Pharma crisis

Editorial Board
Thursday, Feb 09, 2023

The disastrous consequences of a currency in freefall have now become quite apparent. A few days ago, local pharmaceutical companies announced that they were facing a cost-of-production crisis, fuelled by the sharp devaluation of the rupee, and that it has become financially unviable for them to keep manufacturing medicines under the given circumstances. The pharmaceutical industry has been facing several challenges for quite some time now. According to the protesting pharmaceutical companies, the Drug Regulatory Authority of Pakistan (DRAP) has failed to meet their justified demands that retail prices of medicines should be increased to make up for constant increases in production costs. The country’s economic situation is bleak, and the economy is constantly bracing the lingering threat of sovereign default. Delays opening LCs have also hurt the pharmaceutical industry that is finding it increasingly difficult to import active pharmaceutical ingredients (APIs) from the international market. Coupled with a strong dollar, this issue has shot up production costs. Ideally, industries can increase the selling price to cover the cost of manufacturing goods. But in this case, one major issue is the government’s insistence on regulating medicine prices.

Medicine pricing is a little tricky here: the government negotiates the prices and places a cap on essential medicines to ensure that they are affordable and accessible. This sentiment is not wrong, at least in a country where rampant poverty is a never-ending issue. However, it is not as black and white as this. Bureaucratic red tape hurts the very people for whom the government fixes the prices. If the government does not increase the prices, drug companies will halt their operations, leading to the unavailability of essential medicines. This will add difficulties for people, especially those battling life-threatening diseases. The government should find middle ground: authorities must cater to the people without creating hurdles for manufacturing companies which cannot get their business running with their hands tied – and no one can do business at a loss. Last year, the shortage of the popular brand Panadol paralyzed the healthcare sector at a time when not only were hospitals packed to the brim with dengue patients, but millions of flood-affected people were also waiting for medical aid at makeshift relief camps. When companies do not have enough resources to reach the break-even point, they find it more acceptable to halt operations. And if local companies stop manufacturing essential medicines, this will lead to a severe health crisis in the country – already there is an acute shortage of medicines required for the treatment of cancer and heart diseases; insulin and other diabetic medicines are also unavailable. There are fears that the government’s inaction will lead to a thriving black market, where profiteers will profit off of people’s misery and urgency to buy life-saving medicines for their loved ones. During the early years of the Covid-19 pandemic in 2020-2021, people paid close to a million rupees to buy life-saving injections from unregulated and unauthorized dealers and sellers. Is the government waiting for a repeat of 2020?

Pakistan dropped seven places in the 2021-2022 Human Development Index (HDI); life expectancy in the country is 65, one of the lowest in South Asia. And the present situation suggests that authorities are not interested in bringing any improvements. Also, the current dollar crisis is a lesson for the PML-N, which insisted on fixing the dollar rate and ignored the concerns of industries. While Pakistan must keep raising its voice over the Kashmir issue, it should also explore the possibility of importing essential items from India which manufactures these items at a relatively affordable rate. It is also rather strange that the opposition is not bringing up these important issues to pressurize the government into taking notice of the situation and helping the pharma industry deal with the ongoing severe economic conditions.