Sri Lanka price controlled drugs still cheaper despite rupee collapses: Rajitha

ECONOMYNEXT – Sri Lanka’s price controlled drugs are still lower than pre-control price, Health Minister Rajitha Senaratne said, despite two price hikes given due the collapse of the currency by the central bank.

Sri Lanka’s central bank has busted the rupee from 4.70 to the US dollar when it was set up in 1950 to around 180 rupees to the US dollar by 2019. The rupee was fixed from 1885, under a currency board which had no money printing powers.

From 2015 to 2019 under the administration that Senaratne was health minister the central bank busted the rupee from 131 to 180 to the US dollar, taking part of the shine off his price controls.

The National Medicinal Drugs Authority, which was set up by Senaratne gave a 5 percent increase at first and a 14 percent increase after the central bank’s latest collapse of the rupee.

“They (pharma companies) asked for a 23 percent increase but we gave only14 percent,” Senaratne told parliament.

The rupee which appreciated amid weak credit in 2019 from 182 to about 176 to the US dollar is now again sliding.

In August the bank printed tens of billions of rupees through its lender of last resort facilities at the policy deposit rate after disruptive repayment of central bank credit by the Treasury, seeming financed or part financed by newly minted LOLR money.

As the only agency allowed to issue rupee notes, the central bank is solely responsible for over-issue and collapses of the rupee.

Meanwhile Senaratne said the antibiotics such as Amoxicillin injections, were raised to 757 rupees from 631 rupees, after the latest rupee collapse. It was sold at 1668 rupees before price controls.

The drug Azithromycin was raised 63.37 rupees but it was 111 rupees before price controls.

He said price controls kept prices down and also saved money for the government.

“Due to the price control we implemented in 2016 for the medicines for the cancer patients we able to save 17.6 billion for the government,” Senaratne said.

He said according to one audit, there have been big savings for the government, but a supplementary estimate for cash was presented because more people were doing operations due to free medical devices given.

Earlier the many devices for surgery had to be bought by the patient.

Medical device prices were also brought down in 2016, but had been increased by 14 percent after the central bank busted the rupee.

Many companies gave a large cut to doctors who prescribed the device, according to some sources, which pushed up the price.

A medical device known as a Metal Stent that is used for the heart patients was raised to 27,500 rupees from 24,000 rupees after the rupee collapse. It was 50,000 rupees before the price control in 2016.

A drug eluting Stent was raised to 120,000 from 105,000 but it was 275,000 before the price controls.

A glucometer for diabetic patients was raised to 3150 rupees. It was 5250 rupees before the price control.

And testing stripes used with the Glucometer raised to 57 rupees from 50 rupees after the rupee collapse and it was 100 rupees before the price control, Senaratne said.

Lenses that are imported have also been increased.

American lenses was increased to 18 500 rupees and it was 28 000 before the price control. Hoya lenses was raised to 13,950 rupees in this year and it was 25,900 before the price control.

Another type of lense was raised to 6,920 rupees but before price controls it was 25,000 rupees, he said.

“There are about 10 types of lenses under this category that we changed prices in this year,” Senaratne said. (Colombo/Aug23/2019)