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Monday December 11th, 2023

Sri Lanka drug prices up after money printing hits rupee; concern over cost

ECONOMYNEXT – Sri Lanka National Medicine Regulatory Association (NMRA) has given permission to raise drug prices by 29 percent on the request of private importers due to steep depreciation of rupee against the US dollar, the subject minister told the parliament on Friday (11).

HOwever, medical experts have raised concerns over unafforable drugs.

State Minister of Production, Supply and Regulation of Pharmaceuticals, Channa Jayasumana told the parliament, that the drug regulator NMRA has agreed to grant permission to increase prices by 29 percent at a meeting held on Friday.

“With the changes in the dollar we had inquiries to change the prices. But me nor the Minister of health has the power to change or increase the prices.” Jayasumana said.

“The NMRA committee had a meeting today and discussed about it and recommended a price increase percentage which we as the ministry can implement. Accordingly, the price increase they have given permission is 29 percent,”

Meanwhile, the Federation for Health Professionals (FHP) said, state hospitals are experiencing a shortage of more than 50 essential drugs and specialists have had to plan their treatments with just a few of the more affordable substitute medicines.

“This increase in prices is a serious crisis for the entire healthcare system, as it has become the norm to buy all the expensive drugs from private pharmacies,” the convener of the Federation for Health Professionals, Ravi Kumudesh said.

“As a result of this price increase, it is inevitable that the prices of essential drugs will continue to double or triple or even increase on a daily basis at competitive prices and the hospital staff will have to maintain a health care system that varies according to the amount of money available at hands of patients.”

Classical economists and analysts had called for central bank reforms to stop the agency from printing money and being forced to depreciate the currency when the last administration set up the price control agency instead curbing the central bank’s ability to print money.


Sri Lanka’s pharma control Neros fiddling while Colombo burns with falling rupee

“It is the Central Bank that destroys the currency and pushes up the cost of drugs,” EN’s economics columnist Bellwether said when a drug price control agency was set up in 2015 in a Germany ‘social democracy’ style move (Weimar Republic) as the central bank printed money.

“When the currency is destroyed by the state, prices of all imported and domestically produced goods go up.

“The NMRA is a farce. It is a dangerous farce. If the rulers want to keep prices down, not only of drugs but of all goods, first follow prudent monetary and fiscal policies that allows for exchange rates to be stable.

“Or abolish the Central Bank and re-create a currency board so that money printing is illegal and the currency is fixed.”

The parliament which makes laws can take away the powers of the Monetary Board has to print money to manipulate interest rates and bring the currency down.

Free Health at Stake?

FHP said in addition to the dollar problem, an increase in freight rates for pharmaceuticals due to the sharp decline in the arrival of cargo ships and aircraft, increase in oil prices, will lead to further increase in drug prices in the future.

“Unless a definite plan is put in place, the public must be prepared for an environment in which free health care will not function in the country,” Kumudesh said.

Commenting on the allegation on medicine shortage, the minister said the shortage has been created by sellers, dealers and importers by preventing adequate supply to the market expecting price hike.

Jayasumana said the state-owned storages have enough supply for 6 months while the private suppliers had informed the authorities of having enough supplies for another 4 months. However, due to the forex shortage in the country, private medicine suppliers informed a possible shortage in medicine earlier this month.

The Sri Lanka Chamber of Pharmaceuticals Industry (SLCPI), at a press briefing held on March 3, said, due to inability to open letters of credit, country will face a shortage of essential drugs in the market by next month.

Azam Jaward the Vice President, SLCPI said the industry has not been given priority to a certain extent due to the current power crisis where fuel is given priority.

“Delays in NMRA, price control is causing a problem along with the dollar crisis,,” HE SAID.

“Until last month we did not have any major issues. But now the banks have been advised to prioritize issuing LCs to import fuel. If this trend continues, even for the lifesaving drugs, we will have a serious issue.”

“We are at the moment have the supply for another 2-6 weeks, some medicines for another 3 months, but we are concern about the possible situations that can arise in the future in this country due to drug shortage.”

Negative Consumer Reaction 

Medical and Civil Rights Professional Association of Doctors (MCPA) in a letter before the price increase said affordable drug prices are likely to reduce patients taking adequate medicines at appropriate intervals.

Dr. Chamal Sanjeewa, the President of MCPA said many patients are tempted to buy the drugs in small amount “without taking them for the prescribed period of time.’’

‘’If the price of medicine increases, the public will not use medicine in the appropriate and prescribed manner,’’ he said asking for the government intervention to help the poor to ensure medicinal supply at an affordable price.

‘’If there’s no fuel you can stay at home and work if there’s no gas you can convert to firewood or kerosene cookers if there’s no electricity you can light a candle, but if there’s no medicine there is no alternative the people have.’’

He also warned that if Sri Lanka manufactures drugs, it must be done in the right quantity and quality for the patients as there is potential to use Sri Lankan resources to control the budding anticipated shortage.  (Colombo/Mar12/2022)

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Sri Lanka rupee opens at 327.00/50 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee opened at 327.00/50 to the US dollar on Monday, from 327.00/30 Friday, dealers said.

On the Colombo Stock Exchange, both indices opened up: The All Share Price Index 0.28 percent at 10,823, and the S&P SL20 0.35 percent at 3,113.85.

Bond yields were up.

A bond maturing on 01.08.2026 was quoted at 14.05/20 percent from 14.05/15 percent.

A bond maturing on 15.01.2027 was quoted at 14.05/20 percent from 14.10/25 percent.

A bond maturing on 01.07.2028 was quoted at 14.20/50 percent from 14.20/35 percent.

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Sri Lanka promoting Buddhist tourism from Vietnam, ASEAN

ECONOMYNEXT – Sri Lanka is planning to boost Buddhist tourism by linking temples in the country with those in East Asia, Foreign Minister Ali Sabry said after to welcoming a delegation of monks from Vietnam.

President Ranil Wickremesinghe, and Minister Sabry have initiated a temple-to-temple program where 100 Sri Lanka temples will be linked with counterparts in the Association of South East Asian Nations region.

“Tourism development will get a lot of growth with the temple-to-temple program,” Minister Ali Sabry said.

Along with the delegation of monks, five travel agents from Vietnam were also invited.

Under the first phase of the Temple-to-temple programs, several monks from Sri Lanka had received invitations from Indonesia, Malaysia, South Korea and Vietnam the Foreign Ministry said.

The Temple-to-Temple diplomacy program will be extended to Singapore, Japan, Thailand and Cambodia during the second phrase of the program.

Sri Lanka is targeting 2.3 million tourists in 2023, after getting about 1.5 million this year. (Colombo/Dec10/2023)

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ADB $200mn loan for Sri Lanka economic stabilization efforts

ECONOMYNEXT – The Asian Development Bank (ADB) has approved a US 200 million dollar concessional loan to Sri Lanka to help stabilize the country’s finance sector.

The Financial Sector Stability and Reforms Program comprises two subprograms of IS 200 million dollars each, according to a statement by the ADB.

“The program’s overarching development objective is fully aligned with the country’s strategy of maintaining finance sector stability, while ensuring that banks are well-positioned for eventual recovery,” ADB Country Director for Sri Lanka Takafumi Kadono was quoted as saying in the statement.

“The expected development outcome is a stable financial system providing access to affordable finance for businesses in various sectors of the economy.”

The ADB statement continues:

“Subprogram 1 targets short-term stabilization and crisis management measures that were implemented in 2023, while subprogram 2 is planned to be implemented in 2024 and focuses on structural reforms and long-term actions to restore growth in the banking sector.

The program will help strengthen the stability and governance of the country’s banking sector; improve the banking sector’s asset quality; and deepen sustainable and inclusive finance, particularly for women-led micro, small, and medium-sized enterprises.

According to the International Monetary Fund’s (IMF) latest review, Sri Lanka’s economy is showing tentative signs of stabilization, although a full economic recovery is not yet assured.

The program is a follow-on assistance from ADB’s crisis response under the special policy-based loan that was approved for Sri Lanka in May 2023.

It is aligned with the fourth pillar of the IMF’s Extended Fund Facility provided to Sri Lanka to help the country regain financial stability.

It is also in line with the government’s reform agenda, including strengthening the operational independence of the Central Bank of Sri Lanka (CBSL) and its designation as the country’s macroprudential authority.

In designing this subprogram 1 loan, ADB has maintained close coordination and collaboration with the IMF to design targeted regulatory reforms for the banking sector—including the asset quality review—and with the World Bank on strengthening the deposit insurance scheme.

“The loan is accompanied by a $1 million grant from ADB’s Technical Assistance Special Fund to provide advisory, knowledge, and institutional capacity building for Sri Lanka’s Ministry of Finance and CBSL.”

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