The federal cabinet has observed that the medicine prices regulatory mechanism has become ineffective and exploitative amid credible complaints of endemic corruption, with the health ministry terming the 2018 Drug Pricing Policy unfair as it ensured “supernormal profits” for the pharmaceutical industry.

These concerns were shared by the cabinet members in a meeting on Dec 13, 2023, while considering approval of increase in maximum retail prices (MRPs) of 262 drugs under Hardship Category as recommended by the Drug Pricing Committee (DPC) in its 56th and 57th meetings.

The ministers held the view that the pharmaceutical industry was profit-centred, and not people-centric. They also lamented the poor performance of the Drug Regulatory Authority of Pakistan (Drap) for not playing its role as required by the law.
Expressing concerns that the drugs regulatory mechanism had remained ineffective and exploitative and credible complaints of endemic corruption, the cabinet members emphasised the need for deregulating the pharmaceutical sector.
While discussing the method of increasing drug prices in phases and to avoid any disruption in the market, the cabinet members stressed the need for distinguishing priorities between life-saving drugs and other drugs.

The health ministry informed the cabinet that the Drug Pricing Policy, 2018 allowed consideration for hardship cases once in three years with certain conditions.

A minister proposed that the prices should be reviewed and fixed at the DPC or the ministry level, and not in the cabinet.
The health ministry explained that the World Health Organization (WHO) guidelines were being followed for categorisation of essential and non-essential drugs, adding that the policy board was mandated to recommend essential and non-essential drugs to the cabinet with the purpose of use and generic name.

The cabinet observed that the import of drugs as well as import of raw material for manufacturing drugs put a heavy burden on foreign exchange, and that the problems of hoarding, smuggling, double-pricing and shortage of life-saving drugs merited serious attention.

The cabinet was apprised that on the recommendations of the Economic Coordination Committee (ECC), different regional models were studied to bring improvements in the functional governance of the sector, adding that an application had been launched to register complaints, besides the helpline portal.

While deferring the approval of increase in the MRPs of 262 drugs under Hardship Category, the federal cabinet had directed for constituting a committee to have a comprehensive market analysis so that a well-informed and fair decision could be taken regarding fixing the drug prices.

The committee comprising finance, health, economic affairs, privatisation, inter-provincial coordination, ministers any other minister nominated by the prime minister and provincial health ministers was mandated to give its recommendation on reforming the process.

Following the cabinet directive, the committee met on Jan 11, 19, and 30, 2024. After thorough deliberations, the committee advised the health ministry to place its proposal based on the recommendations of the DPC of Drap, directly to the federal cabinet.
The ministry, in view of the current economic situation, solicited approval of the cabinet for an increase in the MRPs of 262 drugs in a phased manner – the MRPs of 17 drugs in short supply in the first phase and 37 in moderately short supply in the second phase.

It also recommended increase in the prices of remaining 208 drugs in the third phase.
The cabinet considered the summary and also decided to approve the increase in the MRPs of 146 essential drugs, with their generic names, as per the WHO criterion.

Meanwhile, the health ministry would submit its proposals to amend the Drug Pricing Policy, 2018 to improve fairness and transparency in the determination of drug prices to make it people-centric and to devolve decision-making of the drug pricing to the ministry or the DPC level.