US embassy cable - 05COLOMBO1404

UNCLAS SECTION 01 OF 03 COLOMBO 001404 
 
SIPDIS 
 
DEPARTMENT FOR SA/INS 
 
DEPARTMENT PASS TO USTR 
 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, EAID, CE, WTO 
SUBJECT: PHARMACEUTICAL INDUSTRY DEEMS SRI LANKA 
NATIONAL DRUG POLICY ANTI-TRADE 
 
 
1.  Summary.  Sri Lankan health authorities are 
discussing a new National Medicinal Drug Policy 
(NMDP) that would theoretically preserve access to 
low-cost, essential medicines.  The main selection 
criteria for drugs under this new policy will include 
cost-effectiveness, need, quality, safety and 
efficacy.  The policy also proposes to promote the 
import of generic drugs and restrict the use of brand 
name drugs.  The pharmaceutical industry is concerned 
about the NMDP and says it is anti-trade and does not 
bode well for patient choice, pharmaceutical research 
companies, or healthcare in general.  End Summary. 
 
2.  In late-June, the Ministry of Health convened a 
two-day consultation to finalize a proposed National 
Medicinal Drug Policy.  The NMDP?s key objective, 
based on the essential medicine concept, is the 
availability and affordability of effective, safe and 
good quality medicines, i.e. cheap drugs.  Other key 
recommendations include: 
 
-- Limiting the number of varieties of a given drug 
(brands); 
 
-- Mandating generic prescriptions by doctors; 
 
-- Permitting ?cost effective? generic substitution 
by pharmacists with the approval of the patient; 
 
-- Incorporating into national laws the Doha 
Declaration on medicinal drugs (to allow parallel 
imports and compulsory licensing) to ensure 
affordability of needed medicine; 
 
-- Giving preference to local manufacturers in the 
supply of drugs to the government sector; and 
 
-- Establishing a National Medicinal Drugs Regulatory 
Authority (NMDRA) responsible for regulation and 
control of drugs. 
 
3.  The consultation appeared to be heavily biased 
toward the views of government health officials, 
given the number of officials who attended and the 
background of the various speakers.  The proposed 
policy still needs cabinet approval, drafting and 
parliamentary approval to become law. 
 
4.  There is no comprehensive health or drug policy in 
Sri Lanka.  Currently, all medicinal drugs, whether 
imported or locally manufactured, need to be registered 
with the Cosmetics Drugs and Devices Authority (CDDA). 
The CDDA is under-funded and understaffed and drug 
regulation is weak. Infiltration of substandard and 
counterfeit drugs is a problem and self-medication is 
on the rise.  In addition, practically any drug can be 
bought over the counter without a prescription. 
Reportedly, over 9,000 drugs are registered in the 
country (with about 3,000 brand name and generic drugs 
currently available) creating a chaotic situation in 
prescriptions and sales. 
 
5.  The standard and delivery of government medical 
services, which are supplied free of charge, also 
leave much to be desired.  As a result, Sri Lankans 
are increasingly resorting to private sector health 
care, although there is no national health care 
insurance scheme.  Consequently, the cost of medical 
care and drugs has become a major political issue. 
The NMDP was initiated by the World Health 
Organization (WHO), which supported the cost 
effectiveness criteria due to financial constraints 
faced by the Government and the people of Sri Lanka 
in meeting health care expenses. 
 
SUPPORTERS HAIL THE ?PATIENT FRIENDLY? DRUG POLICY 
 
6.  The new policy has drawn support from various 
sectors.  According to pharmaceutical industry 
sources, the policy is designed and has the backing 
of groups with a socialist ideology in the health 
sector.  A key supporter is Prof C. Weerasooriya, a 
former head of the Pharmacology Department of the 
Colombo University and currently a WHO regional 
advisor on drug policy.  Weerasooriya is the 
facilitator of the NMDP and newspapers quoted him 
hailing the NMDP as ?a model for South Asia and the 
third world in fostering a patient friendly drug 
policy.?  There are several others in the CDDA and 
government medical service who support the move. 
The policy has received strong support of health 
activists. Some sections of the media have also 
hailed the proposed ?patient friendly? drug policy 
saying consideration of cost effectiveness and need 
when registering drugs will result in cheaper drugs 
leading to a healthier life. 
 
INDUSTRY SAYS COST EFFECTIVENESS AND NEED SHOULD NOT 
BE CRITERIA 
 
7.  The Independent Medical Practitioners Association 
(IMPA)(private medical practitioners) and the 
pharmaceutical industry oppose the NMDP.  Michael 
Andree, Managing Director of GlaxoSmithKline Sri 
Lanka, the only international pharmaceutical company 
manufacturing in Sri Lanka, expressed great concern 
about the policy.  He strongly criticized the move to 
consider cost effectiveness and need when registering 
drugs, adding that these two factors have never been 
recommended by the WHO as criteria for registration. 
He said that evaluation should be purely science- 
based and should test for quality, efficacy and side 
effects, which are the basic global criteria in the 
selection of drugs.  Andree also expressed concern 
about mandatory generic prescriptions and giving 
pharmacists authority to substitute a prescribed drug 
with a generic as this will eliminate the doctor?s 
and patient?s choice in treatment.  According to 
Andree, pharmacists might recommend the cheapest 
drug, which would not be in the best interest of the 
patient and might also violate the contract between 
the doctor and the patient.  The IMPA also expressed 
similar sentiments and added that the decision to 
allow generic substitution by pharmacists is 
premature due to the present stage of development of 
Sri Lanka?s drug regulations and its pharmacy system. 
Further, there is no system to test the efficacy of 
generic drugs in Sri Lanka. 
 
A BID TO RESTRICT PHARMACEUTICAL RESEARCH 
 
8.   According to Andree, the NMDP has been drafted 
and supported by a group with an irrational ideology. 
It is not in the interest of research-based 
pharmaceutical companies such as Glaxo and could 
limit the availability of good quality drugs. 
However, the absence of a direct presence here of 
research-based pharmaceutical companies other than 
Glaxo and Aventis (Aventis has a trading operation), 
restricts their ability to fight anti-business 
policies.  Glaxo has had several bad experiences in 
Sri Lanka trying to protect its patents and fighting 
policies aimed at excluding business opportunities 
for research based pharmaceutical companies.  He 
believes the NMDP will have long-term negative 
effects on the health sector and pharmaceutical 
companies. 
 
9.  Another area of concern is the recommended policy 
on parallel imports.  According to Andree, the Doha 
declaration clause on parallel imports is being mis- 
interpreted in the NMDP, by attempting to include 
parallel imports in the national policy as a general 
clause, and not limiting it to national emergencies. 
 
10.  Pharmaceutical industry sources contacted by the 
Embassy expressed mixed feelings about the probable 
outcome of the policy.  While some sections of the 
pharmaceutical industry believe the NMDP will never 
come through, others think that it will be at least 
partially implemented.  Whatever the case may be, 
Andree foresees the risk that someday, an official 
could utilize any small steps taken now and fully 
implement this proposed policy.  Andree says that 
this policy, if implemented, will have a negative 
impact on free trade and free choice.  Glaxo will 
take legal action if it is implemented in its present 
form.  Some industry representative believe that 
India?s recent accession to WTO TRIPS will mean that 
manufacturers in India will no longer be able to copy 
drugs as freely as in the past, reducing the amount 
of generic drugs available in the Sri Lankan market. 
Andree, however, disagrees and says that Indian 
accession to TRIPS agreement will not immediately 
stop generic supplies from India. 
 
11.  Comment:  With the increasing incidence of self 
medication, poor state of government medical 
services, public health-related outbreaks, and free 
availability of generic drugs, the need for a 
national health policy and a drug policy is 
defensible.  However, as drug pricing is a highly 
sensitive issue, it has become easier for officials 
to gain political mileage by focusing on drug prices 
rather than on the related need for a health policy 
and a drug policy.  Pharmaceutical companies have not 
publicly voiced their dissent although some have 
expressed displeasure to concerned GSL contacts. 
From a global point of view, although Sri Lanka is a 
small market, such biased policies could set a 
precedent for other countries to restrict the 
operations of pharmaceutical companies.  End Comment. 
ENTWISTLE