EDITORIAL: Recent years have seen Pakistan’s pharmaceutical sector struggle to stay afloat as it grapples with myriad challenges, with several international players that were long active in the segment exiting the country, reflecting the broader instability of the investment environment.
More specifically, as pointed out repeatedly by industry experts, the sector is weighed down by a cumbersome tax regime, as well as outdated laws and regulatory hurdles that stifle innovation and deter investment. Furthermore, until recently, pricing controls, which were ostensibly established to ensure affordability, ended up significantly eroding profitability, often leading companies to scale back their production levels.
Among these various challenges, the one pertaining to archaic laws is especially critical, and as highlighted in a recent report in this paper, the antiquated regulatory framework governing the Pakistani pharmaceutical sector significantly lags behind international standards and global advancements, creating considerable barriers to innovation and growth. It is pertinent to note that the regulatory landscape overseeing the sector consists of the Drug Act 1976, the DRAP Act 2012 and the Drug Pricing Policy 2018, with the first of these considered the bedrock of this framework.
As pointed out recently by former chairman of the Pakistan Pharmaceuticals Manufacturers’ Association Dr Qaiser Waheed, the Drug Act 1976, while foundational but is now outdated, contains various anomalies, doesn’t effectively address the evolving needs of the sector anymore, and can potentially create serious complications for manufacturers.
For instance, while citing the case of out-of-specification (OOS) medicines, which are products that fail to meet the quality standards set by regulatory authorities or the manufacturer itself, Waheed underscored that worldwide such drugs are typically recalled from the market, with companies bearing significant financial losses and reputational damage as a result.
However, in Pakistan, the consequences are far more severe, as courts under the Drug Act 1976 have the power to initiate criminal proceedings against even non-technical executives and top-tier management, who are usually not involved in the manufacturing process.
What is overlooked is that the presence of OOS medicines does not necessarily indicate malintent as these can result from factors like environmental conditions, equipment malfunction or human error. It is no wonder then that we had a situation earlier in the year where a company as well-reputed as GlaxoSmithKline had a prison sentence handed out to its CEO for the manufacture of what was deemed to be a substandard drug.
It is unsurprising, therefore, that from a high of around 30 pharmaceutical companies operating in the country, we are now left with just four, as multinational businesses exit the market, driven by the harsh regulatory environment and an unfavourable pricing regime.
In the case of the latter challenge, there has at least been some positive movement in the form of deregulation of drug prices for non-essential categories and a one-time increase in the prices of 146 drugs in February. However, the industry still continues to deal with the consequences of the exodus, a major one being the lack of a sound biotechnology infrastructure, in stark contrast to India’s 300 and China’s 3,000 biotechnology plants, making Pakistan reliant on expensive imported raw materials.
There is clearly a need to modernise existing laws and align Pakistan’s pharmaceutical industry with international best practices that balance the needs of public health, regulatory oversight and the ability to foster innovation and attract investment.
A regulatory regime that helps nurture an innovation-driven industry instead of creating a climate of fear, while also safeguarding consumer protection can significantly contribute to economic growth, boost flagging investment figures, support a creaking healthcare system, and even drive exports. The Drug Regulatory Authority of Pakistan would do well to expedite the modernisation of policies and take steps to create an environment conducive to these outcomes.
Copyright Business Recorder, 2024
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