cent increase in pharma prices
The ultimate result is the burdensome
prices for common man
By FARAZ SIDDIQUI
Jul 03 - 09, 2000
The life saving drugs in particular and other medicines in general have
gone beyond the reach of common man due to exorbitant price increases recently. It may be
mentioned that the government has allowed an increase of 8 per cent in controlled and 10
per cent in de-controlled medicines. Healthcare which is a fundamental right of the people
of any country has become so costly that a large proportion of population living below the
poverty line cannot afford to go for such an exorbitant prices even to save their lives.
If we trace back the history, the first real imposition of statutory
laws to control pharmaceutical prices was made in the drug act of 1976. It was also
informed that prices of pharmaceutical products will be administered by federal
government. During the period from 1971 to 1990 no across the board price increased in
price was allowed by the government. In 1991, an Economic Coordination Committee was
formed to vigilant the existing control of drugs and maintain the extent to which the
pharmaceutical industry should be deregulated. In 1991 an increase of 9.5 per cent was
made in medicine prices which was monitored by the committee.
Committee also classified the drugs into three categories, Category A
comprises life saving drugs, category B the widely used but not life saving and category C
comprises other than A&B. Kazi Committee recommended that category A and B should come
under price controlled and rest of them decontrolled. The committee recommended that the
prices of life saving drugs and drugs of essential nature should be controlled and rest of
them should be de-controlled. In June 1993 the government revised the prices of controlled
drugs with 5 per cent increase and lifted ban from remaining categories of drugs.
In January 1994 the industry decided to reconsider the prices of de
controlled products. From 1994 the prices of essential drugs have been increased about
three times, 7.5 percent in November 1994, 6.5 per cent on January 1 1996 and 6 per cent
on November 1,1996 while the prices of non-essential drugs were also increased by 15 per
cent between July 1995 and November 1996.
During last couple of years, MNCs continued to put on pressure on the
government to increase the prices of drugs because of increased cost of production due to
inflation. Pharmaceutical companies got a sigh of relief on the decision of so called
price adjustment of 8 per cent and 10 per cent on controlled and decontrolled medicines
Mr Tahir, Managing Director of Merck Sharp Dhome and Chairman sub
committee of the Pharma Bureau, in a press release, welcomed the decision of increase in
the prices of drugs. He further stated, no increase was made in prices since 1996 but the
cost of production has risen enormously, owing to inflation, devaluation of Pak rupee in
terms of dollar and imposition of 10 per cent custom duty on raw material and sales tax of
15 per cent on packaging material during the past four years. This situation put the
pharmaceutical industry into doldrums, he added.
He further said that owing to increase in the cost of inputs and the
absence of any price adjustment, the pharmaceutical multinationals had to postpone their
expansion plans. Consistent declining profit margin of pharmaceutical companies in last
couple of years is evident due to the above reasons, he added.
On the other hand this increase in prices was criticized by commons
from all walks of life specially increase in life saving drugs. Now the government should
try to rationalize the prices between raw material import and finished products. Ban on
import of drugs lifted by the Ministry of Health after having the discussion with
Pharmaceutical Importers Association. This is good move if the benefit transferred to
Talking to PAGE Aslam Shaikh, External Affairs Manager of Merck Sharp
and Dhome of Pakistan Ltd, said that this is actually a sort of price adjustment rather
than price increase which was pre requisite for the survival of Pharma industry in
Pakistan because of high cost of production He denied the general perception that cost of
medicines in Pakistan are higher than India but according the research data in 1998 shows
that out of current top selling medicines in Pakistan the prices of approximately 65.62
per cent are higher in India and 34.38 per cent medicines are lower in India as compared
He further said that local companies took undue advantage of leader
price concept and increase their prices unproportionately to follow the MNCs. He said that
they understand the problems of the countryman but they are bound to make such increase
due to couple of reasons. He advocated the importance of mutual efforts by government and
MNCs both to give relief to the peoples.
Whatever we call it either price adjustment or price increased but the
ultimate result is the burdensome prices for common man which is always vulnerable to any
blow. On the other hand this increase in prices will multiply the problems of already
deprived people, specially increase in life saving drugs. Proper measures should be taken
for the correct remedy of this uncertain situation.
There are lot of things to talk about but what can be the way for
commons to survive because no one is likely to realize the pathetic condition of poverty
striken people in the country. Already increased prices of commodities, fuel and now
pharmaceutical prices, where it will be ended?. It can simply be a price adjustment for
MNCs but whether it is enough to justify the deprived public? the answer of this question
should be found by the authorities.