ISLAMABAD: The new drug pricing policy, sent to the Prime Minister`s Office by the Ministry of National Health Services (NHS), calls for drug prices to remain frozen at their 2013 levels until June 2016, after which, the Consumer Price Index (CPI) shall be applied.

However, the prices of medicines that fall under the `hardship` category or those which become non-viable to market, can beincreased until2016.

A former member of Pakistan Pharmaceutical Manufacturing Association (PPMA) told Dawn that the process of `hardship`, i.e. increasing the price of a drug due to an increase in production cost, has never been transparent and provides bureaucrats the opportunity to negotiate with drug companies before approving a price increase.

Forseveralyears,the issue of drug prices has been a major topic of discussion across the country. Drug manufacturers have been asking for prices to be increased, while the government against increasing prices because it is a public issue and it can open the ruling party up to severe criticism.

Through a notification issued on Nov 28 last year, the NHS Ministry increased the prices of drugs by 15 per cent, but this increase was withdrawn the very next day when Prime Minister Nawaz Sharif took notice of the matter.

This sparked much-needed debate around the need for a drug-pricing policy, recommend ations for which have now been finalised and sent to the PM`s Office for final approval.

According to the recommendations, a copy of which isavailable with Dawn, the ministry has suggested that there be no interaction with representatives from pharmaceutical companies when price revisions were decided. It also stipulates that after 2016, there will be automatic annual revisions of drug prices based on the CPI, which is the rate of inflation announced by the State Bank of Pakistan every year.

Under the policy suggested by the NHS ministry, drugs have been divided into two categories; scheduled drugs that include the top 50 most commonly used drugs that treat conditions such as cancer, tuberculosis, hepatitis, HIV, Thalessemia and organ transplants, as well as biological and new chemical entities. All other drugs have been placed in nonscheduled category.

Pricing proposal Regarding the prices of new medicines such as new chemical entities (NCEs), the policy stipulates that they will be fixed by comparing prices of similar brands in India and Bangladesh.

If the originating brand of an NCE has not been marketed in India or Bangladesh, its maximum retail price shall be fixed equal to the lowest retail price in developing countries where drug prices are regulated.

The prices of generic NCE substitutes shall be fixed at 30 per cent less than the originating brand`s price, while the prices of NCE originating brands will be reduced by 30 per cent after hve years.

Automatic price increase Manufacturers and importers may increase their existing maximum retail prices of scheduled drugs up to 50 per cent of the CPI (with a 4 per cent cap) and maximum retail prices of non-scheduled drugs up to 70 per cent of the CPI (with a 6 per cent cap) once in any financial year. Companies have to inform the government about price increases atleast15 days before implementation.

Formula for low-priced drugs Drugs whose prices are verylow will be considered nonscheduled drugs and their prices can be increased. All medicines valued at having Rs 2 per tablet or capsule, Rs 2 per 5ml of syrup, Rs 2 per 1g of cream, ointment and gel, Rs 2 per patch, Rs 4 per sachet and Rs 10 per injection would be considered low-price drugs.

Exporters The locally manufactured products approved for export to developed countries such as the USA, UK, EU countries, Japan or Australia shall be exempted from price control in the local market to encourage manufacturing and export.

The policy also stipulates that a procedure shall be devised to review the maximum retail prices of drugs which have become non-viable to market.

Prices will be fixed on the basis of competitive manufacturing costs and will be uniform for all companies.

Fines for over pricing The policy board has also decided to amend the law so that amounts overcharged by the industry, hospital or retailer, plus penalty at the rate of 20 per cent per annum, will be deposited with the government treasury.

Ayesha Tammy Haq, executive director of Pharma Bureau a body of multinational pharmaceuticals in Pakistan told Dawn that she had not received a draft of the policy, but had heard various rumours.

`There should be a formula for the price increase. We do not want to increase prices without a genuine reason,` she said.

`Price increases under `hardship` are always controversial. Under the PPP government, medicine prices were increased by using the hardship formula but all of those cases were later taken up by NAB and are now under investigation,` she said.

NHS Secretary confirmed that the draft of new drug pricing policy had been sent to the PM`s Office, saying that details would be shared once the policy was approved.