Economic Insight of Drug Pricing Policy of Pakistan
Author: Irfan Ahmed

Drug can be defined as: “A substance used in the diagnosis, treatment, or prevention of a disease or as a component of a medication”. Economic insight is a concept which applies to gain an accurate and deep understanding of economic theory, principles or practices. In Pakistan, out of pocket expenditure (OOPS) are around 70% of the total health expenditure and 55% of the total are spent on purchase of pharmaceuticals for treatment of the different diseases in the rural areas. Total annual market of prescription drugs in Pakistan is about PKR 343 billion. Majority of the medicines are purchased by the people from the pharmacies directly, making medicines the largest household expenditure after food. It results in catastrophe due to high cost medicines. It creates heavy load on government exchequer in term of drug import, manufacturing and purchasing of material (Active Pharmaceutical Ingredient (API) and raw materials). The first comprehensive Drug Pricing Policy (DPP) was introduced in 2015 to guarantee the sustainability of indigenous pharma industry and convenience to medicines. According to DDP Policy, the prices of the new medicines shall be determined on the root like the average prices fixed in India and Bangladesh . When the medicines were not accessible in both these countries, the prices then were based on the lowest rank of developing countries which control medicines prices and wholesale prices in UK, Australia and New Zealand respectively. The comparison of drug prices among countries is a complicated procedure because the similar medicine frequently sold in another countries in unlike strengths, pack size and even in different mode of administration with different tariffs, taxes and markups for public and private health care system. The selection of the reference countries and methodology used for the drug pricing has been comparatively considered because selection of the reference countries (RC) chiefly using high ranking income countries with dissimilar market composition have escorted to high drug prices. ix The proposed study aims at filling the gaps for preparation of the recommendations those fit in the local market requirements. This will help policy makers and other stakeholders to understand, identify and implement the policies to control pharmaceutical prices at the affordable level for benefit of the people in Pakistan. A concurrent mixed method is used for data collection and analysis. The findings from both qualitative and quantitative study reveals that current Drug Pricing Policy, 2015 needs revision. Pharmaceutical companies are providing drugs to market at high prices and making huge profits at the cost of immense burden on the consumers. Multinationals are able to make enormous remittance abroad by transfer pricing but also manage to get higher prices in respect of dosage forms based on the over price raw materials. This situation demands for a proper pricing system for pharmaceutical drugs that creates a balance between affordability ( in lieu of healthcare users) and profitability ( in lieu of pharmaceutical industry). Supervisor:- Dr. Fazli Hakim Khattak Co-Supervisor:- Dr. Atiq ur Rehman

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Supervisor: Fazli Hakim Khattak

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