Drugs cartel holds Zimbabwe to ransom

Dr Gibson Mhlanga
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A pharmaceutical drugs cartel, comprising mainly of businesspeople with links to India, is holding the country to ransom, amid revelations that only a few wholesalers have permission to distribute most “fast-moving” and cheaper drugs from India to the local market.

Investigations carried out by the State media revealed that one of the wholesalers, who is also of Indian origin, has exclusive rights from most Indian manufacturers to provide at least 85 percent of these cheaper drugs to both the private and public health sectors.

Any other wholesaler wishing to bring in the same products from the same manufacturers is barred from doing so, giving the few with exclusive dealership monopoly to charge prices they deem fit.

Investigations revealed that some of those with exclusive dealership were making profit margins of over 300 percent because of relaxed pricing regulations for medicines in Zimbabwe.

This is despite the fact that importation of medicines is duty and VAT-free.

For example, the maximum price of a rabies vaccine is pegged at $3,65 in Indian retail pharmacies.

In Zimbabwe the drug costs between US$25 and US$30.

Another drug, Enoxaparin, used in the treatment of blood clots, costs at most US$5.38 for an injection in Indian retail pharmacies, but in Zimbabwe costs US$12 at wholesale.

Nifedipine (20mg), a hypertensive drug commonly used in Zimbabwe costs 0,22 cents in retail pharmacies in India. The same drug is sold for US$0,50 cents by wholesalers in Zimbabwe.

Clotrimazole — a fungal cream — costs US$0,62 for 30g in India and US$7 in Zimbabwe.

Salbutamol — asthma inhaler — costs US$1,08 in India and US$6 in Zimbabwe.

The Herald also learnt that because of lack of competition on the market, the wholesalers can unjustly increase prices of the products they have exclusive dealership over, taking advantage of desperate Zimbabwean patients.

For example, tetracycline eye-drops used for newborn babies were pegged at $1 in 2008 up to 2016, but the price was unjustifiably doubled to $2 lately.

While most retailers are accepting all forms of payment, those paying using RTGS are charged based on prevailing parallel market rate, disadvantaging access to health by a majority of patients who have no access to foreign currency.

Investigations further revealed that local retail pharmacies also cannot import the same medicines from other cheaper wholesalers in the region.

“At some point, I tried to get these cheaper generics from a South African wholesaler whose prices were much lower than those that were being charged by our local wholesalers but the South African wholesaler was reported to the principal in India (the manufacturer) and was threatened with cancellation of dealership if he continues supplying medicines to the Zimbabwean market.

“Eventually I was left with no option than to get the medicines from our local wholesalers and simply pass on the burden of paying such huge amounts to patients,” said one of the sources in the pharmaceutical industry who spoke on condition of anonymity.

The Herald also established that locally, current regulation does not permit any other wholesaler to bring in medicines that have already been registered by another wholesaler unless that particular wholesaler with initial registration confirms that they do not have stock.

“The bottom line is that our pharmaceutical industry lacks competition and we know that competition plays a huge part in bringing down costs of commodities. In addition, the regulation is very relaxed as no one controls or monitors pricing of pharmaceuticals in the country. This leaves so much room for price distortions in the market,” said another source.

According to the Ministry of Health and Child Care, regulation of medicines is done by the Medicines Control Authority of Zimbabwe (MCAZ) but its sole mandate is to register new drugs and control sale of counterfeit drugs.

The Authority does not have a mandate to control or monitor prices of each dealers’ products once registration has been approved.

In an interview with The Herald yesterday, acting secretary in the Ministry of Health and Child Care Dr Gibson Mhlanga said there was need for the country to come up with ways of increasing competition in distribution of pharmaceutical products.

“We do not regulate the pricing of pharmaceutical products. What we regulate is what the wholesaler or anyone who want to deal in medicines can bring into the country and our regulatory arm is the MCAZ. So no one is allowed to bring in medicines that is not registered with MCAZ but unfortunately we cannot influence how they charge their products,” said Dr Mhlanga.

He said given such a scenario, it was possible that someone with exclusive rights to a particular drug from a particular manufacturer can overprice their products because of lack of alternatives.

However, market monopolies are one of the key functions the Competitions and Tariffs Commission was created for. Section 5 of the Competition Act (Chapter 14:28) mandates the CTC to investigate, discourage and prevent restrictive practices in industry. It also empowers the CTC to study trends towards monopoly situations and prevention of such situations, where they are contrary to the public interest.

Prohibitive costs of pharmaceutical products in Zimbabwe are pushing many individuals to source their medications from neighbouring countries such as South Africa and Zambia where prices are cheaper.