E-drug: Prices of Essential Drugs in developing countries (cont'd)
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Dear E-druggers,
With regards to the call for information on prices of essential drugs in
developing countries, the SL govt does not "tax" pharmaceutical
imports. Whereas other consumer goods may have to pay specific
taxes at point of import and point of sale, pharmaceuticals are free.
There is also no General Sales Tax (GST) levied on pharmaceuticals,
although this tax applies to almost anything. By the way, this
non-payment of GST means that importers try to get any of their
goods under pharmaceuticals, as in that way the price to the
consumer will be less, while the importer can have a bigger margin.
Pharmaceuticals do have to pay the standard defence levy (conflict in
the North etc) at point of import. Whether that is taxation probably
depends on definition.
Once imported the standard pricing allowed in the private sector is
172% of CIF (cost, insurance and freight) - that is the consumer will
pay Rs 172 at the pharmacy if the CIF value was Rs 100. Defined
slices of this 72% go to importer, wholesaler, etc (the defence levy is
also included in this 72%). This pricing scheme was originally
developed to prevent excessive profits, but now it gives a perverse
impetus to expensive drugs. The more expensive the imported drugs,
the greater the profit, so no marks for guessing what the wholesalers
like to import.
This pharmaceutical pricing scheme is being reviewed at present and
examples of or, suggestions for alternative schemes are welcome. One
possibility - maximum import price for a group i.e. benzodiazepines X
USD for 100 tablets as default and the importer has to apply for
higher price. Other - sliding scale of markup based on CIF - i.e. 72%
for low CIF but only 35% for high CIF drugs. Whatever the scheme,
first it has to be simple to succeed, as developing countries generally
do not have the infrastructure to implement complicated schemes. If
anyone knows of a publication that reviews pharmaceutical pricing in
developing countries, that would be useful.
Public sector pricing (for which procurement is done by the State
Pharmaceuticals Corporation) is simple in Sri Lanka. There is a defined
markup (probably 15% of cost to SPC) and then it is given to the
Central Medical Stores.
Dr K Weerasuriya phone/fax +94 1 695230
Department of Pharmacology e-mail: <phrm_cmb@slt.lk>
Faculty of Medicine
University of Colombo
P O Box 271
Colombo, SRI LANKA
home phone +94 1 573170
home fax +94 1 577826
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