Pakistan Pharma Industry Rejects Proposed Changes to Drug Pricing Formula

Pakistan’s pharmaceutical industry has raised concerns over proposed changes to the country’s drug pricing mechanism, warning that abrupt revisions could hurt the sector, disrupt medicine supplies and affect the availability of affordable medicines.

 

Industry representatives said the existing Drug Pricing Policy 2018 was developed after extensive consultation with stakeholders and was also endorsed by the Supreme Court. They argued that the framework should not be altered without a comprehensive consultation process.

 

Federal Minister for Economic Affairs and Establishment Division Senator Ahad Cheema recently instructed the Ministry of National Health Services and the Drug Regulatory Authority of Pakistan (DRAP) to urgently review the regulatory framework for medicine pricing.

 

The proposed changes include revisions to the Hardship Policy and the structure of the DRAP Policy Board, with the stated objective of preventing unjustified price increases while ensuring the continued availability of essential medicines.

 

Under the existing framework, the government regulates prices of life-saving and essential medicines, including products eligible for hardship adjustments when manufacturers or importers find it difficult to supply them at the officially approved prices.

 

Essential medicines represent around 40% of medicines marketed in Pakistan, covering approximately 500 molecules, highlighting the government's significant role in regulating drug prices.

 

Pharmaceutical industry officials said frequent government interventions and policy changes create uncertainty and negatively affect the sector’s performance. They urged authorities to maintain the current pricing framework, including the hardship mechanism, for a longer period so that it can achieve its intended objectives.

 

According to the industry, the existing mechanism provides a transparent process for adjusting prices and incorporates international benchmarks. Under the policy, price increases for essential medicines are capped at 70% of annual CPI inflation.

 

Authorities also benchmark medicine prices against comparable products in regional markets, including India, Bangladesh and Sri Lanka, before approving revisions.

 

For FY2026, prices of essential medicines were increased by a maximum of 4.9%, equivalent to 70% of the 7% CPI inflation recorded during the year. Industry officials said the revised prices remained below corresponding levels in neighbouring markets.

 

The pharmaceutical sector maintained that these measures demonstrate that the current pricing framework protects consumers while also accounting for rising production costs in Pakistan.

 

Industry representatives also cited India as an example of the benefits of policy consistency, noting that the country has maintained a stable pricing framework while deregulating prices for a large number of medicines. They claimed India’s pharmaceutical exports were approaching $30 billion in 2026, nearly matching Pakistan’s total exports in FY26.

 

The industry further highlighted changes in profitability following Pakistan’s 2024 deregulation policy, which allowed manufacturers to determine prices for non-essential medicines. According to an industry official, net profit margins had been around 3% roughly two years ago but have since increased to about 10% following deregulation.

 

Pharmaceutical companies warned that further pressure on already limited margins through what they described as unnecessary regulatory interventions could affect medicine quality and discourage investment in the sector.

 

They also attributed the earlier exit of several multinational pharmaceutical companies from Pakistan partly to inconsistent government policies.

 

Industry officials noted that sectors such as banking, oil and gas marketing and fertiliser manufacturing generate higher profit margins than pharmaceuticals. They argued that pharmaceutical companies need reasonable profitability to reinvest in production capacity, improve access to affordable medicines and expand exports.

 

They further said deregulation of non-essential medicines had increased competition among pharmaceutical manufacturers on both price and quality, ultimately benefiting consumers.

 

According to industry representatives, greater competition helps keep medicine prices and quality under pressure, with patients emerging as the primary beneficiaries.