E-drug: Market competition and prices of medicines
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[The case below highlights the difficulties in implementing pharmaceutical policy reforms targeting the prices of medicines. It is too early to judge the ultimate effect of price deregulation in Qatar and care should be taken in concluding that this case - and that of Pakistan - means that price deregulation is a bad thing. For generic medicines there is good evidence that where adequate competition exists this has the effect of lowering prices without the need for market controls. For single/limited source medicines, some form of price regulation or other mechanisms may be appropriate to ensure access to these medicines by those who need them. - DB]
Dear Colleagues,
Here is a story I just could not resist sharing with you. It reminds me of the times drug prices were deregulated in Pakistan back in 1993. It was argued by the health authorities that deregulation was good because it promotes competition and competition in turn brings the prices down in the market place. What happened instead was that deregulation lead to prices shooting up almost overnight many hundreds of percent.
Look what is happening here in Qatar and how the arguments for the deregulation remain eerily the same. It is ridiculous how policy makers are ready to repeat the mistake again and again – or perhaps it is really not a mistake but a well organized crime indeed.
(copied as fair use)
Qatar drug prices soar after law change
Pharmatimes, World News | May 31, 2011
Lynne Taylor
http://www.pharmatimes.com/Article/11-05-31/Qatar_drug_prices_soar_after_law_change.aspx
[Please fix URL link in browser if broken - DB]
Drug prices in Qatar have swiftly risen by as much as 30% following the introduction of new free-pricing legislation - which was intended to bring down the cost of medicines.
The law, introduced in April, ended government control over retail prices of all medicines sold in Qatar and allows importers to establish their own prices. Previously, the official prices, which were set by the Pharmacy and Drug Control Department (PDCD) of the Supreme Council of Health (SCH), were widely held to be too high - last year, a study by the Gulf Cooperation Council (GCC) found that medicines in Qatar were expensive compared to other markets in the region - and it was envisaged that the new free trade legislation would bring down the costs of medicines.
However, consumers were shocked to find that wholesalers had increased product prices by as much as 30% within days of the ending of government controls. In the past, retailers were required to charge the prices set by the PDCD, which were printed on the packs received from wholesalers, but since the change in the law retailers have been free to set their own price levels based on the price lists supplied by wholesalers, reports The Peninsula newspaper.
But retailers are unclear whether or not they are free to fix their own prices and they are following the lists of wholesale and retail prices issued by wholesalers - and showing these lists to consumers, one retailer told the newspaper.
The PDCD has indicated that it cannot intervene over the price hikes because it no longer has any control over drug pricing issues. However, the cabinet has also approved legislation proposed by the SCH which seeks to boost competition in the market by ending the monopoly held by the 18 agents currently licensed to bring medicines into the country, and it is widely believed that these market liberalisation measures will bring prices back down.
- The Qatari pharmaceutical market reached a value of 1.43 billion riyals ($392.6 million) in 2010 and is expected to grow an average of 12.6% a year to 2015, when it will be worth 2.58 billion riyals, according to recent forecasts from Business Monitor International (BMI).
Qatar's size means that it will remain reliant on medicines imports, says BMI, which goes on to forecast that the emirate will become a billion-dollar pharmaceutical market for the first time in 2019, reaching a value of 3.99 billion riyals ($1.10 billion) by 2020.
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