10 PER 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 respectively.
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 common man.
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 to Pakistan.
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.