The Sri Lanka Chamber of the Pharmaceutical Industry (SLCPI) had rejected reports that it was opposed to price control of drugs by the Government but pointed out that unreasonable control measures would be detrimental to consumers.
It said (in an extreme situation), reputed suppliers will withdraw from the Sri Lankan market due to unattractive market conditions, resulting in a shortage of essential drugs, while competition will reduce due to a lesser number of suppliers, leading to price increases, and thus drastically increasing the state health care spend.
Furthermore, it said in a statement to rebut reports that it was opposed to price control, there will be severe ‘out of stocks’ situation, creation of a ‘Grey’ market, operational issues in implementing and monitoring of price control, and many retail pharmacies will be out of business due to unavailability of products, and the businesses will become unviable, leading to unemployment and resulting unrest
“The ultimate loser from all this would be the patient. Therefore regulation of pharmaceutical prices is a pointless exercise because they have remained stable in the country over the last 10 years. The industry is not against price regulation, our concern is the imposition of unrealistic trade mark ups or margins which will have drastic effect on suppliers and many stake holders of the healthcare delivery system,” the statement said.
The chamber said price regulation is counter-productive to the excellent health services that are currently available in Sri Lanka. In the current system, the patient is given a choice i.e. free health care from the state, ample supply of generic products, which are supplied by the SPC and local manufacturers; and people who do not take advantage of this service for whatever reason could purchase from the private sector at reasonable prices.
The chamber said the 65% margin discussed in various media reports is the recommended approved formula prior to removal of price control. “This includes cascading mark ups (and NOT margin) from a hypothetical CIF of Rs. 100. The 65 % was on the total value chain up to retail, which includes Importer, wholesaler, and the retailer,” it said.
Since the implementation of this scheme in April 1989, Sri Lanka has gone through a severe escalation of costs in the following areas – regulatory; scientific and medical education; professional information services; operational/infrastructure/personnel and staff costs.
It said under the present system, where demand and supply forces act on a free and open market, prices are controlled by economic forces which not only allow a choice to the patient, but are knitted into the fabric of the country’s healthcare system.
This very reason, the chamber pointed out, may cause pharmaceutical prices to further escalate under price regulation and for high quality innovator drugs to become scarce in the market.
It reiterated that the prices of essential pharmaceuticals rather than moving upwards has come down, and in some cases quite drastically through the years and this is mainly because of the healthy competition that is currently prevailing in the market, epecially with SPC pricing creating a bench mark. |
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