Cabinet decides to expand buyback agreements for locally produced medicines to boost industry

Cabinet Spokesman and Minister Vijitha Herath 

• New plan expects to offer contracts to local medicine manufacturers to obtain medical supplies for one year, without impacting companies already entered into long-term agreements with SPC
• Aims to cover 40% of medicine requirements through locally sourced products

The Cabinet of Ministers at their meeting on Monday approved entering into a buyback agreement with local pharmaceutical manufacturers for the supply of medical supplies, aiming to further support and prioritise domestic production.

The move extends a strategy first approved in 2013 to encourage local medicine producers and strengthen the State Pharmaceuticals Corporation (SPC).

Under the new plan, local medicine manufacturers will be contracted to supply medical supplies for one year, without impacting companies that have already entered long-term agreements with the SPC. 

The Health Ministry’s Medical Supplies Division has identified 49 local medicine manufacturing companies capable of supplying 454 different medical items, including essential medicines.

A dedicated pricing committee has also been appointed to oversee fair pricing for these locally produced supplies. 

“This expansion is expected to significantly increase the share of locally produced medicines in the public health system,” Cabinet Spokesman and Minister Vijitha Herath said at the post-Cabinet meeting media briefing on Tuesday.

Initially, the buyback agreement strategy, introduced in 2013, covered 20% of the country’s medical supply needs. Now, with the support of the Health Ministry, this is set to double, aiming to cover 40% of medicine requirements through locally sourced products. 

The expansion follows an approval in 2018 that allowed for the continuation of buyback agreements with local producers for up to 15 years, ensuring stable demand for their products.

“By leveraging capabilities of local manufacturers, the Government aims to ensure a consistent supply of affordable, high quality medicines, while fostering the growth of the domestic pharmaceutical sector,” he added.

Prime Minister Dr. Harini Amarasuriya, in her capacity as Health Minister, presented the proposal to the Cabinet.