Drug regulation

Drug prices in Sindh have soared after an official 15 percent price increase by multinationals has led to a shortage of supplies. The price of some medicines is reported to have gone up by 70 percent as pharma manufacturers and sellers are fleecing patients. The price hike in medicines led to opposition senators walking out of the Senate, and the situation has been made even worse by the ineffective action taken by the federal government and the Drug Regulatory Authority Pakistan (Drap). While Health Minister Saira Tarar has taken notice of the matter, there has been little change on the ground. This has raised questions over whether the federal government should have charge over regulating drug prices. The regulation of drugs and their prices was one of the more controversial subjects after the 18th Amendment omitted ‘Drugs and medicines’ from the concurrent list. Drap was created as a compromise between provinces as the federal government retained control of regulating medicines. The authority has come under criticism from Sindh Chief Minister Qaim Ali Shah for being unable to control medicine/drug prices. The Sindh CM has expressed his helplessness on taking action on the matter as the subject remained under the control of the federal government.

Can provinces do a better job of regulating drug prices? The answer is unclear. The current price increase has not been approved by the federal government. Instead, it is the product of a tussle between the federal government and the pharma industry. In 2014, the health minister promised that drug prices would not be increased before July 2016 via the Drug Pricing Policy 2015. The Pakistan Pharma Manufacturers Association challenged the price freeze in the Sindh High Court. It was only after the SHC suspended the freeze on drug prices in 2015, that multinationals used the SHC verdict to defy the government’s directive to push prices up. Will individual provinces be able to put up more resistance? That seems rather unlikely. Instead, the SHC verdict – which has cited free market logic – leaves everyone in a situation where trying to implement price controls on drugs goes against court orders. The Punjab government has directed district administrations to act against the price increase but there are limited legal grounds to do so. While Pakistan’s pharma industry has been vocal in asking for deregulation, the fact is that the prices of medicine in Pakistan are already twice as high as other regional countries. Senate Chairman Raza Rabbani has questioned whether the SC can be allowed to ‘protect’ drug cartels. Drap had been trying to get big pharma to agree to a major decrease in drug prices when the price hike was announced. Individual provinces would probably have less leverage with pharmaceutical companies than the federal government. The threat of suspending the licence of pharma marketing companies poses its own challenge as it would merely heighten the drug shortage, in turn pushing prices further up. The question, then, is not whether the federal or provincial governments have the power to regulate drug prices. Instead, it is what mechanisms can be put in place to control prices. Right now, the government is in a difficult position.