E-DRUG: Drug Prices in Pakistan (cont)
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This is with reference to Mr. Keith Watson's defense to the
pharmaceutical industry's demand for rise in medicine prices in
Pakistan. TheNetwork appreciates Mr. Watson joining the discussion and
putting across the industry's views on the issue.
However, TheNetwork, would like to clarify certain points Mr. Watson
has raised.
The pharmaceutical companies' case for rise in drug prices in Pakistan
sounds quite convincing as it is being presented. Yes, there had been
currency devaluation, inflation etc. and as the economic turmoil
continues there may be more difficulties in the future. Since around
80-90% of the people in Pakistan buy medicines out-of-their pockets
and public health sector serves mainly the urban middle classes, the
question of any increase in drug prices is a question of further
shrinking of the people's access to medicines, a fact admitted to by
Mr. Watson when he said "no one in the industry wants to raise the
price for the sake of, because it inevitably affects the [sale]
volume..." Since private sector is not sensitive to essential drug
concept, I would not go into the issues of breakdown of types of "high
quality" research products, the high price on which they are marketed
and the way they are pushed in Pakistan. Rather, I would limit myself
to clarifying certain facts put forward by Mr. Watson. He has made
certain statements which are factually not correct and few others with
which we have conceptual difference.
In 1993 when the government, without having any infrastructure to
monitor the prices in the marketplace, partially deregulated the
prices by developing "controlled" and decontrolled" categories, it was
not that the government wanted to control the prices of the "so-called
essential drugs". It is yet not fully clear to us that what criterion
the MoH used to categorize the drugs. It is clear from the following
details about the controlled list:
1. More than 200 generics out of 821 dosage formulations (controlled
list) are not mentioned in WHO Model List of Essential Drugs.
2. More than 100 generics out of 821 dosage formulations are not
mentioned in Ministry's of Health's own National Essential Drug List.
3. Non-essential drugs like Terfenadine, Halofantrine, Lincocine,
Enflurane, Metamizole, Acarbase, Brain Tonics, etc. are included in
this list.
4. Essential drugs like Chlorpheneramine, Quinine, Aspirin, Ferrous
Sulphate, Paracetamol Syrup, Indomethacine, Atropin, Prmethazine,
Naloxone, Aminophyline, Ephedrine, Sucraltafe, etc. are surprisingly
not included in the list.
Mr Watson claims that the cost of production over the last five years
increased by 90% due to 76% rise in inflation, 85% devaluation of
rupee against USD and 10 per cent Customs Duty levied in 1996. Against
this backdrop, he says that companies have only been allowed 21% and
29 % increase in the prices of controlled and decontrolled medicines,
respectively, over the last five years. Despite such adverse economic
factors, the MNCs recorded 2.6% after-tax-profit in 1997 (Pharma
Bureau Fact Book). One really wonders how much profit these companies
were earning five years ago?
Mr Watson is simply covering up increases in prices beyond the raises
given by the government over the last five years. TheNetwork is
possession of a list of medicines with price increases as high as 468%
since June 1993. We also have the list of medicines with price
increases after November 1996, when the government froze prices.
TheNetwork is currently carrying out an extensive price study for a
period 1993-todate of Essential Drugs in Pakistan. The results will be
made public soon.
We have serious differences with Mr Watson's claim of drug prices "on
average" lower in Pakistan than in India. But would he deny that 15
out of 21 most commonly used medicines in the world are cheaper in
India than in Pakistan. This survey was conducted by Consumer
International Asia-Pacific in 39 countries.
TheNetwork believes that the government needs to address some
fundamental issues in the health sector before even considering any
price increase to the industry. We have time and again urged the
government to:
1. Stick to Essential Drug Concept in the public sector and promote it
in private sector to enhance people's access to the needed medicines.
2. Implement the National Drug Policy to have long-term reforms in the
system.
3. Formulate a comprehensive Drug Pricing Policy with inputs
from consumer groups
4. Check transfer pricing by MNCs. (Imports at competitive prices is also a
requirement in Pakistan).
And lastly, Mr. Watson calls stringent pricing controls by the
government of Pakistan as "unfair, discriminatory and
unconstitutional". We have serious objection to the usage of word
"unconstitutional" as the price controls have legal shelter under the
1976 Drug Act and Article 3 of the Constitution.
We fully understand that without fair returns on investments neither
business can develop nor sustain. We believe that MNCs in Pakistan are
surviving only because they are making reasonable profits. There is
evidence available that by indulging in transfer pricing they are
actually earning much more than they are claiming. We are not against
fair price raise but before that the government should devise and
implement policies that can best safeguard the interest of the people.
Dr Zafar Mirza
Executive Coordinator (TheNetwork)
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The Network
(Association for the Rational Use of Medication in Pakistan)
H.No. 60-A, Str. 39, F-10/4, Islamabad
Ph. 281755; Fax. 291552
Email: zafar@arump.sdnpk.undp.org
--
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