Medicine prices have always been a highly contentious issue in Pakistan, particularly after the steady devaluation of the rupee which began in 1982 and inflated prices of imported medicines as well as those manufactured locally using imported ingredients.

Various radical remedies have been tried and far more suggested to bring down the prices and keep them low, beginning with the ‘generics’ in the 1980s by the first PPP government. And the current suggestion is to have a tax-free zone for the pharmaceutical sector. Most of these remedies have tried to address half the problem, while aggravating the others unwittingly.

Having come up with what seemed a radical move the new federal health minister Nasir Khan has quickly qualified that by limiting the concession to five to ten years and confining it to the life-saving sector of the pharmaceutical industry.

He is to meet the multinational pharmaceutical manufacturers soon to discuss the proposal. But it is doubtful whether the companies would like to set up special new units in a specified area to be earmarked now, and to make only life-saving drugs and for a period of five to 10 years? What would happen to the facility on which they would have made large investments after the specified period expires? Would the prices be allowed to jump up after that, or the facility be shut down after the tax holiday period is over?

And what kind of tax holidays would be given to the industry, beginning with income tax? And will the facility enjoy exemption from provincial and local taxes as well, as they too can be sizable?

The minister is of the view the medicine prices should be compatible with prices in neighbouring countries and should never disappear from the market. By saying that he has put his finger on the core of the problem. It is easy for the government to control prices of medicines, as it has been exercisinge, but can’t make sure the supplies are there. The patients are then forced to pay far higher prices in the black market or buy imported medicines at far higher prices.

I remember what happened to Tedral essential for asthma patients. The price was fixed at Rs10 for 100 tablets for very long. As the controlled price was not raised despite the rise in the cost of production and of imported ingredients, Tedral disappeared from the market and I had to buy it for Rs20 to Rs50 in the black market before that, too, vanished.

The same happened to Ventolin inhalers for asthma patients. As the government did not raise the controlled price it vanished from the market, although asthma patients needed that desperately. Ultimately the price was raised to almost triple the original price and the supply became steady thereafter. So price is one factor. Equally important is the availability of the medicine at that price, particularly when it has no other cheaper equivalent or substitute.

When people talk of medicines being cheaper in neighbouring countries they mean India in particular. But the pharmaceutical industry chiefs in Pakistan argue that while some prices are cheaper in India, some others are far higher than in Pakistan.

Certain blood pressure medicines manufactured by a top multinational company in India and Pakistan cost less than 40 per cent of their Pakistani price in India. They are cheaper in Nepal, though manufactured and exported from India, than in Pakistan. The company in Pakistan has no credible answer for blood pressure patients who have raised the issue with it in Pakistan.

The pharmaceutical companies want total decontrol of medicine prices in Pakistan. They argue that when prices of all other items are being de-controlled, prices of medicines manufactured in Pakistan should not be controlled. The US and West European pharma companies also bring pressure through their ambassadors in Pakistan on the government to do away with the controls. The government agrees to that in principle, but not in actual practice in toto. It has opted for a gradual de-control and prefer to protect the life-saving drugs sector through price control.

The companies protest that while there is price control on the medicines manufactured in Pakistan there is no such control on the similar medicines imported from abroad, including from their own companies abroad. They describe that as unfair discrimination.

The companies argue that their profitability is very low and hence they could not make large new investments and expand their facilities.

Another handicap in this sector is that Pakistan’s domestic pharmaceutical sector has been too small. It has grown up in recent times to occupy about 35 to 40 per cent of the production capacity, while the multinational companies have the rest of the share. In India the domestic sector is much larger.

What is striking is that not only the prices of multinational companies’ products are high but also of even the Unani companies who have raised their prices very high, for even items like Ispathol, which do not go through any manufacturing process. While some new Pakistani companies like the High Noon Laboratories in the pharmaceutical sector have come up, large multinational companies are merging to become far larger. While Glaxo and Welcome merged into one company earlier, Smith Cline and French and Beecham Pakistan are merging into that now. And Abbott Laboratories of the US has absorbed Knoll Pharma and is to make additional investment in Pakistan of Rs330 million to expand its facilities.

As for the government, it has not only the problem of keeping drug prices low but also deciding who should supervise the price control. Should that be done by the ministry of industry or the ministry of health? The right ministry should be the ministry of health, but the industries ministry claims primacy over the health ministry in this regard which is wrong. The ministry of industries has enough problems to need expand its area of oversight, but tough warfare is too common in the Pakistan government without caring for the turf itself.

Now that the import cost of everything has come down following the stabilization of the dollar — in fact a fall in the exchange rate of the dollar by nine per cent since 9/11 medicine prices should be coming down. That has not happened at all. The pharmaceutical companies may argue that prices of other imported items have not come down either. Hence medicines cannot be an exception. In fact the prices of many medicines have gone up in recent times where there is no price control. The health minister should look into this problem as well.

The government’s problem is not only making medicines cheap or less expensive in the country but also making them available to the poor through public hospitals. Minister Nasir Khan says there is no real shortage of medicines in government hospitals but there is leakage. The medicines vanish from the hospitals and make their appearance in the shops including the private dispensaries within hospital premises.

The move to have separate coloured packaging for medicines distributed through public hospitals to prevent their theft seems to have made little headway as the stealing syndicate is much too strong and far too large.

The minister is bound to raise all these issues with the pharmaceutical companies when he meets them soon. But one meeting or two alone will not produce results. Committees will have to be set up to come up with proper recommendations and to enforce them.

And when other special industrial zones have made little headway in the country, including the Export Processing Zone in the city, and new industrial zones elsewhere, not excluding Gadoon Amazai, the special tax holiday zone for pharmaceutical industries may also face too many impediments. If the problem is not approached in a realistic manner, and possible problems anticipated and solved the new special zone may not serve its purpose.

But in a country with no social security and hardly any health insurance system, except in the limited corporate sector, medicine prices have to be kept low. And that can’t be done at the cost of the companies which may not produce the essential drugs when their prices are controlled severely.

The need of the times is to have medicines at fair prices and make such medicines available readily instead of vanishing when the government does not agree to the prices demanded by the companies. The government and the companies need to have a realistic and constructive approach to the problem, including the new solution of a tax-free zone for the making of life-saving drugs.