THE prime minister and cabinet’s populist decision to reject a fresh proposal from the health ministry to raise prices of 10 medicines under ‘hardship cases’ will not benefit any stakeholder: the government, producers or patients. Last month, the Shehbaz Sharif government refused to increase the price of 35 medicines under the hardship category; these represent cases where the production of a drug becomes economically unviable at its existing fixed retail price, which then leads to its shortage and disappearance from the market.
Over the last year, many medicines have fallen into this category due to runaway inflation, steep exchange rate depreciation, a sharp hike in the electricity tariff and transportation costs, etc. On top of that, global inflation has led to a significant spike in the cost of imported raw materials, forcing manufacturers to reduce or discontinue some essential products because of their unrealistically low retail prices, causing their shortage in the market. The void created by the unavailability of these essential medicines is encouraging an influx of spurious, and in some cases smuggled, products into the market at great expense to public health safety. With drugmakers having exhausted their raw material inventories, it is being feared that more drugs will vanish from the market unless the government allows a price increase to compensate the manufacturers for the hike in their production costs. As painful as the uptick in price will be for many, medicine shortages can be even more distressing as can be seen with Panadol, a commonplace drug used to treat aches and fever which is presently hard to find. People then end up paying much more than the medicine’s fixed price in order to get their hands on it. If the government wants to help the vulnerable segments of society, it should learn to regulate drug prices by encouraging market competition rather than through price administration. For a longer-term resolution, the health authorities could impose a levy on manufacturers’ turnover to fund provision of free medicines to the poor.
Published in Dawn, September 15th, 2022
