The pharma blues

Recently, Pakistan’s pharma industry has come under fire for the increasing prices of drugs. While this column would like to maintain that medicine should remain affordable to the public, the pricing policy from the government, on the other hand, should not discourage the manufacturers. Otherwise, the whole thing becomes counterproductive; investment into the sector dries up and companies start wrapping up or introducing counterfeits.
Drug manufacturers in the country have not been allowed any price increases since 2001; not even for inflation. Thus, the price of a medicine fifteen years ago would look about the same as its price today. Think of what that would do to a business.
To this end, there was a provision of “hardship cases” from DRAP; drugs that were being sold at losses were granted certain price increases. Moreover, an SRO was issued in late 2013, granting price increase of 15 percent on products that were not granted any price increase since 2001. This SRO was revoked immediately, but the Pakistan Pharmaceutical Manufacturers’ Association (PPMA) filed a petition with the Sindh High Court that gave a stay order to some of the companies on the price increase.
Then, around March of last year, a new drug pricing policy was on the cards for a while but this was later rejected. Moreover, some big companies opted for hardship cases that remained pending for months on end but were never approved. This brings us to the present day.
Pharma companies went to the Sindh High Court in January and increased the prices of their drugs, saying it was not viable to manufacture the medicines at the designated rate; DRAP has failed to come up with a pricing policy, leaving things in limbo. Hardship cases have been pending for over nine months, an industry source told BR Research. With all this, the Sindh High Court granted pharmaceuticals a price increase. Now, the health ministry has been jolted into action and is trying to reduce the prices, which the pharma companies have obtained a fresh stay order on.
BR Research spoke to Dawaai.pk CEO Furquan Kidwai, who listed a host of issues with the pharmaceutical industry in Pakistan. Firstly, he pointed out that hardship cases were not at all transparent and seemingly at the whims of the Authorities. What in theory is meant to be a first-come-first-serve hearing basis, cases are chosen at “random” and are fairly skewed towards the local manufacturers. How some cases are expedited or received more preferential hearing is anyone’s guess. That’s also one of the main reasons behind big pharma bypassing DRAP and going straight to the courts, an industry source confirmed.
Secondly, apart from the strict regulatory environment, intellectual property laws and patent protection is a huge issue in Pakistan. The lack of patent protection deters breakthrough medicines from coming to Pakistan. Kidwai mentioned the case of Gileads’ Sovaldi, which is being marketed by Ferozsons after a commendable effort and that too at a very competitive price. At present, it is perhaps the only medicine for Hepatitis C virus. However, the risk of a copy-pasting exercise remains where some other company starts producing a generic version at a much lower cost. This wouldn’t be possible under a strict patent regime and for this reason, no new technology or investment is entering the pharma business; it’s why a certain multinational chose to destroy its patented suture machinery when exiting Pakistan, he said.
Thirdly, there is the enormous issue of counterfeit medicines. Various reports estimate that 30-50 percent of drugs in Pakistan are counterfeit. Clearly, the regulators are not doing a good enough job on quality control.
Finally, none of the plants in Pakistan are FDA approved, Kidwai said. They may be FDA compliant, but to obtain the stamp of FDA approval there needs to be a regulator level agreement with the FDA for a central laboratory and other quality assurance mechanisms. For this reason, pharma exports have never been able to live up to their fullest potential. While one would assume that the lower prices would attract customers and give them a competitive edge, the missing FDA approval makes most exports a no-go.
All that being said, big pharma are not exactly boy scouts either; it’s public knowledge that GSK, Pfizer, Novartis, and other multinationals have been caught in other countries bribing doctors and government officials. Drug price hikes have also been an issue on the international scene, and pharma companies are notorious for unethical business practices around the world.
Nevertheless, in the case of Pakistan, it might just be the case that a slight price increase for pharma companies is justified, so long as the prices of life-saving and essential medicines are still within reach of the masses. The big pharma players aren’t exactly making losses, but they’re not growing as much as they ought to be either. And at the end of the day, it’s a business; they’re there to make money. So, there’s no reason a middle ground can’t be reached.