CUT IN DRUG PRICES

A positive impact of WTO
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By AMANULLAH BASHAR
Sep 08 - 14, 2003

The prices of life saving drugs are likely to go down across the world following implementation of the WTO regime in the coming years. Practically speaking, the world pharmaceutical market is ruled by the multinational pharmaceutical companies operating almost in all developed and the developing countries. But the scale of the similar drug prices varies on the basis of the size of the market of the respective countries. Generally, the prices of different health products are determined on the basis of the volume of production. Obviously, wherever, the products are being made on the economy of the scale the prices come down accordingly. For example the price of medicines produced by a multinational pharmaceutical company in Pakistan may different from the same product and the same producer in India. Hence with the doing away with the tariff barriers after implementation of WTO regime the prices would be have to come down to the level of the benchmark set in the major consumer markets, otherwise the market would be snatched by other producers of the said product by virtue of the concept of the open market philosophy.

On the home front, the government in Pakistan has also proposed reduction in the prices of over 600 essential within next few weeks.In this respect, the government has already held talks with over 13 pharmaceutical companies both local and multinational to cut prices of 60 drugs by 10 to 50 percent.In Pakistan, around 334 pharmaceutical companies are operating which include 311 national and 23 multinationals.

WTO

On the international front, the WTO prior to implementation of its rules in 2005 has decided to allow the poorer nations to import cheaper generic drugs to combat fatal diseases.

This deal would be bridging the gap in the world trade laws by allowing the poorer nations to import drugs which they are unable to produce such medicines domestically. These remarkable amendments would provide the poorer nations a walkover the international patents and brands enabling them to import cheap generic drugs when need to. The accord would enable the less developed countries to make full use of the flexibility in the WTO intellectual property rules in order to deal with the diseases that ravage their peoples.

In Pakistan, the ministry of health had recommended 10 per cent increase in the prices, in December 2001 under its pricing mechanism. However, the government permitted only 3-4 per cent increase in June 2002 but imposed 15 percent GST on all kinds of drugs produced in Pakistan. The decision to impose GST on drugs had a widespread resentment in all segments of the society who totally rejected the levy on the drugs. The government had to recall its decision of imposing GST on drugs due to strong opposition from all corners of the country.

The commercialization of the health sector is supposed to be the root cause of increasing health facilities in Pakistan. Specialized hospitals run by the private sector are usually out of the reach of the common man due to unabated cost increase. On the other hand the public sector organizations especially in the urban areas are obviously unable to cater to the needs of the huge population. The public sector hospitals although offering doing their best, however, the patients have to buy all sort of medicines from the market even if they are under treatment in a public sector hospital. Although the present government led by Prime Minister Zafarullah Khan Jamali has recommended a cut in drug prices but on the other hand the policy makers have to take care of the market economy as well.

Although there is a difference of opinion between the official circle and the private sector regarding price variation in Pakistan and the other countries in the region. However, the prices of certain medicines are different in Pakistan and neighboring India.

Although some are cheaper in Pakistan but many are much costlier as compared to the prices in India. It is generally believed that with the implementation of free trade concept, the price level would be determined by the market forces themselves instead of price regulating mechanism which certainly has some loop holes, said a drug dealer.

A patient at Cardiovascular Institute while talking to this ascribe said that certain medicines required by the heart patients are so costly that the poor cannot afford to buy them. Although the economic interest of the manufacturing sector was also equally important to make them commercially viable, yet there should be some rationale while fixing the prices of the life saving drugs.

If the human values have any thing to do in the society, at least the prices of life saving drugs have to bring at an affordable level. Globalization of trade without globalization of human values aiming at protecting the interests of the less fortunate may not win the support of the people at the grass root level of the developing nations.

The WTO in its recent deal has made some positive amendments in its rules, however, it need more flexibility so that people of the developing countries could also feel that they are the part of the international human society.