Govt mulls revision of DRAP pricing formula

Federal Minister for Economic Affairs and Establishment Division, Senator Ahad Cheema directed on Friday the Ministry of National Health Services and the Drug Regulatory Authority of Pakistan (DRAP) to urgently revise the regulatory framework governing drug pricing, including changes to the Hardship Policy and the composition of the DRAP Policy Board. Chairing a meeting today, Cheema expressed dissatisfaction with DRAP’s existing formula for determining increases in medicine prices, observing that the current mechanism requires a comprehensive review to ensure that any price revision is transparent, evidence-based and fully justified, as per a press release. “He directed DRAP to review and strengthen the price-increase formula, with greater scrutiny and independent checks to ensure that cost pressures are not automatically passed on to consumers through higher medicine prices. ” He also directed the Secretary, National Health Services and CEO, DRAP, to finalise and present revised rules governing the Hardship Policy at the earliest possible opportunity so that they could be placed before the relevant forum for approval without delay. He stressed that the revised framework must ensure that hardship provisions provide relief only in genuine cases and do not become a mechanism for transferring disproportionate commercial costs to patients. The minister also directed that the composition of the DRAP Policy Board be revised to “strengthen expertise and evidence-based decision-making”. Cheema specifically directed the inclusion of a Health Economist and a Public Health expert on the Policy Board. During the meeting, the Ministry of National Health Services and DRAP agreed with the proposal, and Cheema instructed the concerned officials to initiate the necessary process and place the proposed changes before the relevant forum for approval at the earliest. “Drug-pricing decisions have a direct impact on millions of households. Our regulatory framework must therefore combine pharmaceutical sustainability with affordability and strong consumer protection, ” Cheema said. During the meeting, DRAP officials briefed the Federal Minister on the existing Hardship Policy and its application to essential medicines. Cheema observed that importers of essential medicines often seek relief under the Hardship Policy and subsequently also seek an increase in prices. He said the revised rules must address this issue and ensure that the benefits provided under the Hardship Policy are appropriately reflected in the pricing structure rather than resulting in an additional burden on consumers. The minister said that where an importer is already benefiting from tax concessions or any other relief provided by the Government under the Hardship Policy, the importer should also be prepared to rationalise its own margin instead of seeking to pass the entire cost on to the consumer. He directed DRAP to examine the existing importer and retailer margins, including margins that may currently be around 40% in relevant cases, and provide for their rationalisation under the revised Hardship Rules. Senator Cheema stressed that the necessary adjustment should be made between importer and retailer margins. “If the government is extending relief under the Hardship Policy, the importer and retailer must also share the burden through reasonable adjustment of their margins. This adjustment should take place within the supply chain and must not, under any circumstances, be passed on to the consumer, ” he said. He directed the Secretary, National Health Services and CEO DRAP to incorporate an appropriate mechanism for rationalisation of importer and retailer margins in the proposed Hardship Rules and submit the revised framework at the earliest for consideration and approval by the relevant forum. The minister emphasised that the regulator has a responsibility to maintain a fair market balance—ensuring the continued availability of essential medicines while protecting patients against unjustified price increases. He said commercial viability was important, but it could not be pursued at the expense of consumers, particularly in the case of essential medicines. The meeting also reviewed the pricing mechanism for originator and existing brands. DRAP officials briefed the meeting that reference pricing, based on prices in neighbouring and other relevant countries, is currently used for originator brands. Moreover, Cheema said that international reference pricing should be supported by an independent verification mechanism to ensure that pricing decisions are based on credible data and accurately reflect market realities. He directed DRAP to develop a stronger and more independent system of checks within the drug-pricing framework, ensuring transparency, fairness and effective regulatory oversight. As per the press release, the minister stressed that access to affordable medicines is directly linked to public welfare and that the Government would continue strengthening regulatory mechanisms to ensure a fair balance between the legitimate needs of the pharmaceutical sector and the interests of consumers.

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