Corruption in pharmaceutical sector

High healthcare cost in Pakistan is becoming a major financial burden on millions of households in the country. Pakistanis, on average, lose an equivalent to 49 years of healthy life per 1000 population due to ill-health and early life deaths. Behind these gloomy numbers lie the distressing stories of millions of people who cannot afford to pay high medical costs and are left to cut their lives short. This is not surprising for a country where public health delivery is deprived of quality, private healthcare is exorbitant and disparate, and national health insurance system lacks population outreach.

The recent recurrent undue hikes in drug prices in Pakistani market have further aggravated the public outcry at the state of healthcare affordability. The price surge, which has been witnessed over multiple phases across the retail outlets all over the country, is hitting the middle and low-income population the hardest. Many patients of diabetes, cardiac diseases, hepatitis, cancer, and gynecological-related problems are left with no choice but to pay out of pockets to buy medicines at over-inflated rates or else endanger their lives.

Transparency International Pakistan (TI-Pakistan) actively intervened in the issue after its Advocacy & Legal Advice Centre received a number of complaints from general citizens regarding the substantial increase of prices of drugs. It carried out a detailed research into the current Drug Pricing Policy to identify the loopholes in the pricing mechanism which has been adopted by the Drug Regulatory Authority of Pakistan (DRAP).

TI-Pakistan discovered that the DRAP not only raised their prices three times in a row within a period of 12 months, but also revised the pricing policy to manipulate the price increase. As a result, in the pricing formula the mark up on the manufacturing cost increased five times from 70pc in 2015 to 240/355pc in 2018 even though the manufacturing cost had already accounted for the effect of inflation and devaluation in the formula. The increased factor multiplied the retail price of medicines of various categories by several folds.

The exploitation of the drug pricing formula within a short period to surge the drug prices is certainly linked with corruption in the pharmaceutical sector and the strong influence of the corrupt mafia to extort unfairly high prices from the ordinary people. Due to the absence of monitoring mechanism in the country to control illegally high drug prices and penalize the violation of drug policies, it is the ordinary citizen who has to pay the cost of the corruption in the pharmaceutical sector.

In an endeavor to break this cycle of exploitation and corruption in the pharmaceutical sector, TI-Pakistan undertook the process of probing with DRAP related to the recent increase in prices and the manipulation of the pricing formula by the pharma companies.

Throughout its involvement, TI-Pakistan actively pressed the DRAP, Ministry of National Health Services, Regulations and Coordination, Government of Pakistan, and Pakistani media while also calling the attention of other key authorities including National Accountability Bureau (NAB) and Supreme Court of Pakistan. TI Pakistan also gave an interview to the media which was published in the leading newspaper of Pakistan.

As a result of TI-Pakistan’s consistent efforts to keep surfacing the issue and questioning the concerned authorities, the Government of Pakistan finally imposed a 75 percent cap on the increase in drug prices.

By effectively advocating for putting a check on the illicit surge in drug prices, TI-Pakistan has not only put a check on illegally ever-increasing drug prices in Pakistan but also compelled the regulatory bodies to bring forth effective monitoring reforms to control pharmaceutical corruption and regulate the drug pricing mechanism in the country.

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