Imagine a world with no political expediency. While it may be hard to do, it is also a nightmare that sooner or later must be dealt with. The Federal Governments recent decision to reverse the hike in drug prices has been much appreciated by populist quarters. However, this decision poses real dangers to the survival of local healthcare industry, ones that could result in acute shortage of life saving drugs in the coming months.
Talking to BR Research, Khawaja Javed Akbar, Secretary-General of Pakistan Pharmaceutical Manufacturers Association (PPMA) said the industry is shocked by the lack of will shown by the current government to take politically difficult decisions. Behind closed doors, government representatives acknowledge that input costs have been increased by more than 94 percent since 2001, but are afraid of a public backlash given the soaring inflation in prices of goods and services elsewhere.
Clearly, the government is in no mood to add another fight to its list of political battles, but the mood in the pharma industry suggests the politicos may be playing with fire. Other sources in the industry argue that "the rupee has seen more than 100 percent depreciation against the dollar since prices were frozen back in 2001; for an industry which imports more than 90 percent of its inputs, the price control regime has become completely unsustainable, with many manufacturers at the risk of being driven out of business".
In a meeting with the industry representatives on November 18, the Ministry of NHS agreed to a 15 percent price hike for 45 percent of products, which excluded life saving medicines. However, afraid of media reports carrying "pharma bomb" as their 9 oclock headlines, the Federal Government reversed the decision promptly, baffling the industry and consumers alike.
While the lack of will shown by the government in dealing with Pakistans "pharma problem" may be symptomatic of a larger problem with our political system, the fact remains that price controls cannot be kept in place indefinitely. Using price controls suffocates an industry responsible for development of life-saving drugs, while discouraging investment in R&D that could potentially bring down total Medicare and treatment costs in the long term.
According to a study by Battelle Memorial Institute, "the prices American public pays for prescription drugs have been significantly higher than those paid by citizens of any other developed country--and have been so for years". But these higher prices allow the industry to invest in the development of new drugs.
"US pharmaceutical industry also accounts for 36 percent of worldwide research and development of medicinal drugs." Such research is expected to "save" more than $750 billion in treatment cost for the patients over the next 25 years, by rendering hospitalization for diseases such as Alzheimers and arthritis unnecessary.
And herein lies our problem: by taking the populist route to deal with price controls, the Federal Government has proven when it comes to dealing with the issues concerning long-term well-being of this nation; political expediency tends to take precedence over sound policymaking.
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