Pakistan Drug Price Hikes, Production Cutbacks

After price hikes in January, April and July (Marketletter August 12), drugs in Pakistan are now the most expensive in the region, says the Independent Network for the Use of Rational Medicines, an Islamabad-based non-governmental organization which is lobbying for an essential drugs act.

Prices have risen as much as 113% in the last six years compared with market growth of 25%, and rose 20%-38% right after the Bhutto government imposed a 5% general sales tax in this fiscal year's budget. The Network says "the high growth rate outpaces the country's rate of population growth, which should mean that people's access to modern medicine is fast growing," but "in reality, the situation is exactly the opposite." It concludes that drugmakers have been boosting their profits by selling fewer drugs at higher prices.

Pakistan's drug industry was deregulated in 1993. It was allowed to set its own prices for drugs on a decontrolled list, with Ministry of Health permission. However, the Network feels the Ministry "has no will or mechanism to ensure the implementation of this." It says about 60% of the country's 130 million people cannot afford drugs, and that while the poor depend on state health care, money for drug purchases by state hospitals and clinics is shrinking. A Karachi wholesaler said prices have risen as much as 38% under the new rate lists issued by drugmakers at the end of July. There have also been two devaluations of the rupee, and companies have cut production targets by about 20%, disrupting supplies of essential and non-essential drugs. Some drugs are now sold on the black market.