Pharma aches for price relief

In the wake of recent happenings, Pakistan has been battling on various fronts, from heavy rainfalls and floods destroying the country’s infrastructure, to life threatening dengue and malaria epidemic, all amidst serious economic crisis. Where the public at large is trying to survive these hardships with meagre resources, the shortage of life saving drugs is another blow in their faces, worsening the situation. On Monday, 12th September 2022, the Health Minister, Abdul Qadir Patel, while addressing media at the Drugs Regulatory Authority of Pakistan, Islamabad, claimed that the current news about the “shortage’ of the pain killer paracetamol is false, circulated by certain political elements to create disruption. The Minister stated that the so-called shortage of the pain and fever relief drug is due to the recent increase in dengue and malaria cases in the country. He further directed the CEO DRAP, Asim Rauf to ensure the availability of life-saving drugs in the country and initiating a nation-wide crack-down against the suppliers of spurious drugs.   However, in all this chaos, it is a shame how the authorities have blatantly ignored the needs of the healthcare sector, especially the pharmaceutical industry in this crucial time. One must keep in mind that in Pakistan, in absence of any government initiatives, the whole burden falls over the shoulders of the pharmaceutical industry to maintain the drug affordability-availability balance. Where authorities are mostly concerned with mitigating drug shortages to the public, no heed is paid on the factors that are laying hurdles in the way of smooth and continuous drug supply. It must be appreciated that the drug raw material prices have soared globally in past two years owing to the pandemic and subsequent global economic crunch. The unpredictable currency devolution by almost 24% YoY and almost 25% increase in ocean freight charges in the year 2022, has further added fuel to the fire (PACRA data base). Since, Pakistan import raw materials from other countries to meet almost 95% of its drug manufacturing demands, it has almost been an impossible task to ensure that the cost to price gap in medicine prices is met. Recently, the window was further narrowed when the Government imposed 17% sales tax on the purchase of raw materials vide SRO 383 (1)/2022, which is refundable on the supply of finish goods. This means a manufacturer must bear the burden of the tax for at least 1-2 year till the complete utilization of the raw materials, in addition to the yearly inflation rate.   The pharmaceutical industry is largely criticized for the annual price increases availed by drug manufacturers on the justified grounds of annual inflation in the consumer price index (CPI), as permitted by the Drug Pricing Policy 2018. Often the opponents forget to acknowledge that the very inflation affecting the common man, also poses deleterious impact to the limited resources of the pharma industry. As per 2020 estimate, the Pakistan pharma market has reached a substantial 3.2 billion USD mark, and the pharmaceutical sector contributed around 3.6% of the value of the total Large-Scale Manufacturing (LSM), that constitutes around 74% of total manufacturing activities in the country for the year 2021 (Pakistan Bureau of Statistics, State Bank of Pakistan). Sustaining the industry at this level requires it to expand its business, something that entails deepening of pockets. In such situation, any kind of cost increase in the manufacturing operations may be countered by a corresponding price adjustment.   No matter how the current drug-shortage situation is theorized by the health authorities, the practical cause remains the inability of the industry to meet the drug expenses at the present price fixed by the Federal Government. Only recently the Federal Cabinet in its meeting held on 13th September 2022, chaired by the Prime Minister Mian Muhammad Shahbaz Shareef rejected the increase in the retail prices of 10 medicines, emphasizing over the needs of the flood and epidemic stricken masses. However, the long-term impact of refusing monetary relief to the drug manufacturers would eventually result in unavailability of life saving drugs to the public. Though one may realize the good intent behind the Cabinet’s decision, it must also be indicated that industry is not assisted through any government funded scheme or subsidiaries, thereby being deprived of any support to meet the market demands in this national catastrophe.   The question therefore is pointed towards the government as to which side they would tip the scale. The economic challenge is being faced by not only the common man but also the very drivers of our economy, that is the pharma industry. While it is up to the good wits of the authorities to manage this dilemma, the pharma industry hopes to get a supporting shoulder so they may join in the Government’s quest to supply cost effective quality drugs to the public.