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Forex pushing up drug prices – Daily Trust

HomeNewsForex pushing up drug prices – Daily Trust
Forex pushing up drug prices – Daily Trust
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By Judd-Leonard Okafor 

Halima Adamu has always bought a paracetamol sachet for N20. The last time she bought it, she paid double.

“I don’t know whats going on. Everything is rising in cost,” she complains. She isn’t alone. Prices of drugs-and everything else-are jumping sky high. And it is all connected to the dollar.

Rising drugs prices are only coming into public notice, but they began way back in February and March this year.

It isn’t just rising drug prices, but pharmaceutical companies are feeling the brunt like no other time, cutting productions, scaling down operations, laying off staff and closing shop.

“It is seriously outrageous,” says Dr Pius Ukpabi, a community pharmacist based in Lagos.

“Some multinationals could not cope again with the exchange rate and decided to wind down.”

One of them is Switzerland-based firm Boehringer. It is among the highest-paying pharmaceutical companies operating in Nigeria. It paid for staff training and travels to South Africa and Kenya, says Ukpabi, whose brother works there.

“It was using more money to buy dollars,” he explains. The nature of a consumer economy like Nigeria means nearly everything is imported, and importation means paying for import on the international market in dollars. It isn’t just about paying the equivalent of dollars in naira but using naira to buy dollars to pay. The naira has been in free fall against the dollar and the bite has only gotten worse.

One of Boehringer signal product jumped in price, from N4,000 to N8,000 just between June and July.

“By August, they [Boehringer] could not cope. They decided to wind down [in Nigeria]. They are still in Kenya, they are still in South Africa, but in Nigeria they washed their hands and left. Many companies have already wound up, some left in February and March.”

The N8,000 drug is only available through parallel importation-that’s when a drug legally made abroad is imported without Boehringers permission.

Parallel importation is controversial. Trademark holders could lose benefits, original packaging of the drug could change and importers stand to gain.

Parallel importers buy original drugs from one market, say Kenya where Boehringer still is, at a lower price and then sell them in Nigeria for a higher price, and the final consumer bears the cost.

Orphan drugs are seriously affected. Those are drugs, including immunosuppressants and cancer drugs, that are not manufactured in Nigeria and not available for purchase any how else. Now they are simply not there, says community pharmacist Uzoma Nwaigudu, and secretary of the Pharmaceutical Society of Nigeria (PSN).

He sourced a prescription drug for a patient and got only half dose. Three months later, he is still searching for the drug but isn’t finding it.

Novartis, the company that owns the drug, is yet to bring in some. “When it eventually comes, the price will quadruple from what it used to be,” he predicts.

“There are adverse effects in terms of availability. Many companies are unable to access foreign exchange for importing raw materials. Orphan drugs have become scarce, and prices of drugs on the shelf have skyrocketed,” Nwaigudu says.

“And everything comes down to retail. Retail pharmacies are the ones in direct contact with consumers. When you go to the shelf, you find that all prices have skyrocketed. And when you go to replenish your stock, prices keep increasing every day.”

“When buyers come, they think we are the ones putting the prices on retail, not knowing it is in the dollar.”

The dollar is hitting pharmaceutical industry hard. Firms unable to sustain buying the dollar at exorbitant exchange rates are buckling. International companies are scaling back in Nigeria. And local manufacturers are being clobbered. The only firms able to withstand the buffeting are large multinationals with enterprises across the world, the Pfizers and GSKs who have amassed production might over the years.

Ukpabi was to start a business importing drugs from India. The plans were already past the drawing board, but a reality check with the dollar meant that business had to be put on hold, he says.

“Between March and now, businesses that have folded up are uncountable,” he insists. “Some of the products, you can’t see them except through parallel importation, and the prices double.”

The consequence of the dollar beating down on the naira and clobbering pharmaceutical industry is the “flight of intellectual capital, ideas, business and foreign direct investment,” says Ukpabi.

A double-digit billion-dollar loan being sourced by the federal government isn’t helping, and is not likely to do the pharmaceutical industry any good, experts predict.

“Even if you borrow $7 billion and put it in the economy, you cant see anything. It will only go to infrastructure but economic growth is investment in the system,” says Ukpabi.

“Economy is built not by infrastructure. Borrowing money to boost infrastructure doesn’t boost the economy. If you tell that to a market woman, an unenlightened person, they say, yes this government wants to work. What boosts economy is foreign direct investment,” he says.

And the dollar exchange rate is driving foreign direct investment into the ground.

With manufacturers shifting operations to countries where dollar exchange rates are bearable, drugs are drying up in Nigeria and coming in at higher prices. It is a whole different sort of inflation. Local manufacturers can’t keep up or satisfy the market, and patients will bear the brunt, experts explain.

PSN has repeated raised a save-our-souls message with the government, requesting federal government to allocate foreign exchange to the pharmaceutical industry as a “topmost priority”. The expected result is “to save the lives of Nigerians,” says Nwaigudu.

That hasn’t happened, and there is no certainty when it will be. Efforts are on to shore up the naira against the dollar, but the pharmaceutical industry is not waiting. Patients still take ill and need to buy drugs. Drug prices keep rising, for those available on the market. For those unavailable, orders take months to fill, and command higher prices.

“Foreign direct investment is folding up. It is going to be catastrophic,” says Ukpabi. “The economy determines what you eat, drink, wear, not government parastatals.”

The story of drugs and the dollar is only beginning.


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