IN the Pakistani healthcare system, drug pricing has proved to be the beast that cannot be tamed. Every few months, an increase in drug prices is speculated usually on account of a ‘shortage’ of a certain medicine in the market.

For example, recently there was a shortage of paracetamol, one of the most common over-the-counter painkillers. Other than the actual dispute over the increase in the drug price as demanded by the pharma industry, market speculation about the shortage and the consequent stockpiling of the medicine affected healthcare for millions in the country. People were unable to find paracetamol at local pharmacies, which was being sold for steep profits in the black.

In a bid to control situations like these, a drug pricing policy was introduced by the Drug Regulatory Authority of Pakistan in 2015 and later revised in 2018. Under the policy, a maximum retail price was fixed for each medical product in the market by assessing the cost of production of the same drug in other regional countries, using the referencing method to compare the prices of drugs with similar dosage and formulas in India and Bangladesh. In 2015, when the policy was introduced, drug prices and any impending increase were linked to the consumer price index. However, in 2018, Drap gave pharmaceutical companies carte blan­che to increase drug prices by seven to 10 per cent every year without government approval.

Despite the abovementioned policies, drug pricing has continued to be a sticky issue for consumers and the government both.On the one hand, fixing the maximum drug price impairs the quality of medications being produced. Manufacturers, when the retail drug price does not seem economically feasible as compared to the cost of production, cut corners in the task of maintaining required quality standards. On the other hand, the pricing policy impacts the procurement processes of healthcare facilities. Most government health establishments, and also several private hospitals, procure drugs through a tender process and the drug with the lowest cost usually wins the bid. This process of drug minimisation, where the cheapest treatment options are given priority, end up compromising the efficacy of treatments. The quality of services and treatment offered across numerous healthcare establishments in the country is ample proof.

Fixing the maximum price of drugs compromises quality.

With our faulty healthcare system in which patients end up bearing 70pc to 75pc of the total treatment expense, revision and upgradation of the existing drug pricing policy are necessary to make it compatible and more effective as per our requirements.

Moreover, policymakers often overlook the impact of drug policies on the pharmaceutical industry and its importance in sustaining the economy of the country. In 2011, pharmaceutical companies were valued at $1.64 billion, and by 2019 their value had doubled to $3.2bn. Thus, it is critical that any updated drug policy, while aiming to make healthcare more affordable, also supports local drug manufacturers in production and research.

There has been limited research in Pakistan in the drug-pricing sector, contributing to the opacity of the production and marketing processes of pharmaceutical companies. In this regard, a paper published by the Pakistan Institute of Development Economics offered an insight into the drug-pricing and production process, while pointing out the futility of using an external price-referencing system in a developing country such as ours.

However, the paper also included a few solutions to enhance the quality of drugs being manufactu­red locally while also reducing their cost. It advocated for the local prod­u­­­ction of raw ma­­t­erials and reducing taxes on ma­­nuf­acturing-rel­ated pro­­ducts and imports to enable lowering the price of medicines. While there was no problem with the recommendations themselves, the suggested time frame for their implementation made it an impossible feat. In a country like ours where political instability is a constant factor, any robust drug policy would take years to be accepted and then implemented.

A number of different pricing models exist across the world, but in recent years many countries have converted to a value-based pricing system for medicines. This method takes into account the overall efficacy of drugs over other existing options. In Pakistan’s case, however, this option is not viable due to a number of limitations including the lack of data and our unsymmetrical healthcare system.

Hence to develop a long-term policy on the manufacture, marketing and sale of drugs in Pakistan, it is imperative that all relevant medical, drug manufacturing and health policy experts sit down and chalk out a detailed and phase-wise plan for reducing the cost, and improving access to and quality of treatment options available to the people.

The writer, a Harvard graduate, is manager pharmacy, Lady Reading Hospital, Peshawar.

Published in Dawn, October 13th, 2022