Pricing formula, a vital need says Pharma industry chief | Sunday Observer

Pricing formula, a vital need says Pharma industry chief

President, Sri Lanka Chamber of Pharmaceutical Industry, Shyam Sathasivam
President, Sri Lanka Chamber of Pharmaceutical Industry, Shyam Sathasivam

A pricing formula ultimately benefits the consumers by ensuring that the brands they wish to buy will be available on the shelf, and making it sustainable to import it. It will also ensure that the quality of medicines will not be compromised, says President of the Sri Lanka Chamber of Pharmaceutical Industry (SLCPI), Shyam Sathasivam.

“Access to healthcare includes access to medicines. It is important that healthcare be affordable; much of healthcare is already very affordable in Sri Lanka. At present, around 80% of inpatient care and 50% of outpatient care is provided by the public system, while the private sector accounts for the remaining,” he said in an interview with the Business Observer.

“Capping prices on much-needed medicines for cancer and cardiovascular diseases, for example, in the name of making them affordable could result in their not being available for the people that need them. Many of those medicines have to be imported since we do not make them.”

Excerpts:

Q. Can you explain the current market issues of the pharmaceutical industry?

A. Overall, there is a lot about our system and the policies to be positive about and generally, our system has provided positive healthcare outcomes for the majority of patients.

A powerful advantage of our unified system is the ability of Government to draw upon substantial resources across the island to take action on a national scale. We have seen some highly successful, proactive examples in the recent past like the national anti-smoking campaign, and successful campaigns to eradicate polio and malaria.

However, we still face substantial challenges in terms of preventing and combating disease while ensuring optimal healthcare delivery. Funding will always be insufficient to deal with the scale of challenges faced by the healthcare sector.

Therefore, it is vital to adopt a systematic approach to healthcare, and I think it’s fair to say that those systems are broadly in place. But there is always more that we can do, particularly in terms of improving access to treatment for all Sri Lankans.

A pressing issue remains the establishment of a clear and transparent pricing mechanism for medicines and devices to ensure that the industry is able to sustain the import and delivery of quality medicines to the end-consumers.

All industry players are currently under inordinate pressure as, since March 2014, when all pharmaceuticals products were gazetted as essential items, the prices of most drugs have remained unchanged despite the devaluation of Lankan Rupee against the USD from 130 to the current 170 levels.

Around 85% of pharmaceutical products are imported and the exchange rate impacts significantly on the pricing. The first round of price cuts has already cost the industry 1.5 billion rupees in losses on already imported goods, with another round of price cuts being discussed. It remains to be seen whether the industry can sustain itself under such stress.

Q. The Pharma Chamber brought up some of the issues to the notice of the government recently. Has there been any progress since then?

A. We are in ongoing dialogue with the Health Minister and the NMRA on the concerns faced by the industry stakeholders.

Q. If there is no progress, what is your next step?

A. We believe that all parties involved in, ultimately want the same outcome – fairly-priced, reliable quality medicines with equitable availability.

It is the definition and achievement of these goals which needs to be considered with all parties listening with an open mind to the point-of-view of the others.

While we laud the intent of making medicines affordable to the general public of Sri Lanka, concern on the methodology adopted in selecting and ensuring quality and efficacious drugs as opposed to cheap drugs must be cautioned, and we are urging the NMRA not to compromise quality over affordability.

Q. With the price reduction in medicinal drugs, the public benefited immensely. If the old pricing system is bought back, will it be a disadvantage to the people? What is your opinion?

A. We do not necessarily support reverting to earlier prices, but rather moving towards fair prices. Again, this does not always translate into higher prices – some may come down further – but rather having a robust system to ensure that the pricing is sustainable, in order to avoid medicines ceasing to enter our market due to pricing challenges. As it is we have seen many key brands going off-market in the past 2 years.

Q. You have suggested introducing a pricing formula. How will it benefit consumers?

A. Reiterating what was mentioned before, a pricing formula ultimately benefits the consumers by ensuring that the brands that they want to buy will be available on the shelf, through making it sustainable to import. It also seeks to ensure that the quality of medicines available will not be compromised.

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 is 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 their not being available for the people that need them. Many of those medicines have to be imported since we do not make them.

Q. What is the size of the pharma industry in Sri Lanka? How many companies and people involved?

A. The pharmaceutical market is estimated at USD 400 million per year by the WHO, of which imports presently accounts for 85% (although local private healthcare players are partnering with the Government to ramp up local manufacturing capabilities).

There are 60 major importers who account for 90% of the private pharma industry and 800 varieties of medicines which are retailed across 3,400 pharmacies islandwide. The industry value chain directly employs over 60,000 with four times as many dependents.

Q. How should the pharmaceutical industry focus be changed along with the emerging health issues (eg. NCD, cancer) in the country?

A. Globally, the disease burden on countries and economies has been shifting to non-communicable diseases (NCDs) such as diabetes, cardiovascular diseases, cancer and lung-related diseases. Addressing the NCD burden will call for new and innovative medicines, including biologics, and new forms of treatment and therapies.

Today, there are more people living sedentary lifestyles that when combined with increased disposable income and greater leisure options, tends to impact negatively on overall health and wellness, as evidenced by the tremendous rise in Non-Communicable Diseases (NCDs) over the recent past.

Therefore, a holistic approach to medicine is becoming necessary, coupled with preventative awareness of fitness, dietary habits and avoiding toxins (such as the burning of plastics and polythenes) becoming more important.

Q. What kind of investments should be made to improve the industry and to provide more benefits to the people?

A. There are no quick fixes in the healthcare sector and the benefits of any alterations to healthcare policy tend to play over the medium-long term.

Nevertheless, one of the best areas to aggressively target would be the development of our diagnostics capabilities. In the healthcare industry, this is often referred to as the ‘Rule of Halves’: of those who are diagnosed with a disease, only half receive treatment from a qualified healthcare professional and again just half of these people achieve their treatment targets.

Unfortunately, the Rule of Halves does not end there: only half of this relatively small group actually achieve the desired outcome and live a disease-free life.

Essentially, there tends to be an exponential reduction in the number of people who receive treatment relative to those who require it, and ultimately, this is a problem of awareness.

If the public is more aware of what they can do to prevent illness through early diagnosis, parallel to investments to enhance our diagnostic capabilities, I believe that we as a nation can start enjoying the benefits of these investments fairly quickly. Early diagnosis can often pre-empt the need for treatment – which is significantly more complicated and expensive than diagnosis, therefore these investments will be money well spent.

Other investments need to be into upholding quality parameters, as we have been consistently urging the regulators and industry players alike. This can be in part by updating the value chain, in terms of storage conditions, research and development.

Q. What kind of training should be there to improve the job status of pharmacists and related staff? What needs to be done to improve educational facilities?

A. Investment needs to be made into positioning pharmacology as an attractive profession. A pharmacist is a person who serves as a vital bridge between the doctor and patient.

Therefore, there is a close relationship between community, pharmacist and public. With a wide range of new drugs used in medicine, including high-tech biological products and medical devices available in the market, pharmacy sales assistants should always be upgraded with up-to-date knowledge.

Q. With the improvement in technology and e-commerce, what change should the supply chain within the pharmaceutical undergo?

A. Globally we have already seen companies like Amazon disrupting traditional supply chains in the retail sector. Even in Sri Lanka, we have already seen innovation, with oDoc introducing virtual consultations, Healthnet delivering medicines to your doorstep with just a picture of your prescription, and Healthguard introducing a service to index outlet-wise availability of medicine through a simple Whatsapp message.

These innovations broaden the availability of medicine and access to top consultants to those who may not have had access previously. Consider, for example, somebody in Kurunegala who cannot access a certain brand, now being able to go online and find their required medicine, and have it delivered to their doorstep within 48 hours.

Out-station patients no longer need to travel to Colombo to consult particular specialists. Regulatory authorities should embrace these innovations and seek to work hand-in-hand to update procedures in order to facilitate today’s high-speed innovation.

Q. Some Sri Lankan companies have already set up operations in other countries as joint ventures to gain financial benefits. What is your opinion?

A. We are positive on this both ways, Sri Lankan companies expanding to other countries, and foreign companies expanding into Sri Lanka, as long as sustainable models are followed which benefit the countries within which they operate, and are not simply trading outposts.

Q. At a time when the Sri Lankan rupee is weakening against the US Dollar, how is the industry faring?

A. This has been touched on in detail above. This is a challenge to all price-controlled markets, particularly those dependent on imports. However, this is incrementally complicated in the pharmaceutical industry where there are 3,500 brands available.

Q. Any suggestions to the Government by the Chamber, for Budget 2019?

A. We have suggested few proposals to the government to consider in the upcoming budget. Among them are the Wellness Products. The Customs duty reduction on wellness products is suggested which are currently heavily taxed and therefore ill-affordable to consumers who would benefit greatly from them.

With regard to Medical Devices, Customs duty streamlining, where certain products (e.g. gloves, bandages, reagents) are still being taxed which is being passed on to patients. We also have proposed that the authorised distributors to be classified as SMEs and granted tax-exemption to make them viable.

 

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