WHO should determine the prices of essential medicines — the ministry of health or the ministry of industries? Apparently, it looks like a husband-wife quarrel but has a crucial bearing on the common man’s health status. Put simply, the controversy boils down to the question: Should a medicine be considered a health-restoring product or an industrial product like a toilet soap or tooth paste?
The controversy was disposed of, not resolved, by the military regime in pre-election days in a hasty manner so as to favour the multinationals’ lobby — an obligation expected from an ally of the United States in the war on terrorism. The implication was that the medicine is an industrial good and that the would-be civilian regime is bound to honour outgoing regime’s action.
Now that an elected government has been put in place and given powers, as alleged, to take vital decisions on its own, can it muster some courage to review the controversial action and take a fresh decision in a manner that protects common man’s interests? It goes without saying that the prices of the medicines and other medicinal products are too high in Pakistan and visibly beyond the reach of the poor. The middle class can afford a few and the lower middle class has to depend on counterfeit versions. But, then, the drug manufacturers are no Edhis either. They must earn some profits to make their enterprises viable. But how much this profit should be is what a good government is expected to resolve in a judicious manner.
Regarding the controversy as to which ministry — health or industries — enjoys the legitimacy to decide about a raise in the drug prices or fix the ones of new products has its roots in the global trend, that gained currency a decade ago, that only free market economy was the answer to all the ills of the developing countries. It is strongly recommended, propagated and imposed on the poor, less developed countries by the IMF-WB-WTO combine — the three pillars of the Washington Consensus. (In the Florence conference held last month, the demonstrators called these three institutions the ‘axis of evil’).
The irony of this notion is that it is in stark contrast to what the developed world practised itself. It still keeps controls on essential items pertaining to public health, nutrition, food and basic necessities of life. It is a common knowledge how FDA functions in the US and how rigidly it enforces its controls on medicines. Equally well known is the hard fact that generic drugs are not only allowed in the US, Canada and Europe but constitute almost one-third of total drug sales. Why countries like Pakistan are, then, pressured to loosen controls on the prices and disallow generic drugs is difficult to understand.
It is interesting to note that General Musharraf had to personally intervene to ensure the controversial favour to the pharmaceutical industry because the ministry of health was too adamant and unwilling to concede. To offset health ministry’s opposition, a clever plan was earlier devised by the drug multinationals with the support of their sympathisers in the bureaucracy and with the blessings of Shaukat Aziz-Razzak Dawood duo (who represent the interests of the Washington Consensus in Islamabad). Under the plan, the ultimate decision to approve a periodic rise in the prices of the medicines now rests with the ministry of industries and not with the ministry of health although the application for the same is to be submitted to the latter.
Of significant interest in this strange scheme has been the last-ditch effort by the health ministry’s top bosses and the minister himself to thwart the odd move they thought would ultimately result in abnormal rise in drug prices and put severe burden on the commonfolks. They refused to accept the switch-over in the Economic Coordination Committee and stood to their grounds resolutely. It is for the first time that the health bureaucracy, also enjoying no good past record, put up such a brave resistance to defeat a dubious move and that too at a time when the military was in power. Maybe, it was their self-interest which coincided with the common man’s interest in some manner.
It was in the last week of September that President Gen. Musharraf stepped in and overruled health ministry’s objections over placing the pharmaceutical industry in the category of industry and directed immediate implementation of the decision.
According to a report published in this newspaper on September 28, the president issued directives under the rule 16(2) of the Rules of Business, 1973 for immediate implementation of the industrial policy for pharmaceutical sector as approved by the ECC a few days earlier. The ECC decision had said that prices of all drugs, which have to be registered for the first time will be fixed by the ministry of health. Appeals against the ministry’s decisions will be made to a board located in the ministry of industries and production. The board will have representatives from both the ministries.
However, the prices of already registered drugs will be regulated by the ministry of industries. How the two ministries differed over the new procedure can be judged from the fact that a press conference called for announcing the decision and to be jointly addressed by Razzak Dawood, industries minister, and Dr Abdul Malik Kasi, the health minister, had to be ultimately cancelled.
The health ministry’s stance was that the new scheme should be held in abeyance till an elected civilian government was installed. Since long, the matters relating to prices of medicines were handled by the health ministry under the Drug Act, 1976. Razzak Dawood had a different approach. He argued that under the Price Control Act of 1997 the industries ministry could regulate the prices of drugs since these were also industrial items.
The health ministry’s argument was that what was decided in the pre-ECC meeting was that in future a summary for annual price increase would be initiated by the ministry of industries for presentation in the ECC and then in the cabinet for final approval, and not that the prices of the registered medicines would be considered for a raise by the ministry of industries. Nowhere drug prices were regulated by the ministry of industries, was the health ministry’s argument.
In July this year, five organizations in the pharmaceutical sector came out strongly against this sector’s intended deregulation and talked about the interests of the common man. They were Pakistan Pharmaceutical Manufacturers Association (PPMA), Pakistan Chemists and Druggists Association, Foundation for the Preferment of Pharmaceutical Sciences (FPPS), and The Network for the Consumer Protection, a health NGO.
They quoted a World Bank report which stated that policy of promoting brand-name medicines had always led to abnormal increase in the prices. The prices could be lowered only by adopting generic drugs policy, as many drugs marketed in industrialized countries were not needed in developing countries, and were likely to confuse doctors, besides leading to price hike.
In Pakistan, the deregulation task was given to three successive committees, namely, the Tariq Sidiqui Committee, the A.G.N. Kazi Committee and Shahnaz Wazir Ali Committee and the end-result was the concept of ‘controlled and decontrolled’ drugs that was adopted in 1994. In simple words it meant the government would keep its hold on the prices of 25 per cent of the drugs which are considered or declared ‘essential’ and the remaining 75 per cent, considered ‘non-essential’, were left to the companies to determine themselves in the wake of free competition in the market. Thus, the firms were allowed to fix the prices of their drugs as they wished.
The ill-conceived policy resulted in a major rise of prices. By the time the government realized what a foolish step it had taken, several drug firms had already bagged huge profits. The industry, as such, failed to convince the ministry of the wisdom of letting the prices to be determined by market forces. Then came the idea of transferring the power of giving price rises to the ministry of industries.
What is usually ignored in the on-going debate is the hard fact that a medicine, although produced like other industrial goods, is uniquely different from other goods because here the consumer (the patient) is left with no choice in selecting the commodity (drug). It is the doctor who decides about which drug the patient has to buy and his decision is irrespective of the latter’s purchasing power. The only solution of this problem is the constitution of a board consisting of scientific experts, senior medical professors and elder citizens of good reputation to consider the price structure of medicines and decide about the requests for any raise.