Pakistan pharma industry opposes proposal to alter the drug pricing formula
Pakistan’s pharmaceutical manufacturing industry has expressed concern over a federal minister’s directives to amend the existing drug pricing mechanism, warning that sudden changes could cripple the industry, disrupt medicine supplies and undermine efforts to ensure the availability of affordable medicines.
Industry officials said the existing Drug Pricing Policy, 2018 was endorsed by the Supreme Court and was developed by the government through a thorough process involving consultations with stakeholders, rather than by any individual or small group.
Federal Minister for Economic Affairs and Establishment Division Senator Ahad Cheema recently directed the Ministry of National Health Services and the Drug Regulatory Authority of Pakistan (DRAP) to urgently revise the regulatory framework governing drug pricing. The proposed changes include amendments to the Hardship Policy and the composition of the DRAP Policy Board, with a focus on protecting consumers from unjustified price increases while ensuring the availability of essential medicines.
Under the existing pricing policy, the government determines and regulates the prices of life-saving medicines, including those covered under hardship cases, where a medicine becomes too expensive to manufacture or import at the price currently allowed by the government.
Essential medicines account for roughly 40 percent — or around 500 molecules — of all medicines marketed and sold in the country, indicating that the government continues to exercise significant control over medicine pricing.
The pharma industry said repeated government interventions and changes to pricing policies create inconsistency and hinder the industry’s performance.
Industry officials urged the authorities to allow existing pricing policies, including the hardship mechanism, to remain in place for a longer period to deliver the desired results, including the availability of affordable medicines and higher exports.
They said the existing pricing policy provides a transparent mechanism for revising prices of essential medicines and follows international standards.
Under the policy, the government allows a maximum price increase equivalent to 70 percent of the annual Consumer Price Index (CPI) inflation rate when revising medicine prices.
Price revisions are also made after benchmarking the prices of the same molecules in neighbouring countries, including India, Bangladesh and Sri Lanka.
Accordingly, authorities revised the prices of essential medicines by a maximum of 4.9 percent in fiscal year 2026, equivalent to 70 percent of the 7 percent CPI inflation recorded during the year. The increase was kept below corresponding prices in neighbouring countries.
The pharma industry said this demonstrated that the pricing process remained transparent, with the government not allowing prices to exceed levels at which medicines are available in regional countries, despite higher production costs in Pakistan.
Industry officials also pointed to India, saying the country had maintained consistency in its pricing policies and deregulated the prices of a majority of medicines. They said this helped India achieve pharmaceutical export earnings of close to $30 billion in 2026, almost equivalent to Pakistan’s total export earnings in FY26.
The industry said Pakistan’s pharmaceutical manufacturing sector had a net profit margin of around 3 percent some two years ago, before the government introduced its 2024 deregulation policy allowing manufacturers to set prices for non-essential medicines.
Following deregulation, profit margins have improved to around 10 percent, according to an industry official.
Industry officials further argued that pressure on pharmaceutical companies’ profit margins due to what they termed “unnecessary government interventions” could compromise medicine quality.
They also pointed to the departure of a large number of multinational pharmaceutical companies from Pakistan in the past, attributing it to inconsistent policies.
According to industry officials, several other sectors, including banks, oil and gas marketing companies and fertiliser manufacturers, were earning higher profit margins than the pharmaceutical industry.
They argued that pharmaceutical companies were “just doing business” and needed to earn profits to reinvest in the industry, increase the availability of affordable medicines, expand production lines and boost exports.
The industry also said deregulation of non-essential medicines had increased competition among pharmaceutical companies over prices and quality.
“Competition always keeps a check on pricing and quality of medicines,” industry officials said, adding that patients remained the biggest beneficiaries of competition among pharmaceutical companies.
Copyright Business Recorder, 2026