Although food and clothing have previously been identified as the individual’s basic needs, it is clear from the health sector reports that medicines are also now one of those basic needs.
Medicines are just as crucial to human life. Although healthy resources are a great benefit, there is an urgent need for medicines and food as more and more communicable and non-communicable diseases are in the country. The fact that the Government allocates a lot of money on medicines after fuels prove this to be true.
For almost two years, every country, including Sri Lanka, has been suffering from the Covid virus. It is correct to say that the pandemic was a global catastrophe.
The collapse of a country’s output is the beginning of a series of economic crises. The Sri Lankan economy also suffered a massive collapse, and many products came to a standstill due to the shortage of raw materials for many products.
As a result of the Covid pandemic, even locally made medicines had to be discontinued. There is indeed a shortage of medicines in the country at present. That is not to say that all medicines are in short supply. Some medicines may be available for some time, even if they have been in short supply. These conditions are likely to get worse over time. These shortfall periods are prolonged and will primarily affect production.
Various factors contribute to the emergence of such situations, and they are also interrelated. One of the reasons for this is the shortage of foreign exchange in the country. At present, almost all the banks are facing a severe dollar deficit. Banks are reluctant to comply with letters of credit for importing medicines, as all imported medicines are paid in US dollars. Banks delay issuing letters of credit until they have enough dollars. The result is an unplanned import of medicines in dollars to meet the country’s needs.
Supply chains
Another factor contributing to the shortage of medicines in the country is the difficulty in maintaining the average supply level due to the severe impact of the Covid pandemic on all manufacturers and supply chains. Late-payments-affected delivery disruptions are also a factor.
The API price of active pharmaceutical ingredients, the most crucial factor of any medicine, has risen sharply during the pandemic and other associated costs. It has been realised that pharmaceutical manufacturers cannot profit by exporting to Sri Lanka as it is impossible to increase the maximum retail price (MRP) of medicines in the country due to Government regulations. High-quality manufacturers are aware of this situation to a greater extent, which is one of the main reasons for the shortage of medicines in the country.
The pharmaceutical trade in Sri Lanka is regulated by the National Medicines Regulatory Authority. Due to various reasons, such as the restrictions imposed by the health sector during this pandemic, a shortage of health sector staff has existed. For instance, the National Medicines Regulatory Authority activities have come to a standstill because of a lack of health sector staff.
Due to the supply, problems have been exacerbated and drug importers have difficulty obtaining and updating drug registrations and obtaining permits for imports from this authority. This is also one of the main reasons for the shortage of medicines.
At present, all essential medicines are under price control from October 2016. But this has been done without a proper pricing mechanism. The function of a pricing mechanism is to adjust the price of a commodity when key inputs such as exchange rate, fuel, interest and inflation change.
But this has not been done by the regulator throughout the past 5 years. In some price-controlling countries, effective pricing mechanisms are in place to enable the pharmaceutical industry to operate without loss.
Essential medicines
Today the price of essential medicines is set at 194 rupees per dollar. Therefore, it takes a considerable amount of time to adjust the price to the official price of 203 rupees. By now, when the exchange rate is set between 205 and 240 rupees, importers tend to reduce the import of essential medicines to minimise their losses. It also has a direct impact on the shortage of medicines.
It could be pointed out whether the price increase of medicines is one of the main problems in the country at present. The simply given answer for this is that if the prices do not increase, there will be no medicines then. The current price is controlled and regulated at 194 rupees per dollar. By now, the dollar’s value is 203 rupees, and allowing the dollar to float will significantly increase it. This is a difficult situation for any industry to bear.
Medicines will not be imported in the future if the maximum retail price of the medicine is not allowed to adjust to exchange fluctuations. As more than 85 percent of the medicines used in the country are imported, this will have an immediate and irreversible impact on the entire population’s health.
The pharmaceutical industry has always prioritised the needs of patients. As a result, the industry opposes unregulated price increases and realises the injustice to patients.
The pharmaceutical sector proposes a fair and easy-to-implement pricing mechanism. Rising costs and exchange fluctuations should be taken into account, but patients’ well-being should still exist at its core.
The pharmaceutical industry has taken legal action against such a pricing mechanism. Accordingly, the court has directed the authorities to discuss the matter with the stakeholders and come to such a mechanism. Unfortunately, the importers have not yet been consulted, and no mechanism has been put in place.
As the medicine prices are controlled, when considering whether all pharmaceutical brands should be of the same quality or not, the only way to give such assurance is to have all the medicines registered at an accredited laboratory, followed by a random analysis of market samples.
The pharmaceutical industry says that such laboratories do not still exist in Sri Lanka, which is why the authorities do not carry out such tests. It is no secret that counterfeit drugs are rampant in some countries due to price controls and the inadequate analytical capabilities of Government authorities.
Hot topic
There is a potential for the emergence of such a situation in Sri Lanka.
Recently, it has been a hot topic in society that medicine importers have made unjust profits during the pandemic. When the facts are thoroughly concerned, it is revealed that it was not profiteering. During this pandemic, medicine importers had to face many other problems in addition to those mentioned earlier, and the staff members could not even go to the hospital due to the Covid pandemic situation in the country.
Many field staff have also been affected by Covid. The increase in fuel prices also severely impacted their field activities. At the same time, there has been a decline in Government purchases, and their payments have been irregular. It is also a fact that the medicinal purchasing power of the people has been drastically reduced due to the prevailing economic situation. When all these are concerned, the past two-year period has been a time of intense pressure on pharmaceutical importers.
Since the Covid vaccination program was carried out through the Government, no contribution was made from the aspect of the industry.
Although some people claim there should be a monopoly on medicines, such a monopoly cannot exist. There are substitutes to all essential medicines, including generic medicines and the so-called substitutes manufactured in many countries. Medicines could never have a monopoly because they are kept at different prices under the cost of production.
Free healthcare service
Sri Lanka has a mixed health care system. It is also a unique situation. Even in the developed world, there is no such free healthcare service. All medicines must be paid for, and there is no provision of free health care. But the situation in Sri Lanka is different.
We have a highly efficient public healthcare system that is accessible to all. Private markets exist only for people who want to buy the brands they want without hassle. There is also a modernised hospital system with all facilities covering every district.
Currently, Government hospitals have modern operating theatre facilities that could perform even specialised surgeries.
Despite some delays, the health service is at a very high level. Therefore, there is no need for poor people to go to private hospitals with hard-earned money because hospital clinics dispense medicines, and they are quality medicines indeed.
In addition, there are outlets of the State Pharmaceutical Corporation in every district providing generic medicines at affordable prices. These pharmacies have also made it easy to obtain medicines at concessionary prices on behalf of the public. The speciality of these pharmacies is that they offer several substitutes for people who cannot afford branded medicines at higher prices.
Furthermore, even during the Covid pandemic, there was a program of home delivery of clinical medicines, which made it possible to obtain medicines safely and without spending money due to the uniqueness of the country’s healthcare system.
Another issue under discussion in society is the pharmaceutical mafia in the country. There could clearly be no mafia in a regulated private market. However, the state procurement system is an existing system for controlling fraudulent activities.
However, despite these methods, some pharmaceutical companies are seen to be manipulating the particular methods fraudulently when some Governments come to power. If there is a pharmaceutical mafia, it will cause serious harm to the public. But due to the regulations and methods in place in the country’s health sector, currently, there is no pharmaceutical mafia in the market.
Having a fixed price formula is the only and lasting solution to this pharmaceutical problem. The price formula benefits all three parties the consumer, the pharmaceutical manufacturer and the seller. In particular, those who buy medicines from the private sector benefit more than those who buy medicines from Government hospitals through the pricing formula.
Government doctors prescribe the brand name of medicine only when it is essential. But the situation in a private hospital is different. Medicines manufactured in European countries are expensive and difficult for an average person to afford. But there are people in our country who can afford such medicines. Such people get more benefits from the price formula. Therefore, the successful solution to the pharmaceutical problem is implementing the pricing formula.
If the health sector in a country is strong, it indicates that the person is healthy. If not for the silent service rendered by the Government and the healthcare service, especially during this ongoing Covid pandemic, our country would be another “Wishala Mahanuwara” by now.
– Dushan M