SAN SALVADOR, Feb 1 2013 (IPS) – After years of delays and obstacles, a law regulating the pharmaceutical market has come into effect in El Salvador, giving its people access to medicines at more reasonable prices, with discounts of over 50 percent for some drugs sold in high volumes, like diabetes medication.
The Medicines Law is a major step forward for health rights in El Salvador, Margarita Posada, the head of the Salvadoran Association of Community Health Promoters and one of the first activists to present in 2002 a bill to limit the abusive practices of drug manufacturers and retailers, told IPS.
In early January, the Dirección Nacional de Medicamentos (DNM, National Directorate of Medicines), newly created by the law, published maximum retail prices for 4,406 medicines that are on average 35 percent lower than before.
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Within this list of named medicines, the drugs with the highest volumes of sales and the highest costs had their prices slashed by an average of 69 percent, good news for consumers who for decades have been paying high prices fixed by an under-regulated industry which has been accused by social organisations of committing marketing abuses.
For instance, the DNM list shows that a medicine for treating high cholesterol, previously sold at 68 dollars, will now cost 37 dollars, and another for diabetes, formerly 23 dollars, will cost 10.73 dollars. (These are chronic conditions, so savings over a year are substantial.)
The price control measures apply only to prescribed medicines, not to over-the-counter preparations, according to the law that was approved in February 2012, but only came into effect Dec. 29 when the executive branch provided it with the necessary regulations to translate it into policies.
Pharmacies have until Apr. 1 to adopt and display the new prices established by the DNM rules.
The World Health Organisation recommends that medicines should not be priced at over five times the international reference price (IRP), but in this country that multiple has been exceeded many times over, according to studies carried out by the state University of El Salvador.
Of course, there have been abuses on the part of the pharmaceutical industry, said Posada. The same medicine for treating high blood pressure costs the equivalent of four dollars in Ecuador, but 17 dollars in El Salvador.
The prices on the DNM list were arrived at by comparison with the cost of medicines in the rest of Central America and with IRP listings. A new list of around 7,000 products with significantly lower new prices will be issued in February.
In (two) months time, all these products must be labelled with the maximum retail price, the head of DNM, José Vicente Coto, told IPS.
As these prices are announced, the pharmaceutical sector remains as hostile as when the legislation was first being debated.
Pharmacy owners, the final link in the chain that has to absorb the price changes, met in December with DNM officials for clarification of the scope of the new regulations. But the meeting turned into a forum for the business owners to voice their collective disagreement with the enforcement of the law.
They say they will lose out because, in two months time, they will not be allowed to sell products they bought under the old price regime at their original cost.
There is no doubt that we will suffer losses. We cannot lower prices just because the law says so, said Ricardo Iglesias, the owner of La Divina Providencia pharmacy in Chalatenango, in the north of the country.
In general, the pharmacy owners complained that the regulations are forcing them to change their prices, but not the pharmaceutical laboratories that produce the medicines, nor the distributors or middlemen.
The DNM director told them that the law only regulates the retail price, but obviously it is expected that the whole production chain will have to adapt to the new rules, including the laboratories and the distributors.
Meanwhile, the Pharmaceutical Chemistry Industry Association of El Salvador (INQUIFAR), which represents the laboratories, said the sector will not survive with the prices set by the law.
Carmen Estela Pérez, the executive director of INQUIFAR, said they have identified a large set of medicines that they will not be able to sell because the prices fixed by the regulations are below the cost of production.
The prices we have seen (on the list) are non-viable, Pérez told a television channel. She underlined that 7,000 direct jobs and 110 million dollars a year from pharmaceutical exports are at stake.
In October 2012 the Supreme Court agreed to try the case of a constitutional challenge from a private citizen against some of the articles in the Medicines Law. This represents the pharmaceutical industry s last card in its bid to have the legislation, and the price cuts, repealed.
Pérez hinted that the law, promoted by the parliamentary bench of the governing Farabundo Martí National Liberation Front (FMLN), might be an attempt to displace national industry in favour of ALBA Médica (Medical ALBA), an initiative she says aims to follow in the footsteps of ALBA Petróleos, an oil company that is a joint venture between FMLN mayors and the Venezuelan government.
Everything related to the Bolivarian Alliance for the Peoples of Our America (ALBA) is a source of severe irritation among conservative sectors in El Salvador, due to the close relationship between leaders of the FMLN, a former guerrilla group, and the Venezuelan government of President Hugo Chávez and his 20th Century Socialism, which promotes this alliance of Latin American governments.
Political analyst Kirio Waldo Salgado said in a television interview that if ALBA Médica enters the market, there is no need for alarm, because that is what the free market, loudly advocated in El Salvador, is all about.