Medicine prices may not rise in domestic mkt

Medicine prices are unlikely to increase in Bangladesh due to its graduation in 2026, according to a latest study, but exports of pharmaceutical items would be affected as export subsidies the industry now enjoys under WTO rules would go.
However, other factors like structural challenges in the health sector and rising energy - gas and electricity - costs may adversely impact medicine prices, it said.
"LDC graduation per se should not be affecting medicine prices. And partly because Bangladesh has incorporated certain WTO and TRIPS-related flexibility such as choice of patentability, compulsory licensing, and parallel importation into the Bangladesh Patent Act," RAPID chairman Dr MA Razzaque said, presenting the study findings at a city hotel on Saturday.
The RAPID study also revealed that the discontinuation of export subsidies, a WTO requirement post-graduation, may lead to an estimated 6.9 per cent decline in export earnings for pharmaceuticals.
Research and Policy Integration for Development (RAPID) with support from the Foreign, Commonwealth and Development Office (FCDO) has conducted the study to analyse the economic impact of Bangladesh's impending LDC graduation on the pharmaceutical industry and its implications for drug prices in the local market.
Bangladesh is set to graduate from the least developed country (LDC) status in 2026.
Out-of-pocket expenditure on medicines accounts for 73 per cent of total health spending in Bangladesh, significantly higher than the global average of 17 per cent.
According to Bangladesh Bureau of Statistics, around 16.2 per cent of households having at least one member suffering from a chronic illness and on average, poor households, defined as the bottom 40 per cent of the population by income, spend up to 20 per cent of their income on medicine-related costs.
High health expenditures exacerbate poverty risks, particularly for families managing costly chronic conditions like cancer or kidney diseases.
Dr Razzaque said the country has introduced the Bangladesh Patent Act (BPA) 2023 to align with the rules under TRIPS Agreement and the Act excludes pharmaceutical products from patent protection until the country's graduation from LDC status.
Additionally, this exemption can be extended for three more years after graduation, based on a decision made at the WTO's 13th Ministerial Conference to support a smooth transition.
Bangladesh's current capacity to produce patented medicines remains limited, reducing the likelihood of immediate disruptions post-graduation, he said.
"Only 5.0-10 per cent of currently produced drugs are patented, and LDC graduation is unlikely to increase their prices, as these drugs do not meet the novelty criteria for patents post-LDC graduation even if they remain within their patent protection time frame."
BPA 2023 limits royalties for producing patented drugs to a maximum of 4.0 per cent of local sales revenue, ensuring that the prices of new patented medicines remain affordable, he said.
If negotiations with the patent holder fail at this royalty rate, he added the government can issue a compulsory licence to produce the drugs without the patent holder's permission, provided that there would be domestic production capacity.
He, however, said structural reforms addressing healthcare financing are critical to alleviating the broader economic burden on households.
Explaining the graduation impact on pharma exports, the report said pharmaceutical exports comprise a relatively small portion of the sector's revenue and Bangladesh's overall exports, mitigating broader economic impacts.
Reliance on imported Active Pharmaceutical Ingredients (APIs), which make up 95 per cent of domestic API use, leaves the sector vulnerable to supply chain disruptions.
"Enhancing local API production is crucial to reducing costs and increasing resilience," it noted.
The study recommended deepening support for the sector by leveraging the extended three year WTO post-LDC period to continue royalty-free medicine production, build capacity for patented and high-value drugs.
It also stressed on full operationalisation of the API Industrial Park, establishing testing facilities and promoting investment and enhancing healthcare accessibility, including expanding health insurance coverage and targeted subsidies for poor and vulnerable populations with treatment needs.
Its other suggestions included building institutional and legal capacities and securing an extended pharmaceutical waiver from the WTO.
Speaking at the event, Lutfey Yasser Siddiqi, special international affairs envoy of the Chief Adviser reflected a deep understanding of the challenges and opportunities facing Bangladesh's business environment, particularly in the context of its transition to a more open, competitive economy.
Terming the industry sophisticated, he stressed the need for thoughtful, strategic decisions rather than rushing into changes, particularly with regard to the country's graduation from LDC status.
He emphasised the importance of developing a clear decision framework for Bangladesh's graduation from LDC status based on data, detailed cost-benefit analysis and conditions of this transition.
He stressed the importance of improving the ease of doing business in three key areas-inside the government by streamlining processes within government agencies, for business by making it easier for businesses to operate efficiently and between government and the private sector by fostering better communication and collaboration.
Abdul Muktadir, president of Bangladesh Association of Pharmaceutical Industries (BAPI), agreed with the findings saying that there will not be much effect on prices after post-LDC and accessibility, availability of the products, and pricing will remain the same for a short time.
Expressing concern, he said that while lower medicine prices in Bangladesh compared to countries like India may seem beneficial, they could jeopardise the financial viability of the pharmaceutical industry.
Persistently low profit margins could lead to closures in the long term, compromising the industry's ability to support public health objectives, he said, adding that some multinational companies have already left the market and there were no clear signs of new investments entering the industry.
This stagnation raises serious concerns about the sector's ability to grow or even sustain its current capacity, he said, stressing on resolving the energy crisis with a stable and cost-effective energy supply which would reduce operational costs and enhance the competitiveness of Bangladesh's pharmaceutical sector.
Director General of Drug Administration Md Akter Hossain said the lack of proper collaboration and a supportive attitude towards the pharmaceutical sector remains a significant issue.
Terming five years not a long period and to address the challenges of LDC graduation, he suggested addressing the difficulties faced by the manufacturing and import sectors.
Moderated by RAPID Executive Director Dr M Abu Eusuf, Additional Commerce Secretary Md Abdur Rahim Khan, Dhaka University Professor and Pro-Vice Chancellor (Administration) Dr Sayema Haque Bidisha and former chairman of GSK Bangladesh Masud Khan, among others, spoke at the event.

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