Hike in prices of drugs destabilises the market

Tuesday March 12 2019


Since November last year the drug prices have risen by 6.3 per cent, going as high as 10 per cent for some drugs, which is wrecking havoc in the Rwandan market. PHOTO | Cyril NDEGEYA  

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Pharmacies and clinics are in a dilemma over increasing drug prices, yet they have to sell at a lower price previously agreed on with insurance companies. Wholesalers keep increasing prices and this is hurting their business.

Since November last year, the prices of medicine have risen by between 6.3 per cent to as high as 10 per cent, which is wrecking havoc in the local market.

“Insurance companies on contract increase prices within a period of six months or one year, yet wholesalers are increasing prices almost every month, which is becoming untenable” said Serge Abayo, co-owner and pharmacist at Sabans Pharmacy in Giporoso.

Although customers paying out-of pocket are the ones largely feeling the increase in drug costs, the impact is spread out over the entire chain from those who import the medicine to bulk buyers like the Rwanda Social Security Board (RSSB).

RSSB, which runs its insurance plan (RAMA) alongside the community-based health insurance scheme, Mutuelle de Santé, had projected to spend Rwf95 billion for the fiscal year ending on June 30, and about Rwf47 billion in a six-month period, but half year expenses have already amounted to Rwf54.2 billion.

This means it has already used 14 per cent more funds than expected, which is partly due to the increase in drug prices.

Mr Abayo said some errant wholesalers are engaging in dubious practices of hoading some drugs to create an artificial scarcity, only to sell them later at higher prices.

Sanjay Singh, the owner of San Enterprises, one of the leading drug importers in the country, said the rise in drug prices is due to a high international exchange rate and related bank charges, which if added to the two per cent drug import charge instituted by the Ministry of Health, has driven the cost of medicine up by over 12 per cent.

Mr Sanjay added that drug manufacturers recently increased drug prices because raw materials for making some of these drugs have gone up.

Pharmacies faulted insurance companies for taking a long time to pay them, which affects their operations.

Some insurance companies take as long as one year before paying pharmacies.

Gaudens Kanamugire, the president of Rwanda Insurers Association, said that although what pharmacies are saying could be true, the way they are going about it is not right. “Why do they continue working with insurance companies if they are not being paid on time? They should cancel such contracts with insurers who are not paying,” he said. “I think pharmacies have the power to make insurers pay them on time,” he added.

On the increase in drug prices, Mr Kanamugire said the issue has affected the market, adding that it could be the reason behind some insurance companies taking long to pay pharmacies.