Global Insight Perspective | |
Significance | The provincial govenments of the North West Frontier Province (NWFP) and Sindh have improved their health budgets by 40% and 14% respectively. The funds are intended to upgrade healthcare infrastructure and pay for additional emergency medicines. |
Implications | The rise in budgets is in response to President Pervez Musharraf’s pledge last year to improve health services, after severe drug shortages in the aftermath of the devastating earthquake. |
Outlook | The allocation is likely to satisfy short-term targets for healthcare delivery. However, a radical long-term strategy that includes sweeping changes in drug regulation and healthcare services is still missing, leaving the industry less attractive for foreign investment. |
Health Allocations Rise - but is it Enough?
Pakistan's four provincial governments recently endorsed a federal government call for focus on the health sector, following dire criticisms over drug shortages and the over-stretched healthcare sector in the aftermath of last year's earthquake (see Pakistan: 28 November 2005: President Launches National Health Strategy for Pakistan). The overall national health plan has been budgeted at 472 billion rupees (US$ 7.9 billion), and has been expanded to incorporate the Public Sector Development Programme (PSDP), with emphasis on the upgrade of specialist centres and hospitals across the country. Punjab, Pakistan's most populous state, has earmarked almost 11 billion rupees for health, while the North West Frontier Province (NWFP) has allocated 3 billion rupees, with special emphasis on primary health. The local Frontier Star newspaper reports that the NWFP government has pledged 200 million rupees for emergency medicines, while the health minister of Sindh announced a 14% rise in budgetary allocation for health, with hospital upgrades receiving special attention. The source adds that the government will provide one billion rupees in grants for Sindh's hospitals.
The pharmaceutical industry has reacted to the improved budget allocations with some caution. Some of the more encouraging announcements include a social health insurance scheme aimed at low-income households, plus a government subsidy in NWFP and a 1.2 billion rupee increase to the expanded immunisation programme. However, problems with spurious drugs, a less regulated retail sector and feeble adherence to the 2002 patent ordinance, which stipulates World Trade Organization guidelines, are some of the major concerns not addressed by the government (see Pakistan: 10 May 2006: U.S. and Pakistan Discuss Data Exclusivity Laws, as Pakistan's Exports Reach US$61 mil.).
Outlook and Implications
Playing the Numbers Game
The budget allocations are all very well on paper, but concerns over implementation stem from the ongoing trend of higher expenditure on non-developmental purposes in the health sector. As pointed out by the Daily Times, around 50% of the national budget did not go into constructive health programmes; in 2005/06, only 16 billion of the 40 billion rupees earmarked by provincial governments for health was actually deployed for heath projects. With such a track record, the government will need to demonstrate not only the political will but also the concrete strategy to spur growth in the sector. Despite the gloom, there are some areas of interest, such as a focus on the upgrade of specialist treatment hospitals. In the medium-to-long term, this may translate into gradual demand for innovative drugs in the country. Most of Pakistan's secondary and tertiary hospitals are located in the country's cities, with the market dominated by the private sector. The recent earthquake highlighted the poor state of the national healthcare system, and the government is now looking at various options, including increased private participation in the running of public hospitals (see Pakistan: 30 December 2005: Private Healthcare Players Enjoy Burgeoning Opportunities in Pakistan).
For the drug industry, the regulatory constraints, protectionist environment and slow investment into the health sector still present a major barrier for growth, with major factors including cumbersome product registration and pricing policies. In addition, the government's intellectual property rights (IPR) legislation is not sufficiently stringent to attract investment from research-based global pharma firms (see Pakistan: 5 October 2005: U.S. Drug Companies Look for Investments in Pakistan). Rates of R&D investment in the industry are also among the lowest in the region, despite the government's announcement of a 50 million rupee fund last year. Opportunities exist, but in the absence of a concrete policy, the country remains a challenge for the pharmaceutical industry.
Related Articles:
- Pakistan : 30 May 2006: Medicine-Export Revenues Increase by 24% as Pakistani Control of Spurious Drugs Remains a Concern
- Pakistan : 21 December 2005: Medical Experts Urge Pakistani Policy-Makers to Strengthen Provincial Healthcare Services
- Pakistan : 3 November 2005: Local Drug-Makers Fear Foreign Competition, as Pakistani Government Plans Liberalisation of Imports
- Pakistan : 21 October 2005: Over-Charging by Pharmacists Causes Concern in Earthquake-Hit Pakistan