ABSTRACT

Before the independence of Pakistan, drugs were regulated under the Drug act of 1940. This act remained dominant and well into the 70s. Soon after, Pakistan enacted its first major Drug Act, the Drugs Act of 1976, that was designed in response to scientific developments over time and to address the shortcomings of the 1940 Drugs Act. After the 18th Amendment, the Ministry of Health (along with the Drug Regulatory Administration or DRA) was decentralized from the federal level, and provinces were authorized to regulate the pharmaceutical industry. The provinces failed to regulate the drugs such as licensing, registration, price regulation, import and export etc. Therefore, a resolution was issued, calling for regulation of pharmaceutical sector federally. In its place, the Drug Regulatory Authority of Pakistan (DRAP) Act of 2012 was enacted in place of Drugs Act of 1976. DRAP was established after the disastrous incident of the “Fake Drug Crisis” in 2012, in which many people lost their lives in Lahore, under the umbrella of the Federal Health Ministry of Pakistan. It is responsible for the implementation of pharmaceutical rules and regulations in Pakistan. In 2015, DRAP introduced a Drug Pricing Policy to regulate the drug prices, replacing it with a new one in 2018. This study was carried out to analyze the role of DRAP in determining prices of drugs in the pharmaceutical sector of Pakistan and to investigate the drug pricing policies of DRAP in influencing the performance of the sector. For this purpose, mixed methodology was used which covered both qualitative (semi-structured interviews) and quantitative (firm fixed method & Average Treatment Effect Method) approaches. The findings clearly show negativity due to strict pricing policy due to which all the firms are affected and faced losses. Their revenue decreases due to the losses caused by political involvement. The results of study showed that analysis suggest that the existing drug pricing determining mechanism needs to be revised in lieu of its negative repercussions. A good drug pricing system by the DRAP‘s Drug Pricing Committee and the Federal Government that strikes a balance between affordability (for healthcare users) and profitability (in lieu of pharmaceutical firms). This study recommends that the government of any regulatory body should not interfere in pharmaceutical market without keeping in view the demand and supply of drugs. Further, the DRAP pricing policy should be more transparent and liberal which would improve the functioning of pharmaceutical firms.