SLCPI calls for transparent pricing mechanism on pharmaceuticals

• Prices have been frozen since 2014 while the currency has devalued over 24% leading to great losses for the industry

The Sri Lanka Chamber of Pharmaceutical Industry (SLCPI) is urging the Ministry of Health to establish a fair and transparent pricing mechanism which factors the impact of US dollar appreciation against the rupee, similar to the pricing formulae applied on petroleum products and domestic LPG.  

A fully resourced quality assurance laboratory, a primary prerequisite in other countries that could test the quality of all pharmaceuticals imported into the country and can-do post marketing surveillance, is the need of the hour. The SLCPI cautioned that in the absence of such stringent quality assurance, imposing price ceilings for pharmaceuticals arbitrarily will pave the way for poor quality products to be sold, while the more efficacious medicines that are deemed vital will soon be economically unviable to import. While the SLPCI lauds the intent of making medicines affordable to the general public of Sri Lanka, concern over the methodology adopted in selecting these molecules and ensuring quality and efficacious medicines as opposed to cheap medicines was cautioned, with the SLCPI urging the Minister and NMRA at a meeting held last week not to compromise on quality over affordability. 

The urgent need of a pricing mechanism to address the impact of continuous rupee depreciation was highlighted by SLCPI, stating that price controls in the absence of a proper mechanism was unfair and not sustainable, reminding that Section 118 (4) of the NMRA Act clearly states: “The Minister shall, in consultation with the Pricing Committee, the Consumer Affairs Authority and all stakeholders, and taking into consideration all other relevant factors, prescribe a pricing mechanism.” 

In order to streamline the pharmaceutical pricing mechanism procedure and to bring about a greater degree of transparency as well as objectivity, an expert body that comprises all relevant stakeholders from Government as well as private pharmaceutical industry should be urgently constituted, said the SLCPI, who went on to note that despite several meetings convened with Ministry of Health and NMRA and proposals for pricing submitted, no action has been taken as of now.

The call comes on the heels of the Government’s intent to reduce the price of a further 25 molecules including medicines and devices used for diabetes control, antibiotic injectables and oncology medicines. The SLCPI notes that of the 48 molecules that are already within the price ceiling, majority are for non-communicable diseases, which account for over 70 % of deaths in Sri Lanka. 

The SLCPI pointed out that the Health Ministry and NMRA must immediately address the inventory at hand before imposing further price controls overnight as done in October 2016. Pharmaceuticals are categorised by the Consumer Affairs Authority as essential and to ensure seamless availability importers hold inventories of approximately three to four months of stock at their warehouses. 

“As pharmaceuticals are considered an essential commodity, we are compelled to keep a minimum of three to four months of stock and due to devaluation of the rupee and the proposed control of prices, holding stocks of medicines which are subject to the proposed price reduction, would cause significant losses to the stakeholders,” noted the SLCPI.

The industry mentioned that the write-down of losses on inventory at hand cannot be absorbed again having borne a colossal loss of around Rs. 1.5 billion in the first round of price controls. These losses were entirely borne by the manufacturers and importers, who reimbursed all distributors and retailers, which will not be the case in the future, leading to much difficulties for the smaller players. The SLCPI asserts that access to healthcare includes access to medicines. 

“It is important that healthcare be affordable; much of healthcare is already very affordable in Sri Lanka. Currently, around 80% of inpatient care and 50% of outpatient care are provided by the public system, while the private sector accounts for the remaining. Capping prices on much-needed medicines for cancer and cardiovascular diseases for example in the name of making them affordable could result in unavailability and poor quality for the people that need them. Therefore, a fair and transparent pricing mechanism must balance affordability with availability so that the patients receive the benefits of both,” stated SLCPI

The SLCPI, founded in 1961, represents over 60 members who account for over 80% of the private pharmaceutical industry across the value chain from manufacturers, importers, distributors and retailers, providing Sri Lankan patients with 800 molecules from 364 manufacturers from across the world. 

The industry value chain has over 60,000 direct employees and over 240,000 indirect employees. Major corporates in the local industry such as Hemas Pharmaceuticals, Sunshine Healthcare, CIC Lifesciences, Baurs Healthcare and George Steuarts Healthcare are among the members. SLCPI is an affiliated chamber of the Ceylon Chamber of Commerce.