Pharma Chamber welcomes drug price revision linked to rupee devaluation

• Calls for fair long-term pricing mechanism
• Says price increase allows industry to provide retailers with minimum mark-up of 15% on price-controlled molecules, 17% on non-controlled molecules

The Sri Lanka Chamber of Pharmaceutical Industry has welcomed the move by the Government, in consultation with the National Medicines Regulatory Authority (NMRA), to gazette a 14.4% increase in the Maximum Retail Price (MRP) of 60 price-controlled pharmaceutical drug molecules.

 “The increase in the Maximum Retail Price of all price-controlled molecules will provide all our stakeholders with a measure of relief from the escalating cost burden created by extreme rupee devaluation,” said SLCPI President Shyam Sathasivam. 

 “While we appreciate this positive development, it must be noted that it is of absolute importance that the Government continues to work with us to negotiate an objectively prescribed pricing mechanism for medicines, medical devices and borderline products,” he added.

The price hike allows the SLCPI to offer pharmacies island-wide a minimum retailer mark-up of 15% on price-controlled molecules and 17% on non-controlled molecules. This will alleviate some of the financial pressure confronting retailers, and allow them to better fulfil their vital role of providing consumers with high-quality pharmaceutical products. The increase in retailer mark-up will be effective for one year from the date of the Gazette’s publication, and will be subject to a list of trade conditions. 

Previously, the SLCPI was unable to alter retailer mark-up due to its manufacturers, importers, and distributers being hamstrung by spiralling storage, transportation, and regulatory costs, which tighten pharmaceutical price margins. Nevertheless, even with the MRP increase, these factors continue to coalesce with the existing hurdle of rupee depreciation, to threaten the sustainability of the industry’s entire supply chain.

Since the last revision of controlled prices, the Lankan rupee has depreciated by 18-19% against the US dollar. This alarming trend has forced the SLCPI to appeal for a currency depreciation-linked price control formula, given that over 85% of all pharmaceuticals available locally are imported. Without the necessary price relief, continued dollar depreciation could lead to the withdrawal of more high-quality products.

The Government presently controls the prices of 73 drugs, with more pharmaceutical molecules set to come under price ceilings in the near future. Currently, losses across the industry in FY20 alone are projected to reach Rs. 6 billion. For pharmaceutical importers performing the vital function of maintaining medicinal availability and affordability at all price points, this has yielded a significant disruption of supply due to these losses being absorbed by the industry. 

The SLCPI currently serves as the representative of over 60 members who account for more than 80% of the private pharmaceutical industry, spanning manufacturers, importers, distributors and retailers. These stakeholders supply Sri Lankan patients with 800 molecules from 364 manufacturers from across the world.