Accounting for missing billions

Published June 28, 2021
The success of Covid-19 containment efforts has shown the power of political will and collective actions.— Reuters/ File
The success of Covid-19 containment efforts has shown the power of political will and collective actions.— Reuters/ File

Pakistan can deliver better public health care. The success of Covid-19 containment efforts has shown the power of political will and collective actions. In this day and age, it is unconscionable to let the size of someone’s paycheck decide whether a curable disease will be fatal.

It can’t really be an accident that Pakistan did better than most in handling the pandemic. From swiftly establishing the National Command and Control Centre, to leveraging multiple platforms for public awareness, the government even initiated a huge vaccination programme across the country surprising self and others. This was all accomplished from within our crumbling health infrastructure.

No one expects the free market to deliver affordable health cover independent of the government. Today a modern pharmaceutical market performance is gauged by tracking if it delivers drugs swiftly and cheaply. Even when pharmaceuticals are churning profits questions are raised on their sustainability and the purpose if patients can’t access medicines. This explains the public hostility towards drug makers in Pakistan despite their active involvement in supporting social causes.

The changing composition of the drug market with a growing share of local manufacturers did little to improve the accessibility or the quality of medicines. The greater focus of the ruling party on social services has helped. The PTI health card scheme and the policy to widen its coverage is commendable but not sufficient.

The Imran Khan government has yet to sort out the regulatory framework and streamline the financial affairs. Research and technological advancement and achieving global standards are crucial for the advancement of the pharmaceutical industry. There is no justification for not having a single FDA (US Food and drug administration) certified lab. The absence of a globally recognised drug certification facility raise doubts about the quality of available medicines and pose limits on the scope of drug exports.

‘People and businesses have a right to know how billions collected for medical research over the past 45 years are being used’

Pakistan lacks basic research infrastructure though drug makers are obligated by the law to contribute one per cent of their pre-tax profit annually to Central Research Fund (CRF). The pharma industry watchers assess the annual revenue turnover to be in the vicinity of $3.2 billion (Rs499bn). It means the drug makers contribute in billions collectively to the CRF every year.

“People and businesses have a right to know how billions collected for research over the past 45 years are being used. The country does not produce any vaccine or pharmaceutical ingredients for lack of research infrastructure. The absence of credible certification compromises the scope of drug exports. The government needs to drop this levy,” Ayesha T Haq, spokesperson of Parma Bureau, a platform of multinational drugmakers, commented.

Leaders of the Pakistan Pharma­ceutical Manufacturers Association, a body of local companies, asserted that the government has failed to effectively utilise the research and development (R&D) fund and should let the private sector manage it. “Instead of collecting research levy the government can obligate drug makers to direct 1pc of their revenue to research”, said Dr Sheikh Kaiser Waheed, a PPMA leader.

The PPMA dismissed the perception of underperformance of the drug industry in the current health emergency. “We ensured a steady supply of all medicines in the harshest patches over the past year and swiftly adjusted our production to suit the market needs (sanitisers, disinfectants and personal protective equipment demand). The production of Covid vaccines takes more than a wish. In absence of supporting research infrastructure and advanced plants it was not possible,” said Tauqeer ul Haq, chairman of PPMA.

Dr Azra Peechuhu, Sindh health minister blamed the federal government. “The drug makers in Pakistan do not produce any vaccine, even for routine immunisations. Big investments are needed for research and development. The federal government should provide funds in partnership with NIH (National Institute of Health) to this end.”

Dr Faisal Sultan, Special Assistant to the Prime Minister on Health directed the query on the research levy towards the Drug Regulatory Authority of Pakistan (Drap). Asim Rauf, CEO, Drap, did not share account details of the Central Research Fund. Responding to Dawn’s query he forwarded a guarded statement. “R&D fund is charged under Section 12(b) of the Drugs Act 1976. It is charged as 1pc of pre-tax gross profit under Rule 19(14) of the Drugs (licensing, registering and advertising) Rules, 1976. This fund is utilised through the Research and Development Committee under the Drugs (Research) Rules 1978.

“Currently the fund has not been utilised due to the non-constitution of the aforesaid committee. Now, after nominations from provincial governments, the case is being sent to the Cabinet for approving the composition of the committee as per law.”

Regarding the utilisation he wrote: “The fund is not frozen for the last 45 years. A number of research proposals/ projects have been approved and executed”.

He contested the private sector claims on lab facilities. “Alhamdulillah, Pakistan has three World Health Organisation certified labs — PTRD Lab Sunder, Drug Testing Laboratory Faislabad and Prime labs Islamabad. Two more labs, Central Drugs Laboratory Karachi and Drug Testing Laboratory Rawalpindi, are in the final phase of getting certified.” He skipped the FDA certification issue.

There are about 700 drug makers in Pakistan. Multinational drug makers, hardly 4pc of the total, command about 33pc of the industry’s revenue turnover annually. After growing at the rate of above 20pc for many years since the mid-2000s, the growth rate of local companies has moderated to 12pc. Today six of the top 10 drug makers are locals. Almost 60pc of total consumer spend on health is directed towards the purchase of medicines.

Published in Dawn, The Business and Finance Weekly, June 28th, 2021

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