Source: Medicines sector under seige from fortune hunters | The Herald May 13, 2019
Paidamoyo Chipunza Senior Health Reporter
The pharmaceutical sector in Zimbabwe has been besieged by shrewd business people without medical background who have seen the industry as an Eldorado to mine super profits at the expense of national health. Following last week’s expose that the sector was largely controlled by a cartel of agents, with exclusive dealership agreements for critical medicines from particular manufacturers, investigations by The Herald also revealed that only two of the top five wholesalers have a medical background.
The rest are non-pharmacists and have no medical experience or qualifications but are merely businesspersons who have seen an opportunity to make money in this loosely regulated industry.
This has also seen even those running retail pharmacies enticing recent pharmaceutical graduates into fronting their business empires to enable them get operating licences.
“Most of the people behind this wholesaling business are simply business people who have found an opportunity of making money. This is why they find it easy to charge exorbitant prices because they have no ethical considerations to worry about. All they want is money,” said a pharmacist who spoke to The Herald on condition of anonymity.
They said the same situation is obtaining in the retail sector, where operating conditions stipulate that 51 percent shareholding must be held by a pharmacist.
“What they are simply doing is that they lure some of these recent graduates to take up 51 percent ownership but in essence the business persons are the ones that would be calling the shots. This shows that the sector has been besieged by greedy and selfish people who were not trained to serve but to take advantage of people’s conditions,” added the source.
These claims were corroborated by another source who called The Herald following the publication of the first story last week.
The source, who also spoke on condition of anonymity, claimed that he used to buy Timolol — a medication for the eyes — for RTGS$12 but was recently charged US$7 by a local pharmacy.
“The pharmacist said no other pharmacy had that medicine except them and we had to choose to either buy it at that price or return home empty-handed,” said the source.
Investigations further revealed that some Indian generic medicines were marketed here in Zimbabwe with different brand names yet they were supplied by the same manufacturer.
For example, Tadaloyil tablets for erectile dysfunction manufactured by Macleods, is marketed here in Zimbabwe as Skypharm Tadalofil and in India as megalis. Both have the same quantities.
However,. in India, this drug costs at most US$2,21 in retail pharmacies against US$12 being charged by local retail pharmacies.
Another drug levofloxacin — an antibiotic — again manufactured by Macleods is marketed here as Skypharm Levofloxacin and in India as Levomac. The antibiotic, which comes in the form of tablets, costs US$0,61 in India and US$5 in Zimbabwe.
“We do not know whether the changing of brand name is a marketing gimmick to overprice these products but it is a cause for concern particularly when we see such price disparities,” said another source.
Although efforts to get a comment from the Competition and Tariffs Commission were fruitless by time of going to press yesterday, a local competitions expert challenged CTC to institute an investigation into these and other competition issues in the pharmaceutical industry and make recommendations to guide policy.
Mr Dumisani Sibanda, who took part in the production of a detailed analysis on ease of doing business in the pharmaceutical industry in 2016, said while the industry was one of the most regulated in the country — a situation he said could also be contributing to the high prices of medicines — issues of competition still needed to be looked into.
“We did some work under the ease of doing business from which we noted that there are lots of issues in the pharmaceutical sector that require attention. There are a lot of competition issues in that sector,” said Mr Sibanda.
He said some countries such as Botswana had made significant progress towards addressing these issues for ordinary people to access cheap medicines, lessons of which Zimbabwe could tap into.
“Botswana has done extensive work to change the way the pharmaceutical industry works. There were so many collusions in Botswana, which Zimbabwe still has. There are a lot of competition issues in Zimbabwe,” said Mr Sibanda.
He said the ease of doing business study, which was instigated by the Office of the President, also noted the period taken by regulatory bodies to approve a new medicine in the country as a contributing factor to monopolistic pricing. On average, the study noted that approvals of registration for a new product takes between two and three years.
“The registration delay creates ground for monopolisation of the market and the firm that registers ahead of players tends to charge exorbitant prices. The practice has a negative effect on consumers who are forced to pay a monopolistic price when an alternative would have been made available,” read part of the study findings.
Other challenges such as too many regulatory authorities, duplication of roles by the regulating authorities, high costs of regulatory licensing and product registering were also cited as barriers to entry for many players in the pharmaceutical industry.
Pricing of medicines in Zimbabwe have been on the agenda for some time now, with some patients preferring to buy their supplies from neighbouring countries where medicines are much cheaper. Although Government regulates new entrants into the market, it doesn’t regulate pricing of the same.
However, in South Africa pricing of medicines in the private sector is done by Government and not by wholesalers, a sharp contrast to the situation in the country.
In setting drugs prices, Government calculates the cost of the product from the manufacturer, cost of logistics and Value Added Tax to come up with what is known as the single exit price (SEP).
A retail pharmacist can then add a dispensary fee when distributing the product to the customer, a percentage of which is also determined by Government.
No player is allowed to discount the SEP but can charge lower than the maximum dispensary fee and never above it as doing so is tantamount to committing a crime.
In India, where most of the medicines are coming from, Government also prescribe maximum percentage from which any player in the distribution chain can charge.