THERE is no justification for a function-specific tax if it cannot serve the purpose it is being charged for. The government should consider scrapping the central research fund because after thirty years of its introduction, the country does not have the very basic quality research infrastructure or even one internationally recognised drug testing lab.
The government labs in Islamabad or the provincial capitals are not accredited to the World Health Organisation. The FDA (federal department of food and agriculture of the USA) another prestigious organisation that accredits labs, has very stringent standards. All drug companies are liable to pay one per cent of their profit before tax deduction as central research fund (CRF).
The pharmaceutical industry, multinational and national companies together, have paid million of rupees annually as CRF since 1976 but have to make do without any public research facility of international standard.
Estimates of industry are much higher but statistical officer in the ministry of health revealed that about Rs75-85 million are collected annually under this head from the industry. The last consolidated figure under CRF available with the ministry is Rs467 million. These funds are deposited in the treasury and are not lapsable at the end of a year.
The multinationals projection is around Rs150 million per annum, as according to statistics with them, the top six MNCs, representing 30 per cent of the market, contributed Rs156 million as CRF in the last three years. They arrived at Rs150 million figures by extrapolating on these confirmed numbers.
The national companies put it even higher at Rs200 to Rs250 million. They said that they arrived at the number by working on sales figures of the industry. Why the actual collection is less than half of private sector projections for CRF is another subject. The fact remains that a substantial amount is deposited annually for research by the pharmaceuticals that sit pretty in government coffers while the health scene in the country turns uglier day by day.
“Yes, we pay one per cent of our profits as research fund. The development of drug research infrastructure is too advanced a preposition; we still have difficulty finding quality pharmacists and other skilled manpower required by the industry”, CEO and managing director of a local company told Dawn.
Dr Fernaz Malik, Drug Controller, ministry of health, confirmed that it took government twenty years to set standard operating procedures (SOPs) for CRF that were introduced in 1976. “Some headway was made towards utilising funds collected for research from drug industry in 1996 when rules and regulations were put in place to facilitate transfer of funds from treasury to the concerned ministry but the actual project approval procedure did not start until 2001”, she told Dawn from Islamabad.
Dr Shaikh Kaiser Waheed, Chairman Pakistan Pharmaceutical Manufacturers Association, a grouping of generic drug makers regretted the fact that researchers have to cross borders to get required testing done as even highest seats of learning are not equipped to carry out sophisticated research.
Riaz Hussain, executive director, Pharma Bureau, a joint forum of drug multinational companies, said it would serve the industry better if the training facility is financed by the CRF to bridge the gap in demand and supply of skilled manpower in the industry. To a question as to what kept this powerful industrial lobby from exerting pressure on the government to utilise the money contributed by them, no satisfactory explanation was provided either by locals or multinationals.
They said that the issue was taken up by them on a number of occasions in dialogue with the government in the past but failed to yield results. A senior pharmacist, who wished anonymity, explained that the drug industry was a highly regulated sector and it had to turn to the government at every step to get approvals etc.
“They cannot afford to annoy the government. It is as simple as that. They conduct themselves very cautiously as they have their files in ministry all the year round. You know what it takes for files to move. The nature of drug business is such that it transforms the toughest of people into sweet talkers. It is a very lucrative trade and drug-makers are trained to apply temptation techniques more than straight talks”, he said.
The suggestion of doing away with CRF altogether did not get an enthusiastic response from the private sector either.
“I do not think it is such a good idea to scrap the fund as industry has now budgeted in its economics. However, it must be used discreetly to support researchers and research institutes that is a most neglected sector in the country”, Kaiser Waheed of PPMA said when approached.
Riaz Hussain of the bureau gave a guarded reply. “Our companies are now feeling the pinch as the prices of medicines have not been revised for the last about six years. We are still ready to work with the concerned ministry to invest the fund in suitable projects”. Another source said that it would better serve the purpose if a trust is created to manage the fund on professional lines.
The health secretary was not available to comment on the issue the lady drug controller felt that the funds are managed by a committee where both PPMA and Pharma Bureau have representation. “Instead of floating ideas in public they should come with concrete suggestions at the proper forum. Why did they not propose for creation of a trust in any of the meeting?” she asked.
Dr Fernaz told Dawn that over the last three years 33 research-related projects had been approved and were at different stages of implementation. The ministry is also actively considering establishment of a state-of-art bio-equivalency lab and a training facility for pharmacists.
Whatever has been presented by the private sector or the government does not justify the neglect of a deprived area when locally generated fund were lying idle.