THE ultimate success in any stakeholder negotiation is to find a win-win for all. Unfortunately, in Pakistan, we specialise in the reverse: creating situations where every single party loses. This lose-lose approach is evident today in our national politics and every facet of our economy, but nowhere is it more dangerous than in the case of medicine availability.

With increasing drug shortages putting more and more lives at risk, the government’s ostrich-like response to drug pricing is bewildering. This blind spot has existed through successive governments but has now reached catastrophic heights. The implications of this approach for stakeholders are terrifying.

Let’s take a look at who these stakeholders are, and how they lose. Let’s start with those at the heart of the entire effort — the patients. The absence of a steady availability of medicines at rational (ie, sustainable) prices forces patients to not only buy medicines in the black market at prices that are well above what local manufacturers are demanding, but they also carry a great risk of consuming medicines that may be spurious, even counterfeit.

Next is the government. By completely failing to address the issue, the government directly bears the blame for drug shortages, black-marketeering and the inevitable flooding of the market with spurious and counterfeit products that follows when a product is needed but not available. So, despite, or in fact because of, its efforts to control prices in such a myopic manner, it loses. As Justice Babar Sattar recently noted while hearing a case on medicine pricing before the Islamabad High Court, the costliest medicine is the one that is not available.

Pakistan’s approach to medicine regulation is catastrophic.

Our third stakeholder — the pharmaceutical industry — is haemorrhaging money and on the verge of collapse. International pharmaceutical giants Eli Lilly and Fresenius have recently joined a string of multinationals exiting Pakistan after years of losses. Unless it wishes to be left behind, Pakistan needs the world’s leading pharmaceutical companies to operate on its soil and continue providing access for patients to the latest medicines.

Yet, despite the fact that only a handful of MNCs are left and even local producers of generic medicines are finding it difficult to survive, the government seems happy pretending to slash the prices of medicines, spurring further shortages and willfully ignoring the catastrophe that is upon it. Therefore, pharma, too, is a loser in this arrangement.

In most countries with robust, export-led pharmaceutical sectors, such as India, pharmaceutical price regulation and quality regulation are distinct functions handled by independent regulatory mechanisms. The primary responsibility of the state regulator is to enforce quality, while pricing is largely limited to oversight of essential drug prices and ensuring a robust competitive environment.

In Pakistan, however, the regulation of pharmaceutical pricing and medicine quality lies with the same regulator — the Drug Regulatory Authority of Pakistan (Drap). This is an outdated and unproductive approach, which relies on artificially controlling drug prices and ignoring its core responsibility of ensuring drug quality.

With no visibility into their long-term pricing and diminished profitability at home, manufacturers are unable to make the investments required to achieve international certifications. For this reason, we do not have a single FDA-approved facility in Pakistan, while next door, India has over 100. Even Bangladesh, with a much younger pharmaceutical industry, has multiple FDA-approved facilities on its soil.

In addition to the detrimental implications for human health, there are clear economic losses associated with this stunted regulatory approach to pharmaceutical pricing. Pakistan is in desperate need of new avenues for exports. Since the early 1990s, the pharma sector has repeatedly been identified by consultants, including McKinsey, as not only critical to the country’s health security but also as a potential game-changer for exports. At no other time has the need for export-led growth and diversification been more obvious or urgent for Pakistan.

Can we turn this dire lose-lose situation into a win-win? After all, other countries in our own neighbourhood have done it remarkably well. With exports exceeding $25 billion, India has become a global giant based on this win-win approach, and Bangladesh shows all the signs of becoming the next emerging player in the pharmaceutical landscape. A miracle of growth in quality, exports and employment can occur in the health sector, but it will only happen when pharmaceutical companies have control over their own prices and a clear path to economic viability at home.

The writer is the executive director of the Pharma Bureau.

Published in Dawn, February 11th, 2023