The ongoing dispute between pharmaceutical stakeholders and the National Medicines Regulatory Authority (NMRA) has escalated once more, with importers, distributors, and pharmacy owners expressing strong dissatisfaction over what they describe as the NMRA’s duplicity in regulatory decisions.
This frustration follows a series of legal actions, gazette notifications, and failed negotiations spanning from 2019 to 2025, resulting in continued uncertainty over the country’s proposed medicine pricing mechanism.
Pharmacy owners’ grievances
Speaking to The Sunday Morning, All-Island Private Pharmacy Owners’ Association (AIPPOA) President Chandika Gankanda said: “The Sri Lanka Chamber of the Pharmaceutical Industry (SLCPI) first filed a legal action in 2019, and we, as pharmacy owners, joined that legal battle as interveners. After years of delay, the NMRA issued another gazette in 2024. That led to another legal action by us – the AIPPOA – and once again, the NMRA had to withdraw the gazette. Then a new gazette was issued recently.”
He added that all these legal matters had been taken up before court on Monday (23), where all parties had been summoned. “All cases, including the earlier writ we filed for the previous gazette, were considered. But since that was a case against a now-withdrawn gazette, the matter was removed,” he explained.
According to Gankanda, importers, distributors, and pharmacy owners met the Health Minister on three occasions in April to resolve the matter collaboratively.
“There are around 7,500 registered medicine brands in Sri Lanka. When Rajitha Senaratne was the Minister of Health, only about 60 were controlled under the Maximum Retail Price (MRP). A blanket ceiling price poses a major risk to the sector, as many high-quality pharmaceutical manufacturers are pulling out of Sri Lanka due to non-viable margins,” he warned.
He added: “We have been campaigning for years to introduce a price formula based on the Cost, Insurance, and Freight (CIF) value. During former Minister of Health Keheliya Rambukwella’s time, a pricing mechanism was developed by a committee that included doctors and economists. It was headed by Prof. Sirimal Abeyratne and finalised after considering all our views. But when Minister Ramesh Pathirana took over, the implementation was stalled again.”
Revisiting the events of 2024, Gankanda recalled: “There was another gazette that year and we had to file another case. That gazette, too, was withdrawn. The NMRA Act clearly states that the pricing formula must be finalised in consultation with importers, distributors, and retailers.”
Concerning the most recent negotiations, he noted: “At our meetings with the Minister, all three stakeholder groups agreed to reduce the prices by 75%. It was presented formally by us – the importers, distributors, and retailers. The idea was that if a medicinal drug comes to Sri Lanka at Rs. 100, it could be sold at Rs. 175, factoring in clearance costs and other margins. The NMRA initially agreed to this.”
However, Gankanda said the NMRA then issued another regulation that contradicted what had been agreed upon. “They brought in a tiered system: for medicines priced between Rs. 1 and Rs. 40, a 75% markup was allowed. But for Rs. 40 to Rs. 2,000, only 65% was allowed; from Rs. 2,000 to Rs. 6,500, it was just 55%; and for anything above Rs. 6,500, only 45% was allowed. This is completely against what we discussed and committed to,” he said.
He stressed the financial strain this reversal placed on the sector. “There is a huge cost and investment involved in bringing medicines into the country. There is also a massive process in terms of clearance, compliance, and logistics. We agreed to a fair markup to ensure affordability while sustaining business. But this latest gazette has completely undermined the process.”
Gankanda confirmed that both the SLCPI and the AIPPOA had filed a fresh writ last week. “We have spent nearly six years fighting for a pricing mechanism that benefits the public and sustains the industry. But because of the NMRA’s inconsistent actions and contradictory gazettes, the advantage that should have passed on to patients never materialised,” he said.
He noted: “This duplicity by the NMRA has eroded trust and now the entire pricing reform is once again in limbo. It’s the patients who continue to suffer.”
NMRA guidelines
Against this backdrop, the NMRA has officially issued a new set of guidelines outlining the pricing mechanism for medicines in Sri Lanka.
The directive, released on 14 May, sets out the framework for calculating the MRP and Maximum Ceiling Price (MCP) for pharmaceutical products, reinforcing the legal provisions under the NMRA Act No.5 of 2015 and subsequent regulations published in the Extraordinary Gazette No.2429/12 dated 25 March this year.
Under the updated pricing formula, the MRP for medicines will be based on three components: the CIF value converted to Sri Lankan Rupees, applicable duties and taxes, and a structured Supply Chain Total Markup (SCTM). CIF values must be presented in US Dollars and converted using the average selling exchange rate for the past three months as published by the Central Bank. The markup structure is tiered, ranging from 75% for CIF values below Rs. 40 to 45% for CIF values above Rs. 6,500.
The guidelines apply to both newly registered and re-registered medicines. Applicants – including manufacturers and importers – are required to submit detailed documentation, including international reference prices, prior NMRA approvals, as well as recent import and sales data.
Subsequently, the NMRA will use both External Reference Pricing (ERP) and Internal Reference Pricing (IRP) to verify the submitted prices. Regional benchmarks include India’s National Pharmaceutical Pricing Authority, Bangladesh’s Directorate General of Drug Administration, and the British National Formulary, among others.
Importantly, no MRP will be allowed to exceed the gazetted MCP. In cases where the calculated MRP falls below the MCP, the lower price will prevail. Any future revisions of MRP due to exchange rate fluctuations – exceeding ±5% – will be assessed and implemented as necessary.
The NMRA emphasised that any requests for price increases must be formally submitted with full justification. These will be reviewed by the Pricing Committee, with appeals directed to the authority’s Appeals Committee. All approved MRPs must be clearly printed on product labels, and pharmacies are required to display them prominently. Non-compliance may result in regulatory or legal action.
The guidelines will be reviewed at least every six months or as needed. Stakeholders are encouraged to submit feedback to the NMRA via email at info@nmra.gov.lk. The full set of guidelines is available for public access on the NMRA’s official website.
This directive was issued with the approval of the Pricing Committee and signed by NMRA Pricing Committee Chairman Dr. Ananda Wijewickrama on behalf of the authority.
Price control background
Ever since the rupee began to depreciate following the Covid-19 pandemic, pharmaceutical companies have requested price increases for all essential medicines to correspond with the rupee’s fall in value.
Since 2021, the prices of all medicines have been revised three times due to exchange rate fluctuations, with increases of 9%, 29%, and 40%, respectively.
In 2021, medicine prices saw a 9% increase, and in 2022, local pharmaceutical prices were revised twice to address the gap caused by the drastic devaluation of the rupee in 2021. In March 2022, the prices of 60 essential medicines were raised by 29% through an extraordinary gazette notification. In 2023, the Health Ministry issued a gazette revising the MRP of 60 types of medicines. The prices of these medicines were reduced by 16% with effect from 26 June 2023.
Sri Lanka’s public health expenditure stands at 1.5% of Gross Domestic Product (GDP), aligning with the average for low- and middle-income countries but higher than regional peers in South Asia. In 2019, the Government allocated 23% of its healthcare budget (Rs. 54 billion out of Rs. 235 billion) for medicines. The total pharmaceutical expenditure in 2022 was estimated at Rs. 163 billion, with Rs. 58 billion for the State sector and Rs. 105 billion for the private sector. Per capita health expenditure rose from Rs. 22,314 in 2017 to Rs. 25,778 in 2018.
Despite an annual budget of $ 300 million for importing medicines and surgical supplies, Sri Lanka faced a $ 220 million funding gap as of January 2023 and owed Rs. 25.7 billion to foreign pharmaceutical suppliers, leading to delays and shortages. The 2021 budget for pharmaceuticals and consumables was reduced to Rs. 60.7 billion, a 29% decrease from the 2020 revised budget of Rs. 85.8 billion.
Price control on pharmaceuticals was introduced in 2016 through a gazette notification issued by the Health Ministry, reducing the prices of 48 pharmaceutical drugs, mainly prescribed for non-communicable diseases such as diabetes and high blood pressure, under the NMRA Act No.5 of 2015. As of now, the Government presently controls the prices of 60 medicines.
In such a backdrop, when contacted, Ministry of Health Secretary Dr. Anil Jasinghe confirmed that the new pricing mechanism was expected to be implemented soon, with relevant authorities actively working on finalising the details.
When asked about the recent legal challenges, he acknowledged that another case had been filed but emphasised that the ministry remained committed to moving forward with the revised pricing framework.
NMRA stance
In responding to the allegations levelled by industry experts, NMRA Chairman Dr. Wijewickrama said: “The NMRA remains fully committed to establishing a fair and transparent pricing system for medicines in Sri Lanka, despite ongoing legal challenges.”
He explained that initial discussions with pharmaceutical importers, distributors, and retailers had included an agreement to implement a maximum markup of 75%. However, this 75% margin is part of a regressive markup structure, where the allowable percentage decreases as the landing price of the medicine increases.
“For example, if a medicine’s landing price is Rs. 100, it may be sold at Rs. 175, meaning the cost plus a 75% markup. However, applying a 75% markup on a product that costs Rs. 10,000 would lead to a price of Rs. 17,500, which is neither justified nor necessary. Therefore, the markup rate decreases progressively for higher-priced medicines, with the lowest markup rate set at 40%,” Dr. Wijewickrama clarified.
He further noted that although there was initial agreement from industry stakeholders, some had later withdrawn their consent and filed multiple legal cases challenging the new regulations.
Dr. Wijewickrama provided concrete examples highlighting the need for regulation: “Consider the Lorid syrup, commonly used for children’s cough and cold. Its landing price is approximately Rs. 260, but it is currently being sold at Rs. 674 – a markup of over 150%. Similarly, the deworming tablet Wormin 500 has a landing price of Rs. 30 but is sold at Rs. 83.60. These excessive markups place an unnecessary burden on patients, especially for essential paediatric medicines.”
Regarding the impact of ongoing court proceedings, the Chairman said: “Due to the injunctions obtained by some companies, the NMRA was unable to publish official prices for a period, allowing prices to remain inflated. However, the injunction related to the previous gazette has recently been lifted, and we have withdrawn the earlier pricing notice to issue a new one compliant with court decisions.”
He stressed that the process of regulating medicine prices would be gradual: “We cannot immediately fix prices for all 7,500 registered pharmaceutical brands in Sri Lanka. The NMRA is implementing this step by step, starting with selected medicines and extending regulation as new registrations occur.”
“Our mandate is to protect patients from unfair pricing while ensuring access to quality medicines. Despite resistance, we are moving forward with this essential reform to bring relief to consumers across the country,” he concluded.