EXCLUSIVE: Pharmaceutical Wholesalers Speak On ‘Cartel’ Claims

INDIAN Pharmaceutical companies operating in Zimbabwe have refuted claims that there are running a ‘medicine wholesale cartel’ in Zimbabwe colluding in the pricing madness of medicines to quash competition.

By Kudakwashe Pembere

The response comes hot on the heels of reports that there is a cartel of pharmaceutical wholesalers in Zimbabwe monopolising drugs. Investigations done by this publication show there are several wholesalers responsible for the distribution of medicines in Zimbabwe by the Medicines Control Authority of Zimbabwe. With international manufacturers that directly ship the medicines into the country the number is over a hundred.

On the MCAZ website, the latest list of medicines registered and companies responsible for manufacturing and distributing, there were instances of several wholesalers selling more than one brand. In separate interviews with highly placed sources in the wholesale industry, they argued that since the pharmaceutical business in not the same as other industries which manufacture or distribute sugar or sweets.

“The pharmacy industry is different. There can only be a sale if there is a prescription. So you cannot buy and sell like sweets, or sugar where you can put on a shelf. I can only sell to the pharmacy if they have a script of the product. A cartel is when you will be colluding to fix prices. I don’t think there is any price fixing. The products are sold on a need based requirement. If there are only ten people with a certain disease, the prescription is for ten people. So how can prices be fixed,” said the source.

The source lauded MCAZ for its thoroughness in monitoring wholesalers that import medicines from other countries.

“There are 20 000 Indian Pharmaceutical Manufacturers. We have got some that are very competent and others that are incompetent. Zimbabwe is a highly regulated industry in terms of import of drugs and registration of drugs. In Zimbabwe we have the regulator, the Medicines Control Authority of Zimbabwe. We are one of the most competent, the most thorough when it comes to licensing of medicines. For you to get a product registered by MCAZ, it means your standards are up to scratch. They do that for a good reason. They want to make sure that the medicines imported into the country are safe for people to use, and also that they are efficacious meaning they do what they are purported to do. So there will be no short cuts and I trust and believe that they do their work. And also they have an oversight role in the industry. They monitor our activities to make sure that the products we bring are safe,” said the source.

With the regulator being strict on quality, the source revealed they only allow high quality Indian medicines as well as others manufactured in the UK and the United States of America.

“There is another issue of comparing prices in India with those of Zimbabwe and South Africa. If I am to give you my exit price which I am not allowed to by Law you will be shocked. Zimbabwe does not only get its products from India pharmacopeia. These are standards for example if you look at a drug they are either written BP for British Pharmacopoeia, US Pharmacopoeia, or Indian Pharmacopoeia. These are standards for the manufacturer. So in India, the standards are a bit low. Therefore the manufacturer manufacturing using those standards, their production costs are lower. So they can sell within the Indian market or any other market with similar standards. For markets that insist on the highest pack, British or US like Zimbabwe, the more the drugs get expensive. So for some of the products they are probably written for Indian Market Only. So when some of the people go on the internet and research they find Indian prices and compare with Zimbabwe,” said the wholesaler.

The wholesaler also said that they do not have any influence in the prices seen at pharmacies.

“On the distribution side, as wholesalers we get from the manufacture, we distribute to registered pharmacies, and they are checked by MCAZ. At the pharmacy, we are excluded from their charging models. There is an issue where a person enters into a pharmacy, they see a product inscribed it’s been distributed by a certain company.

“When he goes there, they will be pointing the distribution company saying it sold them the product. The product will be from the distribution company but the retail pharmacy would have put its own mark up. We do not determine the prices of retail pharmacies,” said the source.

Another source said there are times manufacturers cancel exclusive rights with wholesalers.

“You also have to consider that we have received letters of termination of arrangements between us and the manufacturers, this happens in other countries as well where if manufacturers feel we are not performing as per their expectations they may cancel.

“Another thing is that the distribution arrangements have a time frame. As they know the economic situation in the country, sometimes they can give us an extension period,” said the source.

Pharmaceutical Society of Zimbabwe  which represents retail pharmacies, wholesalers and manufacturers through its president Mr Portipher Mwendera said  there are no cartels in Zimbabwe.

“No I do not subscribe to the notion that there are cartels in the pharmaceutical value chain in Zimbabwe. Admittedly there are monopolistic tendencies mostly due to the nature of how distribution of medicines is controlled worldwide.

“Competition can only be healthy in the true economic sense when a user does have a variety of options to choose from. Due to market authorisation requirements not many players jave their molecules in some therapeutic areas registered in our market leaving only a few players and thus creating a monopoly,” Mr Mwendera said.

Acting Health and Child Care Ministry Secretary Dr Gibson Mhlanga was quoted as saying that 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.

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