Price controls, falling rupee push pharma industry to withdraw 11 drugs from market

• Phama chamber says importing them has become commercially unviable amid rupee depreciation
• Notes with concern that biggest setback is for patients
• Says govt’ has failed to address the issue with a fair and proper pricing mechanism
• Health Ministry introduced price ceilings on 48 drugs in 2016; a second round of price caps expected 

The Sri Lanka Chamber of Pharmaceutical Industry (SLCPI) yesterday announced the withdrawal of 11 drugs from the local market due to the price controls slapped by the government. The pharma chamber said despite the persistent appeals, the government has failed to address the issue with “a fair and proper pricing mechanism” in light of the sharply depreciating rupee against the US dollar.

 “... both the Ministry of Health as well as the National Medicines Regulatory Authority (NMRA) have remained wilful in depriving the industry of adjusting pricing of products as per the prevailing exchange rate,” SLCPI said in a statement. 

The rupee has depreciated 11.3 percent so far this year and since the new government came into power in 2015, the rupee declined to Rs.171 from Rs.131 to the US dollar.

Sri Lanka imports 85 percent of its medicinal drug market, with 50 percent of the supply met through private sector importers.

“SLCPI notes with distress that discontinuation of pharmaceuticals implicates multiple parties such as the manufacturing firms, patients, providers, pharmacies and the health authorities. 

The biggest setback would be for the patients who are adversely affected if the drug product that provided excellent therapeutic benefits and resulted in positive health outcomes is no longer available in the market,” the statement added. The chamber said some of the drugs in the list of 11 were withdrawn in 2016 due to the price ceiling and in the absence of a price formula.

A gazette notification signed by Health Minister Rajitha Senaratne was issued in 2016 reducing the prices of 48 pharmaceutical drugs, mainly prescribed for non-communicable diseases such as diabetes, high blood pressure etc. under the National Drug Regulation Authority Act No. 05 of 2015. 

Although price controls on pharmaceuticals have been discussed since the 1970’s, their actual imposition was first done in October, 2016, through this gazette. 
It is also expected that a second phase of price ceiling will be implemented in the near future on expensive drugs for treating tumours, benign lumps, and cancers.
According to the Health Minister Senaratne, price controls will make important drugs more affordable and will push importers to expand their pharmaceutical manufacturing capacities locally. 

However, the unintended consequences of price controls, despite their much hyped benefits, would be shortages of goods and increase in low quality goods in the market place.