the drugs are costlier than in India or Bangladesh.
According to the policy, the prices of new drugs shall be fixed on the basis of average prices in India and Bangladesh, and if the new drug is not available in these countries, the price shall be fixed at the lowest level of the developing countries which regulate drug prices, or in accordance with wholesale prices in the UK, Australia, or New Zealand. “Prices of generics shall be fixed at 30% less than the originator brand of new drug,” Saira said.
Secretary health Ayub Sheikh said, the prices of originator brands of new drugs shall be reduced after 4 years or when minimum 3 generics are available in the market, whichever is later. “Total reduction shall be 10% every year over a period of three consecutive years. Prices of generics of these drugs shall be reduced correspondingly and minimum price difference between prices of originator brands and generic will be maintained at 15%,” he stated.
The secretary maintained that the production of lower priced drugs shall be encouraged and annual increase in their prices shall be automatic, provided it does not exceed the CPI. “Production of orphan drugs and export of high-quality drugs to developed world shall be encouraged. A transparent mechanism has been devised to decide justified hardship cases of the industry to keep the drugs available in the market,” Ayub said. He said hardship cases will be considered after nine months.
When asked who will decide the criteria of hardship cases, Saira said, the policy board has constituted a four-member committee led by the DRAP chief to deal with these cases in a transparent manner. Responding to another query, she said, monitoring mechanism shall be devised with the coordination of the provincial health authorities to ensure that drugs are not sold in market on prices higher than those that have been fixed.
The policy divides drugs into two categories in terms of pricing. Drugs on the essential medicines list, top 50 most commonly used drugs, and drugs for treatment of cancer, TB, hepatitis, HIV, thalassaemia and organ transplant, biological, and new chemical entities have been categorized as schedule drugs, while the rest of the drugs have been categorized as non-scheduled drugs.
The press conference was also attended by the chief executive officer of DRAP and members of the policy board. When asked why consumers, as well as medical practitioners, are not represented in the policy board, which consists of 15 members, the secretary said, “A decision will be taken on this soon. Since the board can extend its membership, all stakeholders will be included.”
Saira said, the drug pricing policy was first finalized by the policy board, then sent to the Prime Minister for approval, given that drug fixation is his prerogative. The PM referred the policy to the Economic Coordination Committee for scrutiny before its eventual finalization.