In the wake of many news reports and articles regarding the price regulations of pharmaceuticals in Sri Lanka, the SLCPI wishes to clear some misconceptions that have risen about our position on the matter.

We have not at any point ‘vehemently opposed’ a price control by the Government.  What we pointed out clearly was that price regulation is counter-productive to the excellent health services that are currently available in Sri Lanka.  In the current system, the patient is given a choice i.e. free health care from the state, ample supply of generic products, which are supplied by the SPC and local manufacturers; and people who do not take advantage of this service for whatever reason could purchase from the private sector at reasonable prices.

The 65% margin discussed in various media reports is the recommended approved formula prior to removal of price control. This include cascading mark ups (and NOT margin) form a hypothetical CIF of Rs. 100/-.  The 65 % was on the total value chain up to retail, which includes Importer, wholesaler, and the retailer.  Since the implementation of this in 1989 April, Sri Lanka has gone through a severe escalation of costs in the following areas.

• Regulatory
• Scientific and Medical Education
• Professional Information Services and
• Operational / Infrastructure/ personnel
• Staff costs

We would also like to point out that under the present system, where demand and supply forces act on a free and open market, prices are controlled by economic forces which not only allow a choice to the patient, but are knitted into the fabric of the country’s healthcare system. This very reason may cause pharmaceutical prices to further escalate under price regulation and for high quality innovator drugs to become scarce in the market. Therefore, we only wish to point out the negative factors that could come about from changing a system that currently works for one that would not really benefit the patients.

In addition, we want to reiterate that the prices of essential pharmaceuticals rather than moving upwards has come down, and in some cases quite drastically through the years and this is mainly because of the healthy competition that is currently prevailing in the market, especially with SPC pricing creating a bench mark.

The Indian Journal of Pharmacology 2011, last February carries a report on ‘Medicine Prices, availability and affordability’ compiled by several eminent parties in the Sri Lankan Medical fraternity, including Professor B. M. Rohini Fernandopulle, M.B.B.S. (Ceylon), Ph.D. (Colombo) Professor in Clinical Pharmacology, Department of Pharmacology and Pharmacy University of Colombo.  The report says “In Sri Lanka, generic medicines have effective pricing and are available and affordable.  No drastic changes in prices of medicine in the private sector were observed over the 6 years despite removal of price control.”

We would like to point out several issues that would follow in the event unreasonable price regulations are implemented in the local market

• Reputed suppliers will withdraw from the Sri Lankan market due to unattractive market conditions, thereby causing a shortage of Essential Pharmaceuticals
• Competition will reduce due to a lesser number of suppliers, which would lead to price increases, thus drastically increasing the state health care spend
• There will be severe out of stocks situation of Pharmaceuticals in the country.
• Possibility of newer molecules not being available due to the higher investment required in medical education
• Creation of a ‘Grey’ market
• Operational issues in implementing and monitoring of price control
• Many retail pharmacies will be out of business due to unavailability of products, the businesses will become unviable, leading to unemployment and resulting unrest

The ultimate loser from all this would be the patient; therefore regulation of pharmaceutical prices is a pointless exercise because they have remained stable in the country over the last 10 years.  The industry is not against price regulation, our concern is the to imposition of unrealistic trade mark ups or margins which will have drastic effect on suppliers and many stake holders of the healthcare delivery system.

In conclusion, we would like to say that we always have and will continue to extend our fullest support to the Government and Health Minister in all their initiatives. In addition, as industry experts, we would not hesitate to give good counsel when and wherever required.

- Amali ramanayake