Volker Steger/Science Photo Library
Many manufacturing facilities in India have low production costs |
High drug prices have allowed medicines smuggled from India to capture
Pakistan’s pharmaceutical
market. Although Pakistan has 25,000 licensed medicines, the markets
are replete
with Indian medicines, which are selling like hot cakes.
Huge profits can be made, especially in rural areas, by selling all sorts
of preparations smuggled from India and antibiotics, analgesics, sedatives,
tranquilisers, hormones, antihypertensives and contraceptives are making
their way across the border on such a scale that multinational corporations
(MNCs) and local manufacturers are finding it hard to compete — 40
MNCs and 300 national companies supply medicines in Pakistan.
The pricing of medicines in Pakistan is lightly regulated. “The Ministry
of Health
allows the multinational drug manufacturing firms to raise the prices of
their products every now and then,” Mohammad Riaz, president of the
Pakistan Pharmaceutical Association (PPA), told The Pharmaceutical
Journal.
Furthermore, in the past decade, prices have increased by about 200 per
cent. MNC products are at least 10 times costlier than the ones smuggled
from India, said Ghulam Sarwar Khan Mohmand, managing director of a pharmaceutical
factory in Peshawar. According to one survey, a strip of 10 Zantac tablets
costs Rs90 (Pakistani
rupees) compared with Rs14 for the Indian version. Similarly legitimate
ciprofloxacin is available for Rs520 whereas the smuggled version costs
just Rs21. Diclofenac sodium is on sale for Rs50 but its Indian version
costs Rs3 only. And the list goes on.
Drugs are cheap in India because of a 1970 law that allowed Indian manufacturers
to get around international patents and
grow rapidly. By the time India acceded to World Trade Organization (WTO)
patent rules, last year, the country had built up
the largest number of US Food and
Drug Administration approved manufacturing facilities outside the US and
these benefit from unbeatably low production costs. In
addition, the Indian Government provides subsidies for some drugs in an
effort to keep prices low.
A blind eye
In Pakistan, a country where the gross
national income per capita is just US$520 and medical facilities are
limited, patients’ inability to purchase expensive drugs manufactured
by the MNCs, compel them to buy the Indian alternatives, despite the
bad blood
between the two countries (three wars have been fought over Azad Jammu
and Kashmir). Ikramullah Khan, a 40-year-old shopkeeper from Peshawar,
whose mother is a cancer patient, says he buys smuggled drugs for injections
from India because they cost only a fraction of locally made preparations.
Smuggling is particularly rife in the lawless rural parts of the North
West Frontier Province (NWFP) that share borders with Afghanistan, which
imports millions of dollars worth of drugs from India. These are then
smuggled to border areas in Pakistan from where they make their way across
the country. Many pharmacies in this region deal only in smuggled drugs
from India. Some of the products on pharmacy shelves do not have information
leaflets or details, such as expiry dates, but according to officials
at the Federal Quality Control Board in Islamabad, most drugs smuggled
in from India are safe for human use. In addition, studies have shown
that smuggled anti-cancer drugs were as effective as those of the MNCs.
There are even doctors who have been prescribing Indian medicines. For
example, Peshawar-based doctor Gul Jamal claims to use an Indian brand
for chronic stomach problems, finding it “quite effective”.
Although smuggling medicines in Pakistan is a crime punishable by a maximum
sentence of 10 years’ imprisonment, according to a drug analyst
at the Federal Quality Control Board, some authorities are reluctant
to stop the illicit trade because that could mean denying the poor access
to affordable drugs. Some regulatory authorities simply look the other
way, whereas others receive hefty bribes from the perpetrators.
Under such conditions, pharmacists often recommend Indian medicines over
legitimate ones. Shortages and safety
Pakistan’s expensive legitimate pharmaceutical market is further
marred by frequent drug shortages. A recent survey conducted by the Network
for Consumer Protection (a non-governmental organisation that, among
other things, works to discourage irrational use of drugs in Pakistan)
showed that 47 out 478 essential drugs (including antimalarials, antibiotics
and immunosuppressants) were either unavailable or in short supply. Of
these, 26 had been unavailable for at least six months. There have also
been claims that some shortages are created in order to keep prices high.
Anti-retroviral drugs for HIV/AIDS are in particularly short supply and
Pakistani manufacturers do not make them. About six months ago, the World
Health Organization started importing these drugs to Pakistan from India
under special arrangements. They are prescribed to patients in five treatment
centres in the major cities by specially trained doctors. To deal with
concerns that the anti-retrovirals might get into the wrong hands or
find their way on to the open market, the WHO has put stringent measures
in place. Distribution is strictly monitored and patients are not allowed
to take their medicines home. However, “there is no guarantee that
[anti-retrovirals] would not be smuggled from India,” Quaid Saeed.
The WHO’s professional medical officer for HIV/AIDS in Pakistan,
said. Trade barriers and agreements
A national study of 439 drugs from 37 therapeutic classes manufactured
by 41 companies found that policies restricting trade from India have
a direct impact on prices of pharmaceutical products in Pakistan because
the country is bound to purchase expensive medicines made by MNCs.
In addition, “Pakistan-based MNCs are importing raw materials
from their mother countries, which causes increase in prices”,
said Ghulam Sarwar Mohmand, former president of the Frontier Chamber
of Commerce and Industries. The issue of Indian drugs being sold in
Pakistan is not a new one. It has been debated several times in the
National Assembly of Pakistan but with no tangible outcome.
About 10 years ago, under WTO guidelines, India granted Pakistan “most
favoured nation” status. This means that Pakistan is granted all
trade advantages (eg, low tariffs) that other countries receive. Members
of the WTO accord this status to each other. Pakistan, however, did not
reciprocate. More recently, the South Asia Free Trade Agreement (SAFTA)
came into effect. This aims to reduce tariffs for intraregional trade
and both India and Pakistan were among the seven countries to ratify
the agreement. Notwithstanding this ratification, Pakistan has still
not accorded India most favoured nation status but some remain hopeful
that trade will open up. “When SAFTA and WTO rules are fully implemented
and there are no trade barriers there will be a sharp reduction in the
smuggling of medicines from India to Pakistan,” said a local pharmacist.
In addition, according to Ayyaz Kiani, executive co-ordinator at the
Network for Consumer Protection, although Pakistan has not granted most
favoured nation status to India the trade tariffs that it applies on
imports from India are much lower than those it applies to sectors bound
under the WTO. “These tariffs would apply to any additions made
in Pakistan’s positive list [items which can be imported] for India
under SAFTA,” he said. It has been suggested, however, that once
SAFTA is implemented and there are more Indian medicines on the market,
it may be more difficult to keep the sale of smuggled Indian medicines
in check.
For their part, Indian pharmaceutical companies are keen to gain a toehold
in Pakistan’s pharmaceutical market, which is estimated to be worth
US$140m. Currently, MNCs control 60 per cent of the market with the rest
going to about 100 drug importers and the 300 licensed manufacturers.
According to the Indian Drug Manufacturers Association, Pakistan imports
drugs in bulk from all over the world, except India, which is a leader
in exporting bulk drugs. Working through the Federation of Indian Chambers
of Commerce and Industry (FICCI) Indian pharmaceutical companies have
been putting pressure on the Indian foreign ministry to get Pakistan’s
trade barriers against India removed, at least in the drug sector. “We
have been holding a series of discussions with officials on specific
sectoral trade relaxation,” Amita Sarkar, a director at FICCI,
said.
There may be hope in the composite dialogue process through which Pakistan-India
ties have been steadily improving over the past two years. Bilateral
trade between Pakistan and India now exceeds US$800m against $334m in
2004. However, contraband trade is believed worth more than twice that
figure.
Another alternative is circular trade. This is carried out through third-party
countries (such as Dubai and Singapore, and now Afghanistan), which import
goods then re-export them to Pakistan. A number of Indian products, such
as truck tyres are indirectly, but legally, imported into Pakistan in
this way, but this is costly. “Keeping in view the competitive
pharmaceutical market, low prices for medicines in India and rising pharmaceutical
demand in Pakistan, exporters from India and importers in Pakistan cannot
gain maximum profit from legal trade, mainly due to tariffs and hindrances
in trade facilitation,” said Mr Kiani. For now, “Smuggling
remains the best option to avoid tariffs, standards and documentation
issues,” he said. |
The
Pharmaceutical Journal