The revenue board is happy as it has been mopping up an increased volume of value-added tax (VAT) from the pharmaceutical sector in recent years. The VAT collection from the sector, according to a report published in this paper on Thursday, increased by 11.20 per cent in the last financial year (FY 2021-22) over that of the previous year.
The higher consumption of drugs and the rise in prices of pharmaceutical products have made it possible. The top 20 companies had paid almost twice the VAT amount last year over the previous year. In reality, ailing people and their families, not the drug manufacturers, paid the higher consumption tax to the government.
The drug manufacturers have been enjoying a field day in Bangladesh as far as the pricing of drugs is concerned. The Directorate General of Drug Administration (DGDA) fixes the prices of only 53 essential drugs among hundreds of pharmaceutical products and the rest is left at the sweet will of drug manufacturers. So, the latter have been squeezing the consumers as much as possible to earn a hefty profit. In such a situation, the government prefers to remain an onlooker.
Most pharmaceutical companies, deliberately or otherwise, skip the manufacturing of essential drugs and concentrate more on drugs of non-communicable diseases (NCDs) the sale of which has been on the rise in recent years.
A free-for-all situation prevails in the marketing of pharmaceutical products. Every pharmacy, as the law dictates, is supposed to employ a qualified pharmacist, but the directive is flouted with total impunity. The pharmacies are barred from selling medicines, except the over-the-counter (OTC) ones, without a prescription. But that rule is hardly followed in the absence of monitoring and supervision by the official agency concerned. How a section of physicians is bribed by companies to get their products on the prescriptions is no secret.
The drug manufacturers on different pretexts have been raising the prices of their products with nobody asking any questions. These companies have developed a unique method of raising the prices of their products. One of the leading manufacturers without any prior notice stops the supply of a particular medicine. Others follow suit one by one. Pharmacies familiar with the trick start charging more than the usual price knowing that the companies will soon hike the price of the medicine. Over the last couple of years, the prices of most medicines increased between 40 to 100 per cent.
There have to be some valid reasons behind the companies raising the prices of medicines. The reasons they cite include the increase in the prices of raw materials in the international market and the depreciation of taka vis-à-vis greenback. But there exists a gap in such a claim, many feel.
The industry could have cut its cost had they been truly interested in producing active pharmaceutical ingredients locally. The government has made available facilities for the production of basic raw materials for generic medicines at the API Park. Yet there are some hurdles and those need to be removed.
The government and the pharmaceutical industry have got an opportunity to make the best use of the concessions offered under the TRIPS (trade-related aspects of intellectual property rights) for the least developed countries. But they have, by and large, failed in that respect. As the country is set to graduate from the LDC status in 2026, it stands to lose all the exemptions, unless there is a strong move to get an extension. In that case, the medicines will be even costlier. Now the out-of-pocket expenditure in the health sector stands at around 70 per cent. It is destined to soar further following the country's graduation to a developing one, much to the sufferings of the poor and low-income people.