Life-saving & essential drugs pricing formula controversy: multinational firms may stop production

Multinational pharmaceutical companies would stop production of many essential life-saving drugs if the Drugs Regulatory Authority of Pakistan (DRAP) adopts its proposed pricing formula called "Average Pricing" method, instead of introducing "Reference Pricing" formula, Business Recorder learnt here on Thursday.
"Average pricing method may force the top local and multinational pharmaceutical companies to stop production of many `unfeasible' drugs as the top manufacturers do not compromise on their quality standards which are prime factors in their pricing," industry sources told this correspondent.
According to sources, there is a consensus among PPMA, Pharma Bureau and the Pakistan Chemists & Druggist Association (PCDA) to have "Reference Pricing" formula which is prevalent in countries with similar socio-economic conditions. The sources claimed although the prices of drugs, under a formula proposed by the ECC, would increase the prices by around 93 per cent, the pharmaceutical companies had agreed to increase the prices by only 15pc in the interest of patients.
They said: "Although Sindh High Court had ordered the DRA to come up with a pricing policy in consultation with all stakeholders, DRA is gearing up to come up with a `destructive' formula of average pricing. Such a move on the part of DRA would increase the prices of sub-standard drugs and compel quality drug makers to stop production and wrap up their businesses," sources feared.
They also claimed that the DRA has refused to take into account considerations of the external stakeholders. "Such a move on the part of DRA will ultimately hit consumers when most of the drugs will not be available in the market. Recent shortage of life-saving drugs and vaccines was just a trailer," the sources threatened.
The pharmaceutical industry of the country has been asking for price increase since long, but the government is bent upon introducing new formula in the new drug policy, the sources said, adding that "such a move would mean a government sponsored 'cartel' as opposed to efficient market dynamics which is the tested method of ensuring viability of the industry and at the same time allowing competitive forces to force the price down automatically," the source opined.