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Inept price regulations lead to acute shortage of essential drugs

By Mansoor Ahmad
August 04, 2019

LAHORE: The government denying due price increase by pharmaceutical companies has caused acute shortage of low-cost medicines in the country as drug makers are reluctant to continue commercially unviable production.

The Drug Regulatory Authority of Pakistan (Drap) has granted licences to numerous domestic and multinational companies to produce most of the drugs that are not available in the market. Surprisingly, none of these companies are producing the drugs as the price approved by the regulator is not commercially viable.

The regulator with competent experts on the payroll knows this fact. The government is too aware of the reality, but it lacks the political will to allow increase in rates. Consequently, there is an acute shortage of several essential low priced medicines. The patients are badly suffering because of the unavailability of the low cost but critically essential drugs.

Take for example the case of folic acid prescribed to all pregnant women by the doctors. Folic acid deficiency affects the development of both cranium and spinal cord. The resultant neural tube defects increase the risk in new born of neurological complications, including paralysis and many other ailments. Folic acid is a very low priced drug.

Before the present government was inducted, the Drap’s notified price was Re0.09 per tablet (9 paisa). The drug was not available in the market as commercial production at the price was not possible.

When the government allowed the drug manufacturers to increase medicines price under a transparent formula, the price of folic acid increased to Re0.24 (24 paisa) per tablet. The drug was reintroduced in the production schedule of numerous companies and there was no shortage anywhere in the country. But there was a media outburst that the prices have been increased by 270 percent. No one even bothered to point out that even a third rate unhygienic sweet is not available below one rupee.

Subsequently, the government succumbed to the pressure and limited the maximum increase in price of any drug to 75 percent. This brought down the officially permitted retail price of folic acid to Re0.16 (16 paisa). The production was abruptly stopped and the pregnant women in Pakistan (and they are in million) are facing the risk of delivering babies with birth defects. It is distressing that the government has not made sensible decision, while issuing a generalised notification.

There are numerous low cost drugs that should have been treated separately. The other low priced drugs include multivitamin tablets used in blood pressure and anaemia all costing less than Re0.50 before the first increase. Their priced were restricted to 75 percent increase after the notification. All are now out of the retail market.

Pharmaceutical industries in all south Asian countries except Pakistan are growing double their national growth rate. Indian pharmaceutical industry that was three times larger than Pakistan at the start of the century is worth $36 billion. According to McKenzie, the industry is destined to reach $50 billion in three years. Pakistan’s pharmaceutical industry stands at $3 billion and is declining. The country’s medicine exports are stagnant at less than $200 million. They declined in the last fiscal. India, on the other hand, is the largest exporter of generic drugs in the world with exports exceeding $19 billion last year.

The government is regularly increasing the prices of power, gas and petrol on the plea that it has to recover the cost, while the prudent principle is disregarded in case of medicine prices.

The International Monetary Fund asked the government to remove subsidies for energy sector and recover the cost of power theft from consumers if it is unable to control the pilferages in electricity and gas distribution. If there is a competition in a sector it is impossible to pass on inefficiencies to the consumers as the efficient companies wipe out the inefficient ones from the market.

In Pakistan, the power and gas distribution is predominately under the control of public sector. Because of the monopoly, the government could increase power and gas tariffs easily as there is no alternate supplier. However, since these rates impact common man and every sector of the economy, the increase in rates is not popular with the electorate. They resent every increase in the rates of the utilities.

The present regime has mustered the political will to take difficult decisions as it could not afford to bear the cost of its inefficient sectors that would otherwise bleed the exchequer profusely.