The cabinet is not satisfied with the drug pricing mechanism

Islamabad:

The federal cabinet has observed that the drug price regulatory mechanism has become ineffective and exploitative amid credible allegations of endemic corruption, with the health ministry labeling the 2018 Drug Pricing Policy unfair as it ensured “extraordinary profits” for the pharmaceutical industry.

These concerns were shared by cabinet members in a meeting on December 13, 2023, while considering the approval of the hike in maximum retail prices (MRPs) of 262 drugs in the Hardship category as recommended by the Drug Pricing Committee (DPC) in the 56th and 57th meetings.

The ministers were of the view that the pharmaceutical industry was for profit and not people-centred. They also lamented the poor performance of the Drug Regulatory Authority of Pakistan (Drap) which did not play its role as required by law.
Expressing concerns that the drug regulatory machinery had remained ineffective and exploitative and credible allegations of endemic corruption, cabinet members stressed the need to deregulate the pharmaceutical sector.
While discussing the method of increasing drug prices in phases and to avoid any disruption in the market, the cabinet members stressed the need to distinguish priorities between life-saving drugs and other drugs.

The health ministry informed the cabinet that the Drug Pricing Policy 2018 allowed for the review of hardship cases once in three years with certain conditions.

A minister suggested that the rates should be reviewed and set at the DPC or ministry level rather than the cabinet.
The health ministry explained that World Health Organization (WHO) guidelines for categorizing essential and non-essential drugs are followed, adding that the policy council was mandated to recommend essential and non-essential drugs to the cabinet for purpose of use and generic name.

The cabinet observed that the import of drugs as well as the import of raw materials for the manufacture of drugs put a heavy burden on the foreign exchange and that the problems of hoarding, smuggling, double pricing and shortage of life-saving drugs needed serious attention.

The cabinet was informed that following the recommendations of the Economic Coordination Committee (ECC), various regional models were being studied to improve the operational governance of the sector, adding that apart from the helpline portal, an application to register complaints had been launched.

While postponing the approval of the increase in MRPs of 262 drugs in the Difficulty Category, the federal cabinet directed for setting up a committee for a comprehensive market analysis so that a well-informed and fair decision can be taken on fixing the prices of the drugs.

The committee comprising finance, health, financial affairs, privatisation, inter-provincial coordination, ministers any other minister appointed by the prime minister and provincial health ministers has been mandated to make its recommendation to reform the process.

Following the directive of the cabinet, the committee met on 11, 19 and 30 January 2024. After thorough discussions, the committee advised the health ministry to submit its proposal based on the recommendations of Drap’s DPC, directly to the federal cabinet.
The ministry, in view of the current economic situation, has sought Cabinet approval to increase the MRPs of 262 drugs in phases – the MRPs of 17 drugs in short supply in the first phase and 37 in moderate shortage in the second phase.

It also recommended increasing the prices of the remaining 208 drugs in the third phase.
The cabinet considered the summary and also decided to approve the increase in MRPs of 146 essential drugs, with their generic names, as per the WHO criteria.

Meanwhile, the Ministry of Health will submit its proposals to amend the Drug Pricing Policy, 2018, to improve fairness and transparency in drug pricing, to be people-centric and to delegate pricing decision-making of medicines at the ministry or DPC level.