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Antibiotics: plea for raising prices

September 06, 2012


DEVELOPING resistance to antibiotics is a very serious phenomenon. In the past two years western countries have witnessed the incidence of a number of patients displaying resistance to all kinds of antibiotics.

After an analysis it was found that all of these patients have come from South Asian countries like Pakistan, India and Bangladesh. Developing resistance to antibiotics is very dangerous because patients then cannot have any simple surgery or even stop any bacterial infection. And in most cases these patients die from simple hospital visits.

An analysis of the Pakistani and Indian pharmaceutical manufacturing sector shows that this phenomenon can be reduced by a simple change in the government health rules.

For example, a pharmaceutical manufacturer can only produce products in small quantities due to the sensitive nature of the production. Owing to this the manufacturer has to bear 40 to 50 per cent of the cost of the product as workforce salary and company expenditure.

The product raw material costs around 15 to 20 per cent, 15 per cent goes to the distributor, 15 per cent to the chemist, and the remaining five per cent is spent on promotional activities.

With the passage of time, the increase in the cost of raw material, salaries and currency fluctuations have forced a sharp increase in the monthly expenditure of all pharmaceutical manufacturers in this region.

But governments of Pakistan and India have not allowed any increase in the prices of medicines registered decades ago, while the same health policies allow the registration of newer molecules at higher retail prices.

Therefore, for a company, having a limited production capacity, the only option to overcome the increase in the cost of production is to concentrate their promotion on newer, highly-priced molecules, as they give them more return per pack. Even chemists and distributors promote the expensive medicines, because they get more profit from those items.

All of these factors have forced the entire supply chain of health in these countries to promote and sell newer and more expensive molecules to the public. This results in younger children being given advance molecule, which creates a resistance for antibiotics in their bodies.

The governments of these countries can help alleviate this problem by a simple change in their health policies. They should allow an increase in the price of all medicines that have been registered five or more years ago. The government should make the process simple by setting a fixed, high price for these older molecules and letting the manufacturers set their prices as they wish as long as it is below the government’s fixed price for that molecule. This will create a healthy competition for manufacturers to target their products and prices as they wish.

By doing this, the government would give an incentive to manufacturers to promote older molecule products. It would also help to distribute the drugs production and promotion among different manufacturers of these countries, improving quality and reducing costs in the entire health sector.

This simple change in the health policy can usher in a new life in pharmaceutical manufacturing sectors of these countries, taking it to its new level, creating jobs and bringing new prosperity to the pharmaceutical sector, while saving our children and ourselves from facing antibiotic resistance in the next 10 years.


Trade liberalisation

THE rhetoric of trade liberalisation, in business fraternity, gained momentum after the government decided to grant the most-favoured nation status to India. Since then, governments of both the countries are being pressed hard by powerful lobbies of the business class to include more and more items on the negative list. Pakistan’s pharma industry, through Pakistan Pharmaceutical Manufactures’ Association (PPMA), raised grave concerns over the news that Indian-finished medicines were being allowed to cross Pakistan’s boarder.

The fear behind this was that Indian medicines, being cheaper, will shake terribly the local pharma industry because, apart from its larger share in South Asia’s export of finished medicines, the Indian pharma industry also enjoys token of loyalty of its government in the form of low tax packages and cheap electricity.

Although Pakistan’s pharma industry accounts for nearly one per cent of its GDP towards employment of hundreds of workers and professionals, the fact is that the business of counterfeit or substandard drugs strengthened its roots, especially in the wake of devolutionary controversy of the Drug Regulatory Authority.

Pakistan has more than 400 pharmaceutical units manufacturing medicines. Several of them are even without ISO certification and have achieved purchase order through an underhand bidding process from many public-sector healthcare units, which are supposed to provide quality medicines to the poor of our society.

A lot of local pharmaceutical units are also manufacturing drugs, especially parental products, at compromised quality without ensuring the good manufacturing practice recommended by the international practice line.

These finished medicines are then sold at cheaper rates in bulk quantity at the Lohari Gate market, from where distributors make them available at medical stores and pharmacies. But when it reaches the desperately needy consumer, it costs them more or less equal to high quality medicine of multinational pharmaceutical industry.

At every point of time the PPMA came to rescue its member pharma industry whenever the government body tried to launch an inquiry against it or set up a committee to ascertain the cause of substandard or counterfeit drugs, such as witnessed in the disaster of the Punjab Institute of Cardiology. But hardly at any time the PPMA pressed its members to follow an agreed and unified framework to ensure manufacturing of identical quality medicines.

If ultimate consumer is assured that locally manufactured finished medicines meet the standards of both quality and quantity, then hardly any Indian medicine would be able to replace them.