Sri Lanka price controls drive drugs off market as soft-pegged currency falls
ECONOMYNEXT – Several drugs used to treat, blood pressure, cancer, osteoporosis, cancer and antibiotics have gone off the market as price controls originally proposed by a Marxist began to bite amid a steep fall in the currency.
Sri Lanka Chamber of Pharmaceutical Industry (SLCPI) said despite repeated appeals the price control agency, National Medicinal Regulatory Authority (NMRA) has not allowed increases prices, which were cut despite a falling rupee.
Over 85 percent of the drugs are imported to Sri Lanka but the health ministry and NMRA has not allowed prices to be raised, the industry body said.
Eleven drugs will "no longer be available in the market as it is not commercially viable to import them," the SLCPI said.
"The biggest setback would be for the patients who are adversely affected if the drug product that provided excellent therapeutic benefits and resulted in positive health outcomes is no longer available in the market."
The drugs going off the market include those made by Astra Zaneca, Roche and Novartis of Switzerland, MSD of UK and Italy, Eli Lilly of France and Sandoz Bangladesh.
Drug price controls were originally proposed by Senaka Bibile, a Marxist but were not implemented until the current administration came to power in 2015, when the NMRA was set up as a price control agency.
Since the new administration came to power the rupee has fallen from 131 to 176 to the US dollar, indicating an currency inflation of 34 percent, amid money printing and a real effective exchange rate targeting policy.
But only a 5 percent increase has been given since price controls slashed prices from previous levels. Price controls by the state creates a blackmarket and smuggling. But drugs produced by European firms in particular are exported to Sri Lanka at substantially lower prices than in the home market. When the price controls were first announced at prices below the then market, importers negotiated lower prices.
While a choice of drugs are available in Sri Lanka from multiple countries, patients and doctors through years of use have found particular brands are more effective and have less negative effects than others.
Generics do not undergo clinical trials and efficacy is not proven, though so-called bio-equivalence tests are performed for chemical properties. Price controls usually create a blackmarket.