• Importers struggling to find rupees and dollars to open LCs for imports 
• Most products out of stock due to importers’ inability to open LCs: SLCPI 
• SPC owes Rs. 28 b to pharma importers, creating cash flow issue 
• Acute shortage of over 90 essential meds in State hospitals: GMOA
• $ 20 m out of $ 100 m pledged by AIIB to be used to pay dues: Chandraguptha 

By Maheesha Mudugamuwa  The ongoing drug shortage in Sri Lanka is expected to worsen as pharmaceutical importers are struggling to source rupees needed to open Letters of Credit (LCs), while banks strain to source dollars to meet the requirements, The Sunday Morning learns. The depreciation of the rupee, inability to open LCs, high interest rates, and unpaid dues owed by the State Pharmaceuticals Corporation (SPC) has already impacted the industry, leaving many struggling to stay afloat. Pharma companies struggling “We have been waiting for months to get our bills settled. If the bills are not settled immediately, we won’t be able to continue our business,” a medium-scale pharmaceutical company owner who wished to remain anonymous told The Sunday Morning. “We are running a business. We have obtained loans from banks at higher interest rates. Now we have to pay our loans but we have not got paid for supplies we made months ago,” the company owner lamented.  Sri Lanka Chamber of the Pharmaceutical Industry (SLCPI) President Sanjiva Wijesekera said that most companies were finding it difficult to open up Letters of Credit (LCs), due to which most products were out of stock. “Apart from that, SPC owes the companies, which is another issue. It is about Rs. 28 billion,” he said. “Due to the rupee depreciation, whatever you were buying at Rs. 203, now you have to pay Rs. 371. This is for importation only. Previously the interest rate was around 9%, now it has gone up to over 30%. When we import and supply SPC, it doesn’t settle our dues, so we have to pay interest on that. For SPC tenders we generally keep small margins. This is one area where we have been badly affected,” he said. Wijesekera explained that pharmaceutical imports generally received 120 to 180 days of credit from the supplier, for which they had to open LCs. After 120 or 180 days, the payment was required. “You need forex to open LCs. Now banks do not have forex, so we are compelled to remit the money via Telegraphic Transfers (TT) and the maximum limit, unlike LCs, is $ 50,000. When you send money via TT, you have to pay upfront; we do not get the credit period,” Wijesekera lamented.   Unions warn of shortages   Meanwhile, unions attached to the health sector are calling on the Government to expedite medicine importation in order to avoid further crippling the country’s health sector. The Government Medical Officers’ Association (GMOA) maintains that there is an acute shortage of more than 90 essential medicines in most State hospitals. GMOA Secretary Dr. Haritha Aluthge told the media that the hospital network in the country would collapse due to shortages. According to the GMOA, emergency medicines, such as aspirin, which is used to prevent heat stroke, are in short supply at the National Hospital of Sri Lanka (NHSL) and there is also a shortage of medicines and medical equipment for operations. All Ceylon Nurses’ Union (ACNU) General Secretary S.B. Mediwatta stressed that the drug shortage had posed a serious delay in routine surgeries and in some circumstances surgeries had been cancelled when the patients were not able to find the essentials. “The Government has put the entire weight on the public; poor patients are required to bring essentials for their surgeries. In some wards they have publicly put up notices mentioning what drugs and medical equipment they should bring from outside for their surgeries,” he stressed. “It is mostly poor people who seek the support of Government hospitals. They can’t afford the medicines required from outside,” Mediwatta stressed, adding that the NHSL was currently facing a severe shortage of essentials and it had been allowed to make local purchases. Meanwhile, Academy of Health Professionals (AHP) President Ravi Kumudesh said the drug supply chain had been impacted due to delays in procurement and the forex crisis. “If there are no medicines in the supply chain, we are in for a big problem. There are either limited or no stocks at hospital level,” he said.   Kumudesh further said that when stocks ran out at hospital pharmacies, the Medical Supplies Division (MSD) restocked the products. However, with stocks distributed from the MSD to hospitals running out, problems of distribution between the MSD and SPC have arisen.   Ministry stance   Ministry of Health Secretary Janaka Sri Chandraguptha stressed that the Ministry had paid part of the bills and the rest would be settled soon. According to him, the Ministry is expecting $ 100 million from the Asian Infrastructure Investment Bank (AIIB). He said the AIIB had agreed to provide $ 100 million for the purchase of essential medicines and medical supplies by revising the scope of the Colombo Urban Regeneration Project and the Reduction of Landslide Vulnerability by Mitigation Measures Project funded by the bank. He explained that $ 20 million out of the pledged $ 100 million would be utilised to pay off bills of the pharmaceutical companies as some companies were now reluctant to release drug stocks until they had received their due payments. He said that the Treasury would release Rs. 5 billion this week to settle the bills all together, while the Ministry was planning to settle around Rs. 13 billion worth of bills.     BOX Pharma companies arbitrarily increasing prices?   The All Island Private Pharmacy Owners’ Association (ACPPOA) alleged that some pharmaceutical companies have increased prices of non-controlled items by around 700-800%, as a result of which patients were facing a huge difficulty in obtaining medicine. ACPPOA President Chandika Gankanda said: “At present people are buying medicines on a daily basis as they cannot afford it. Prices have gone up drastically and around 85% of the drugs brought down by the State Pharmaceutical Corporation (SPC) are also no longer available in pharmacies. Several companies have increased prices in such an unfair manner.” However, Sri Lanka Chamber of Pharmaceutical Industry (SLCPI) President Sanjiva Wijesekera denied the allegation: “These are very unprofessional statements. Fortunately for them, they have not specified a company; if they had they would be taken to task. These are political debates where you use mudslinging.” “The problem is they have been asking for a higher percentage from us, which we have not been able to give. Every time the dollar depreciates, we fight and get particular increases. If we request a 20% increase, we get around 15%. No sooner we get that 15%, these guys ask for 1% or 2%. How can we give that? They don’t import. We find money and import and we are getting somewhat of a cushion for currency depreciation. Their expenses may have gone up, but we can’t pass on whatever we get – we don’t even get the full amount,” he added.