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An exclusive interview with Ayesha T Haq, Executive Director, Pharma Bureau on the issues

faced by the Pakistan Pharma Industry. Ayesha says nowhere in the world, other than Pakistan,
does the state have blanket control over prices of all medicines.

Q. What are the major challenges that the Pharma sector is confronted with?

A. The biggest challenge faced by the industry is the complete freezing of prices of
pharmaceutical products. The price mechanism set by the government since 2001 has not
allowed the pharma industry to increase prices of even those drugs whose costs have gone up by
more than a 100 percent, whereas the price of inputs such as fuel, electricity, labour wages and
raw materials have increased drastically making the survival of the industry very difficult. There
were 36 MNCs working in Pakistan in the early 2000s in the sector, that number is now down to
about 22. That is an eye-opening number of exits. In recent times the situation has become worse
as most of the raw material is imported and any increase in dollar rates adversely affects the
profitability of the local manufacturers.

On the other hand the growing menace of counterfeit products has become a serious problem for
the established pharmaceutical companies. The proliferation of fake and modified goods is not
only hurting the industry but the consumers as well. The menace is adversely affecting the
government revenues and thereby the public sector socio-economic programs. Counterfeit
medicines are estimated to cost the government over Rs 12 billion a year.

Q. What are your thoughts on the tug of war going on between the pharmaceutical industry and
the Regulatory Authority (DRAP)?

A. Pakistan’s pharmaceutical sector is simply unable to meet local demand and increase exports
under the current regulatory regime, which is extremely oppressive. Pricing undoubtedly is the
most burning issue with the Drug Regulatory Authority of Pakistan (DRAP). Contrary to DRAP,
majority of developing countries regulate drug prices to safeguard the interest of the consumers,
but their regulations are transparent. Neighboring India and China liberalized their drug pricing,
which has benefitted domestic consumers and accelerated their exports. India’s exports are in
excess of US$15 billion per annum while Pakistan’s exports have declined and are now
approximately US$160 million a year. If Pakistan aims to double its exports to Sri Lanka within
a year as stated recently it will need to review its drug pricing mechanism.

The other issue is delays in approval of new molecules, which can often take several years,
depriving patients of the benefits of the latest remedy. A cancer patient, for example does not
have the luxury of waiting 3 to 4 years for a drug to come into the Pakistan market. They need
that drug right away. Poor policy and an inefficient regulatory structure is denying life-saving
breakthrough technologies to patients in Pakistan. Secondly, it prolongs the price approval
process. The pricing delay also happens when a company wants an adjustment due to the
increase in cost of doing business. Thousands of price adjustment applications are still pending
with the DRAP. At this speed, the regulator would take years to approve or reject the requests.
Since there is no set criterion, price determination varies on a case to case basis.
What is required is a transparent and set formula for increase in prices. It should not be left to the
discretion of any official as this will only open the door to graft.

The DRAP should be strengthened and its regulatory capacity be brought at par with global
standards. Though this will take some time, the regulator, initially, should bring a dug price
equal to its average price in regional economies, like India, Bangladesh, Sri Lanka and others
with the same socio-economic indicators.

Q. Due to pricing issues, some life-saving drugs have been discontinued too, such as anti TB
drugs. What are your thoughts on this?

A. Frankly speaking, the shortage of various medicines is directly linked to the federal
government’s failure to resolve this long standing pricing issue.

The problem of shortage of anti-TB drugs has been going on for the last several months. Two
major anti-TB drugs (Ethambutal and Pyrazinamide) are hard to find on the market. Treatment of
complicated TB cases couldn’t be done without these two first line life-saving drugs. Therefore,
the government must respond by providing a subsidy to companies manufacturing essential
drugs so that they don’t continue to lose money by making a drug at a lower price.

Many cases for price increases have been pending with the government for over five years. More
and more people in the pharmaceutical industry are taking away their investments and ultimately
it will be poor patients who will suffer. You can bear a loss for a time but you can’t survive with
continual losses. Like the rest of the world, the government should control prices of only
essential drugs listed with the WHO and let the market forces determine the prices of other
medicines. Nowhere in the world, other than Pakistan, does the state have blanket control over
prices of all medicines.

Q. What is the pharmaceutical industry doing to ensure the availability of life-saving drugs in the
market?

A. The production of many drugs has been stopped for some diseases which exist only in
Pakistan and few developing countries. Unfortunately, pharmaceutical companies in Pakistan
have also stopped producing drugs for tuberculosis due to non-viability. Therefore, the recent
very nominal price increase will not help companies to continue producing anti TB and other life
saving medicines, which DRAP considers essential to cure infectious diseases.

Pharmaceutical companies were highlighting for years the hardship they were facing due to the
increase in input costs, pushing almost half the life saving drugs into hardship category.
Interestingly enough, most of these drugs are priced between Rs 0.5 and Rs 3 a tablet, which
DRAP terms unaffordable to patients. Irony is that imported alternates, many of which come
through grey channels, which are made available during periods of shortage are priced almost 10
to 15 times higher but DRAP neither try to control the prices of these drugs nor allow local
manufacturers even a marginal price increase to keep these drugs viable.

These drugs are needed by millions of people in Pakistan every single day since these diseases
still exist in the country, therefore DRAP should take responsibility and give due price
adjustment to local companies and ensure that needy patients easily get these drugs. Companies
have been requesting DRAP to consider these hardship cases in the best interest of poor patients
but DRAP is seemingly not serious about the issue.

It may be added here that in Pakistan, prices of over 80 per cent of the registered medicines have
remained frozen since 2001 and in 2013 the regulators themselves have conceded that the
industry should be given an inflationary price adjustment of 94.24%. The cost of doing business
has risen by over 100 percent during these 15 years of dormant prices. It is time to authorize an
increase in drug prices so that companies can afford to manufacture those essential drugs.

Q. The ultimate sufferers are the patients. What do you have to say about that?

A. It is the responsibility of the government and the regulatory bodies to ensure the availability
of medicines to provide relief to those suffering from disease.

It is unfortunate that not only are medicines not available but there is no proper mechanism to
regulate the prices charged for those drugs smuggled in through grey channels. Because of
different prices, patients are doubtful if the drugs are genuine or spurious. Responsibility for
shortages must be taken by DRAP. It is high time that the government take all stakeholders on
board to hammer out a longterm workable solution to end the sufferings of patients and
implement the same in letter and spirit.

Q. How much of research and development is being done by the pharmaceutical industry in
Pakistan?

A.R&D in Pakistan is negligible and we are light years behind other regional countries like India
and China. This is because of the lack of government support. Unless the government encourages
and promotes a culture of academia and research in public-sector universities, the country will
continue to lose opportunities in this important arena. It is a fact that the local private sector is
not motivated to conduct research. This is in contrast to China and India, which have emerged as
the top destinations for researchers in the global pharmaceutical industry.

China and India are providing benefits to their patients with new treatments. This has also helped
them in authenticating their registration process by getting local pre-registration data. China and
India are benefitting from generating revenue by giving industry status to pharmaceutical
research.
Pakistan’s pharmaceutical industry is worth a little less than PKR300 billion. How can such a
small industry invest in research that requires a lot of investment? Research could be done if the
public and private sector joined hands and provided adequate funds to public-sector universities.
Research needs huge funds and consistent efforts by academic institutions, which Pakistan
doesn’t have.

Pharmaceutical companies are bound to pay one per cent of their gross profits in a government
fund established for research purposes under the Drug Act, 1976. Although governments have
collected this amount from each company every year, there is absolutely nothing to show for it.
The major hurdle in research in local pharmaceutical companies is the lack of government
interest.

Q. What can be done to combat the menace of manufacture/sale of spurious, sub-standard drugs?

A. Pakistan should frame and implement a drug policy that ensures the manufacturing of quality
medicines and elimination of spurious drugs to save the lives of the common man in the country
and sentences that will act as a serious deterrent should be awarded to the manufacturers of
substandard, spurious, unhygienic, and fake medicines.

A committee consisting of honest drug inspectors should be formed and start a crackdown
against the sale of spurious, substandard and unlicensed medicines as it is a huge crime.
Factories manufacturing sub-standard drugs should be sealed immediately and the elements
involved in this evil trade must be punished. Corrupt elements in health department who
patronize the manufacturing, stocking, sale and purchase of fake medicines should be sacked. In
fact, according to reports, some of them have established their own factories and pharmaceutical
companies. Owners of the units manufacturing medicines without a license deserve maximum
punishment and this menace should be eliminated through effective measures and stringent.

Q. How can Pakistan increase the export of medicines?

A. Pakistan can increase its pharmaceutical exports to a billion dollars within the next 5 years
from the current figure of less than $160 million if the country gets the membership of the
Pharmaceutical Inspection Convention/Cooperation Scheme (PIC/S). PIC/S provides cooperation
in the field of good manufacturing practice and if Pakistan becomes its member and follows its
regulations, the country’s medicines will have an access to at least 60 countries, from Malaysia
to Sweden. We have been demanding of the government to get its [PIC/S] membership.

At present there are no FDA or EMA approved facilities in Pakistan and there are only a couple
of WHO certified facilities. The costs involved in obtaining these certifications are considerable
and there is no incentive for companies to do. FDA and EMA certifications would allow
Pakistani pharmaceutical company’s access to US and EU markets.
At present, Pakistan is exporting its medicines to a few Far Eastern, South East Asian, African
and Middle Eastern countries.

The global medicines market has reached $1,100 billion while Pakistan’s pharmaceutical
industry size is less than three billion dollars. The pharmaceutical industry is trying to increase
its exports but that is possible only if the Government solves the aforementioned issues and
problems.

Q. Why do pharma companies in Pakistan not opt for Contract Manufacturing?

A. It is unfortunate that Contract Manufacturing, despite having a lot of potential, is not being
practiced in Pakistan. Contract Manufacturing is basically the manufacturing of drugs through
other pharmaceutical companies having specialization in certain formulations. Several
multinationals have left Pakistan over quality production and cost issues. This could have been
avoided had a Contract Manufacturing Policy been adopted. Since the manufacturing facilities at
Pakistani pharmaceutical units do not have FDA approval, this prevents major multinational
companies from entering the market. Approval of pharma production plants by FDA is not a part
of the requirements laid down by DRAP. As a result, to maintain quality, most MNCs go to India
or Bangladesh for quality production while the plants in Pakistan run below capacity.