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April 15, 2019

Raise in prices: Govt cracks down on drug cos

Top Story

April 15, 2019

ISLAMABAD: Nowhere in its two orders of 2018 spanning six pages did the Supreme Court order raise in drug prices or fix any specific increase. But it left it to the Drug Regulatory Authority of Pakistan (DRAP) and the ministry of health services, regulations and coordination to take decision in the matter.

This view emerged during a close scrutiny of the apex courts orders of Nov 11 and Aug 3 of 2018. This was endorsed by a leading lawyer, who had represented the pharmaceutical industry in the Supreme Court. He explained the two orders at length, but chose not to be identified for having appeared in the court.

Meanwhile, Prime Minister Imran Khan’s 72-hour deadline given on Wednesday to reverse the massive raise ranging between 15pc and 200pc in drug prices has since expired and no withdrawal of the increase has taken place. The stands taken by the DRAP and the health ministry that the drug prices have been hiked as per the apex court’s direction stand nailed by the two judicial orders.

The lawyer said that the jump in drug prices has been given by the government and not by the Supreme Court in any way through its two orders.

This correspondent repeatedly phoned Health Minister Aamer Mahmood Kiani for his version, but he did not attend the calls. However, Media Coordinator of the Health Ministry Sajid Hussain Shah spoke to The News on the minister’s behalf at length.

To a question, he agreed that the Supreme Court had neither ordered any raise in drug prices nor prescribed any increase. The court had only stated that the health ministry and DRAP may sit with the pharmaceutical companies to review the prices.

Shah said the government ordered a raise between 9pc and 15pc in drug prices, but the companies introduced a massive jump, which was illegal.

He said that a crackdown was in progress for the past some days to get the phenomenal raise brought about by the companies undone. It will continue till the achievement of the goal, he warned.

The coordinator said that the government has urged the pharmaceutical firms to take back the increase they had done, but they failed to obey the direction, which prompted the current stern action. It will also result in more punishment.

To a question, Shah explained that the deadline given by the prime minister to withdraw the increase related to the raise introduced by the companies over and above 9pc-15pc notified by the government. “The premier’s order is being implemented through the current crackdown.”

Right now, he said, a high level meeting was going on where the situation was being discussed and a new formula was being prepared to protect the rights of the consumers and lower the burden on them.

The coordinator said that while the government had given the raise in the prices of certain medicines, it had also simultaneously cut down the prices of some 395 drugs, which the pharmaceutical companies did not implement. He said such implementation would be ensured at all costs.

The lawyer said that no drug manufacturer has the authority to skyrocket the prices on its own, and the raise has to be introduced only by the DRAP. “However, in several cases the drug companies shot up the prices, which was illegal, and the government was blamed for that. It is a fact that many companies unprecedentedly drove up the drug prices.”

The attorney said that there was a great catch in the present scenario – the drug companies escalated the prices and set them as the base prices, and then got increase sanctioned by the DRAP over them. In fact, he said, the raise introduced by the drug manufacturers was unlawful because this had been done by them and not by the DRAP.

He said that back in 2013, an across the board 13pc raise was given in drug prices, which was undone by the then government next day. However, the pharmaceutical companies went to the court and got a stay order, keeping the increase in tact.

The DRAP has stated that the decision of present increases in prices has been taken under the Supreme Court order of Nov 14, 2018. Never has a huge raise been recorded in four decades.

The Nov 14, 2018, ruling stated that these review petitions have been filed on behalf of various pharmaceutical companies seeking clarificatory orders pursuant to its August 3, 2018, order. The counsel for the petitioner pointed out that the bulk of issues, the subject matter of proceedings before the court, which constituted the basis for development of consensus between DRAP and pharmaceutical companies stand resolved. He submitted that the mechanism agreed between the parties has been implemented, prices of drugs have been determined and where such prices are found fair, the same have been accepted; however, if any pharmaceutical company has any reservation about the price, it has the appellate remedy available to it, the order said.

In this context, the petitioners’ counsel made different requests (which are acceded to) [by the bench comprising Justice Mian Saqib Nisar, Justice Umar Ata Bandial and Justice Ijazul Ahsan] by way of follow up and clarification of the earlier court order, which are necessary for further progress in implementation of the consensus between the parties.

One, although DRAP has determined the drug prices in hardship cases, the same have not been sent to the government. These are required to be placed before the cabinet for consideration before they are notified. The deputy attorney general [DAG], on instructions, submitted that the DRAP recommendations will be sent to the government by Monday for further proceedings. The government will notify these prices within 15 days and no restraining order from any other court shall impede this process. This satisfies the counsel for review petitioners, the ruling said.

Two, it is pointed out that on account of exchange rate differential occurring due to devaluation of Pak rupee against US$, the prices of drugs need revision. For a number of reasons, the prices of life saving drugs need to be revised as these will, otherwise, become unavailable. DRAP has referred both matters to the policy board as per its report. The board may be directed to decide such matters within a reasonable time. The request is reasonable and is not opposed by the DAG, the order said adding that consequently the bench directs that the policy board may decide these matters within a period of 15 days from the date of receipt thereof.

Three, the Drug Regulatory Authority (DRA) Act envisages appellate boards to be notified by the policy board. The bench, comprising Justice Saqib Nisar, Justice Umar Ata Bandial and Justice Ijazul Ahsan, was informed by the DAG that such boards have since been notified. The judges were sanguine that such boards will make bona fide efforts to decide matters filed before them within a period of 60 days as provided in this Act.

Four, it is pointed out that SRO No(1002(1)/13 was issued by the Pakistan government which provided for increase in prices of certain drugs whose prices were frozen for a period of 12 years from 2001 to 2013. However, the notification was subsequently withdrawn as desired by the then prime minister. Such withdrawal was challenged before the Sindh High Court (SHC), and a number of companies obtained restraining orders against such withdrawal. As a result, the prices of certain drugs have not been revised since 2013. These prices were frozen by this bench’s order dated August 3, 2018. The panel clarified that drug prices frozen on August 3, 2013 shall remain frozen except if the same are revised in future as per law in accordance with the Drug Pricing Policy of 2018. It directed that the DRAP shall process the cases of these companies which had approached the [apex] court and whose matters are pending before the SHC, according to the Drug Pricing Policy of 2018. Once the cases are processed, they shall be entitled to such further increases as may be granted by DRAP. However, the companies shall have a right of appeal available to them as provided in terms of the DRA Act. The counsel in both sides agree that other minor issues arising out of the consent order of March 3, 2018, or otherwise shall be resolved with mutual consultation with DRAP or through appellate mechanism provided in the DRA Act.

The parties are satisfied with regard to matters related to the bar-cording. No orders are therefore necessary, the judgement said.

It said that the bench has been informed by the DAG that an appeal against dismissal of an application filed by the DRAP is pending in the SHC. The panel was not inclined to interfere in the matter at this stage. In case, the appeal is fixed for hearing, the same shall be decided in accordance with the law, it said.

The bench said it has passed numerous directions for the appointment of permanent CEO of DRAP, but it found that such order is not being followed in letter and spirit. It said that the DAG has not been able to give the bench sufficient cause for this delinquency. It ordered the health secretary to prepare a summary for the permanent appointment of the CEO within a period of two days as directed by the court in its order dated March 3, 2018, in order of preference on recommendation of the interview committee constituted by the health ministry and DRAP’s policy board and submit it to the competent authority for its final decision. Such decision, in any case, be made within 15 days. The report in this behalf be submitted for the bench’s perusal in chambers.

The apex court had issued the Nov 14, 2018, order to clarify its August 3, 2018 verdict on the request of pharmaceutical companies.

The August 3 decision said that in the backdrop of the bench’s previous orders, DRAP has formulated and promulgated new Drug Pricing Policy, 2018. In the light of an earlier order, the bench had directed the pharmaceutical industry, DRAP and health ministry that they should sit together to develop a policy by consensus.

The bench said it has been informed by the lawyers representing the pharmaceutical industry and various companies that the new drug policy has not only been formulated by consensus but has been validly and legally made, and there is no reason to interfere with the same on any ground whatsoever.

According to the order, at this stage, an objection has been raised by a lawyer appearing for the Pakistan Chemists Association. He submits that drug pricing policy is untenable for the reason that it only caters for and benefits the local manufacturers and not importers of the medicines. Further the difference of margin for both the local and foreign manufacturers at the rate of 40% and 45% respectively is discriminatory. Therefore, the policy is liable to be struck down on the principles of equality as enunciated by Article 25 of the Constitution. When questioned, the lawyer conceded that there is a difference between the two classes namely the importers and local manufactures. It is obviously founded upon an intelligible differentia.

The bench, however, did not find it in conflict with or violative of Article 25. Besides, it also noted that most of the manufactures, who are represented before the court, are local manufacturers as well as importers of pharmaceutical products and have termed drug pricing policy reasonable and fair. For these reasons, the bench did not find any merit in the objections by the lawyer. These are accordingly rejected.

The order said that as regards the question involving hardships cases, suffice it to say that a large number of cases have been dealt with and decided by the DRAP prior to the 2018 drug pricing policy i.e. under the 2015 policy. All those cases which are covered by the erstwhile policy and have been decided cannot be reopened. The remaining hardship cases, which are 457 in number regarding which objections have been filed before this court are covered by 2018 policy. Based on the rule of recurring cause of action and the new cases filed in this regard by pharmaceutical companies shall (as agreed by the DRAP CEO) be decided under the 2018 policy (with prospective effect) in accordance with law within ten weeks from today.

The existing MRP price of the pharmaceuticals sold in Pakistan (with agreement of the pharmaceutical industry and DRAP) is frozen till the DRAP decision regarding the price of fixator in hardship cases in accordance with mechanisms and procedures incorporation in the 2018 drug policy.

Under the law an appellate forum has been provided. Anybody aggrieved of the DRAP decision in these matters may challenge the same before it. With consensus of all, the bench directed that instead of approaching the courts of ordinary jurisdiction ie civil courts or high courts in original jurisdiction or even before agitating, the matters in the constitutional jurisdiction of the high courts, the aggrieved parties shall avail all remedies available to them under the statute.

As far as the question of bar code on the packaging wrappers or containers of the medicines is concerned, DRAP is directed to involve the pharmaceutical industry in its deliberations and issue a notification vis-à-vis bar coding that addresses the issues in SRO 470 of 2017. These issues include the timelines required for the implementation of this technology, printing of such bar codes on primary packaging and other technical issues of this nature. DRAP is, therefore, directed to do the needful in the shortest possible time and submit a summary for the bench’s perusal in chambers.

In case, any of the parties feels aggrieved on account of violation or non-compliance of these directions, it may move an appropriate application for resurrection of the same.

As directed in its earlier decisions, the bench once again ordered the appointment of the DRAP CEO without any delay. However, the CEO thus appointed was recently knocked out of office for having fake degree.