In the face of credible allegations of widespread corruption, the federal cabinet has noted that the mechanism governing drug prices has become exploitative and ineffective. The health ministry has labeled the 2018 Drug Pricing Policy as unfair because it guaranteed the pharmaceutical industry “supernormal profits.”
During a meeting on December 13, 2023, the cabinet members expressed their concerns with the acceptance of the rise in maximum retail prices (MRPs) of 262 pharmaceuticals under the Hardship Category. The DPC had proposed these changes during its 56th and 57th meetings.
The ministers believed that the pharmaceutical business was more concerned with making money than with serving people. They also bemoaned the Drug Regulatory Authority of Pakistan’s (Drap) subpar operation and failure to carry out its legal obligations.
The cabinet members stressed the need for deregulating the pharmaceutical industry, voicing concerns that the system for regulating medications had remained exploitative and ineffectual in spite of credible charges of widespread corruption.
The cabinet members emphasized the significance of setting priority for life-saving pharmaceuticals vs other drugs while talking about how to raise drug costs gradually and prevent any market disruption.
The cabinet was notified by the health ministry that, under the Drug Pricing Policy of 2018, hardship situations could be taken into consideration once every three years under specific guidelines.
A minister suggested that rather than in the cabinet, the costs should be examined and decided upon at the DPC or ministry level.
The health ministry clarified that the World Health Organization (WHO) guidelines were being adhered to in order to classify drugs as essential or non-essential. It further stated that the policy board was tasked with recommending drugs to the cabinet based on their intended use and generic name.
The cabinet noted that the import of pharmaceuticals and raw materials for their manufacture placed a significant strain on foreign exchange and that issues with drug hoarding, smuggling, double-pricing, and shortages of life-saving medications required careful consideration.
The cabinet was informed that, in accordance with the recommendations made by the Economic Coordination Committee (ECC), a variety of regional models were investigated in order to enhance the sector’s functional governance. In addition, an application was introduced in order to register complaints outside of the helpline portal.
While postponing approval of raising the MRPs of 262 medications under the Hardship Category, the federal cabinet ordered the formation of a committee to conduct a thorough market analysis in order to make an equitable and well-informed conclusion about setting medicine prices.
The committee, which included ministers chosen by the prime minister in the areas of finance, health, economic affairs, privatization, interprovincial coordination, and provincial health ministers, was tasked with providing recommendations for process improvement.
As per the direction from the government, the committee convened on January 11, 19, and 30, 2024. Following careful consideration, the committee recommended that the health ministry submit its proposal—which was based on the DPC of Drap’s recommendations—directly to the federal cabinet.
A gradual rise in the MRPs of 262 pharmaceuticals was requested by the ministry, with the consent of the cabinet due to the current economic climate. The first phase included 17 drugs that were in low supply, while the second phase included 37 drugs that were in moderately short supply.
Additionally, it suggested raising the costs of the 208 medications that are still in the third phase.
The cabinet approved the rise in the MRPs of 146 essential medications together with their generic names in accordance with the WHO criterion after taking the summary into consideration.
In the interim, the health ministry will present its plans to modify the Drug Pricing Policy, 2018 in order to enhance equity and openness in the process of setting drug costs, make it more patient-centered, and transfer drug pricing decision-making authority to the ministry or the DPC level.
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