Dental Tribune Pakistan

Are pharmaceutical manufacturers charging too much for dental medicines?

By Dental Tribune Pakistan Report
July 20, 2013

Karachi: A recent rise in inflation has reduced profit margins of the pharmaceutical sector. PPMA Chairman Jawed Akhai states that many companies have shut down as a direct result of this rise in costs of production, four being multinational companies. Alongside, the rise of general sales tax (GST) from 16 to 17 percent is likely to add to the problems faced by the sector.

KARACHI, Pakistan: Pakistan remains an underdeveloped country with the lowest healthcare budget allocations in South Asia. The 2013 budget allocation for healthcare is a mere Rs. 21 billion, reflecting 0.8 % of the total GDP. Most of the healthcare expenses borne by the patients are out of pocket. Despite the poor healthcare sector allocations and more than half of the country’s population unable to afford medical treatments, the pharmaceutical industry remains thriving.  The per capita spending on medicine among Pakistanis is US$10 (PKR 1017) which remains the lowest in the region.

There are presently 750 pharmaceutical industries operational in the country, of which around 386 have operational units. The value of Pakistani Pharmaceutical Market is estimated at $1.90 Billion (PKR 192.9) billion growing at 16.12 % per annum. Out of this amount, 1% per annum is handed over to the R&D fund of the Ministry of Health by each company.

A recent rise in inflation has reduced profit margins of the pharmaceutical sector. PPMA Chairman Jawed Akhai states that many companies have shut down as a direct result of this rise in costs of production, four being multinational companies. Alongside, the rise of general sales tax (GST) from 16 to 17 % is likely to add to the problems faced by the sector.

Added to it is the challenge of rampant counterfeit drugs which are undercutting margins of the pharmaceutical industries. Recent incidences of deaths due to substandard medications in two separate incidences in Lahore are the reflection of the malpractices underway in pharmaceutical industry. Despite these challenges, being the 10th largest pharmaceutical sector in Asia Pacific and catering to one of the highest prescription rates in the country, the pharmaceutical industry is forecasted to remain strong in the future.

The primary concern here however, is the impact of these high profit margins on the patient. As mentioned, most of the medicines are bought out of pocket by the patients. Therefore, any changes in the prices of medicines directly affect the patient’s buying capacity.

Pakistan has also recently seen a rise in a very negative culture in prescribing practices. This is a self-created misconception by patients believing that only the most expensive medicines are good medicines, and the cheaper versions of the same salt are counterfeit. Some patients even attribute the prescribing habits of medicines to the credibility of the doctor, believing that a doctor who prescribes the more expensive medicines is a better doctor.

Researches show price ratios of the branded products of 0.72 to international reference prices ranges of 26.2(Cameron et al, 2008). Among certain dental medications, such as omeprazole, ciprofloxacin and diclofenac, the same high priced trends are seen (Cameron et al, 2008). A research done on low income countries showed that the total cumulative %age mark-ups between manufacturer’s selling price or Cost, Insurance and Freight price, and final patient price in the public and private sectors in Pakistan ranges from 28-35% (Cameron et al, 2008).

A similar research reported that originator brands are over 40% more expensive than their generic counterparts and in some cases over 600% more expensive than other market competitors. The same research claimed that adherence to regulated maximum prices is largely but not exclusively observed.

Another trend among pharmaceutical manufacturers is making those drugs having higher profit margins. It is for this reason that drugs such as thyroxin termed ‘orphan drugs’ are rarely manufactured by pharmaceutical companies. Price variability therefore remains a very complicated challenge in the medical sector.

A small proportion of patient population visits hospitals and private dental practices for dental treatments due to the high treatment costs involved. In many of such cases, the problems are infections of the oral cavity. These require long antibiotic courses and pain medications taken over the course of dental treatment. The costs of these medicines may be difficult for the patients to bear. Any changes or increase in the pharmaceutical costs directly affect the patient.

In order to overcome this severe price variability and exorbitant pricing systems of medical drugs, some medical industry gurus recommend the creation of a generic system of medicines. Practitioners believe that this method will help overcome the affordability factor for the patients (Zaidi et al, 2013).

In conclusion, it is the responsibility of the Ministry of Health to ensure that a majority of patients are able to receive the medical and dental care they deserve. Alongside, the MoH should ensure that exorbitant and impractical profit margins on certain medicines should not be placed, which can severely limit the patient’s buying capacity. This in turn can lead to patients withdrawing from the treatment altogether, which is unacceptable on all grounds.

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