Editorial Comment: Drug smuggling a symptom of profiteering

Source: Editorial Comment: Drug smuggling a symptom of profiteering | The Herald December 10, 2019

Editorial Comment: Drug smuggling a symptom of profiteering

THE organised smuggling of medical drugs is growing rapidly in Zimbabwe and is driven primarily by one factor, the huge mark-ups charged by those who import, wholesale and retail drugs.

Drug smuggling is different from other smuggling cases. There are no customs duties payable on approved drugs, so the smugglers are not trying to avoid taxes, the main reason why other products are smuggled. What they are doing is taking advantage of the huge gaps in prices between Zimbabwe and most of its neighbours.

Of course, with a crime being committed by smuggling in what would be legal drugs if the importer was registered and the particular band of drug was registered, other products are added to the supply chain.

These are drugs banned in Zimbabwe, mainly addictive cough mixtures and sex enhancers of dubious provenance and effect.
And perhaps some of the real medical drugs are time-expired, or have been ineptly stored, or are supplied by a get-rich-quick generic manufacturer rather than by an ethical generic manufacturer.

No one really knows. But sick people, faced with huge and unaffordable quotations at a registered pharmacy, turn to the streets and try to find what they need there.

So the dangers from medicine smuggling are serious. But it flourishes because people need medicine and the legal pharmaceutical supply system in Zimbabwe is a surprisingly very closed chain.
We saw this when all pharmacies were demanding US dollars for medicines.

Even private hospitals would accept medical aid cards for other charges, but insisted on drug deposits and drug payments in US dollars.

The reason for all that was because the major wholesellers and importers were demanding US dollars from the retail pharmacies and hospitals. Even with the switch to a single Zimbabwean currency, retail prices were largely set by the suppliers, not by retail pharmacies competing.

In normal circumstances, with a retail pharmacy in almost every city block in central Harare and a surprising number in every suburban shopping centre, one would expect a high level of price competition.

There appears to be a clear policy not to compete on prices, instead restricting competition to how many medical aid cards a pharmacy will accept and the levels and range of stocks they hold.

Mark-ups are generally so high that it is possible in what would otherwise be a grossly overtraded sector to have small pharmacies meeting their overheads on just a dozen filled prescriptions a day, even when they are in high-rent premises.

There are a few mavericks, but they have had to work very hard to create alternative supply chains and cut their overheads.
It is possible, but very difficult.

So great are the differences in retail prices between Zimbabwean pharmacies and those in neighbouring countries that growing numbers of Zimbabweans with moderately complex chronic conditions who find it well worth their while, financially, to travel to Blantyre or Lusaka, Musina or Polokwane to fill their prescriptions. The savings are considerably higher than the cost of the bus tickets, which are not cheap. But people who need medicine today, or tonight, do not have that luxury.

They have to buy today from a Zimbabwean pharmacy.
Part of the reason for the Zimbabwean system stems from the days when some drugs were in short supply because importers needed allocations from the Reserve Bank of Zimbabwe (RBZ). Now they have to buy on the interbank market, most bankers will give priority to drug imports, so that does not apply.

Solutions are needed. And solutions are available. Europe offers one set of solutions. Medical drugs in Europe are usually significantly cheaper than the identical drugs sold in the USA.

This is because most European countries have some form of national health scheme that can intervene in the market to prevent profiteering, while the American Government, even when drugs are being supplied in a federal health scheme, is forbidden by law from doing so.

The British National Health Service for example floats tenders for generic drugs.
Offers are carefully investigated. Factories have to be approved, medicine quality is tested and guaranteed.
Production costs are checked, to prevent short-cuts being taken to win a tender. And then the winning company is given a fair mark-up on these actual production costs.

Zimbabwe needs to do more. At one time there was flourishing local production of a wide range of essential drugs. That has largely disappeared. It should be revived. High quality imported generics are often locked into a single Zimbabwean agent.
Those deals can be broken with government-to-government intervention, as they already have, at least partially through aid schemes, for supplies to State hospitals.

There is a strong argument that the entire requirements, in both private and public sectors, of at least the top 100 or so most common drugs could be put out in a single international tender, along with strict rules over quality.

Zimbabwe is not a huge country but the total annual supply of a particular drug could well be worth serious attention by a reputable international manufacturer and would reopen the doors to local manufacture. And our regulators could make a big dent in pricing by accepting foreign registrations of brands from a carefully compiled list of countries, dramatically reducing the entry level cost for a new supplier.

Only profiteers and smugglers will cry.