Sri Lanka’s latest medicine pricing mechanism could drive higher-quality branded medicines, particularly those sourced from European Union markets, out of the country, the All-Island Private Pharmacy Owners’ Association (AIPPOA) has warned, amid an ongoing legal dispute over the new pricing formula.
An interim injunction is currently in place against the disputed mechanism until Thursday (19).
Speaking to The Sunday Morning, AIPPOA President Chandika Gankanda said the National Medicines Regulatory Authority (NMRA) had departed from a previously agreed 75% supply chain markup by introducing four pricing slabs based on medicines’ Cost, Insurance, and Freight (CIF) values.
He argued that the revised structure gave importers excessive discretion over the margins allocated to distributors and retailers, threatening the financial viability of pharmacies and potentially discouraging imports of premium medicines.
According to Gankanda, the AIPPOA had initially supported a flat 75% markup on the understanding that it would be transparently distributed among importers, distributors, and retailers. However, the NMRA subsequently introduced three additional pricing slabs without specifying how the margins should be shared among stakeholders.
He claimed that this had left pharmacies dependent on importers’ commercial decisions, with some distributors reportedly being offered margins as low as 2%, while retailers received just 10%.
In response, the AIPPOA has called for a pricing formula that explicitly defines the margins allocated to each segment of the supply chain. Its proposed structure includes 30% for importing companies, 18% for retailers, 8% for distributors, 5% for Customs clearance, and 7% for other expenses.
The dispute has also reached the courts, with Gankanda stating that the AIPPOA had obtained an interim injunction against the latest pricing regulations until Thursday and would seek a permanent injunction. He noted that the legal dispute over medicine pricing dated back to 2019.
While acknowledging the need for a medicine pricing mechanism, Gankanda insisted that any formula should be developed through consensus among importers, distributors, and retailers, ensuring reasonable margins for all parties.
He warned that an unworkable pricing structure could discourage imports of original branded and premium medicines, particularly those sourced from European markets, reducing patient choice and potentially affecting the availability of quality medicines.
The AIPPOA has accordingly urged the Minister to restore the previously agreed pricing structure and introduce a formula that balances medicine affordability with the commercial viability of the pharmaceutical supply chain.