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22nd April 2001
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Patients before patents

SPC ready to slash prices of drugs

By Louis Benedict
In the wake of a historic court victory in South Africa on the sale of cheaper generic drugs, Sri Lanka's State Pharmaceuticals Corporation says it is also ready to import cheaper generic drugs for major ailments if Cabinet approval is given. The SPC was responding to a Pretoria court battle where the world's richest drug makers withdrew from their legal battle to stop South Africa importing generic AIDS drugs. The decision by 39 drug firms to drop the landmark court case was hailed as a major victory for the world's poorest countries in their efforts to import cheaper drugs to combat AIDS and other major diseases. 

'The outcome of the case signals a dramatic shift in the balance of power between developing states and drug companies. Oxfam, Medicines Sans Frontieres and the South African Treatment Action Campaign' said in a joint statement, "It sends a clear signal to the third world governments that lives should and can take precedence over patents." The crux of the South African case was its right to buy or produce cheap generic drugs.

The drug companies had negotiated deals with individual countries to slash the price of triple drug combination therapy which costs about $10000 a year in the United States to about $ 1000. But the same drugs can be bought from generic producers for as little as $300.

SPC Chairman Prof. Colvin Gooneratne said the Corporation was ready to import widely used drugs under generic names from suppliers from India and elsewhere, if cabinet approval was granted. He said the SPC could import the much cheaper generic drugs, not only for the treatment of AIDS, but also for other major diseases. Generally, the generic drug is less than one-third the price of a similar drug sold under a patented brand name by big drug companies. 

Prof. Gooneratne told The Sunday Times the South African precedent provided an opportunity for developing countries to slash drug prices in a move that could be immensely beneficial, especially to millions of poor people. He said he believed World Trade Organisation regulations allowed room for governments to import or produce generic drugs if they felt this was necessary in the interest of public health. 

The Brazilian government, for instance, has taken a bold initiative to produce and buy generic drugs instead of the much more expensive brands names marketed by the multi-national drug companies. Two of these US based companies had apparently pressurized the US administration to take action in the WTO against the Brazilian government for allegedly violating patent laws. But Thursday's court decision in South Africa, is expected to give a boost to Brazil and other developing countries to buy or produce cheaper drugs, and thus slash medical costs by more than one third. \

Over the years medical research has provided clear evidence that there is no substantial difference between generic drugs and the branded ones, except for the packs, foils and other superficial elements.

Health Minister John Seneviratne said that the Ministry was seeking Cabinet approval to provide facilities for Sri Lanka to produce its own generic drugs, as India does on a large scale now.

SPC Chairman Colvin Gooneratne gave The Sunday Times a full list of generic drugs available at Osusala and other outlets with a comparative list of the same drugs and their prices when sold under various brand names:

SPC Price per unit (Rs.) Branded Products 

(Tablet/capsule/vial) Prices (Rs.) & Names

Eye Drops

Genatamycin eye drops 69.15 Garamycin 212.40

Betamethazone eye drops 45.30 Celestone 220.10

Timolol eye drops 130.20 Timoptol 421.40

Pain killers

Piroxicam 200mg capsule 2.81 Feldene 45.00 

Tenoxicam 20mg (Seltil) 11.80 Tilcotil 35.80

Blood pressure drugs

Antenol 50mg 0.54 Tenormin 26.11

Antibiotics

Ceftriaxone 1g injection 198.5 Rocepin 1058.00

Cefticidim 1g injection 334.50 Fortum Inj. 600.00

Cefuroxime sodium 

750 mg injection 131.40 Zinacef 364.95

Gentamycin injection 

80mg/2ml 7.75 Garamycin 125.00

Doxycyline 100mg 

capsule/tablet 2.93 Vibramycin 29.25

Asthma drugs

Salbutamol inhaler 149.60 Ventolin 268.81

Gastro-intestinal drugs

Omeprazole 20mg 5.83 Losec 89.82

Mebendazole 500mg .80 Vermox 46.00

Skin preparations

Hydrocortisone cream15g 62.00 Efcortelan 112.90

Betamethasone cream15g 58.50 Diprosone 243.00

Clobetasol cream 25mg 147.50 Dermovate 248.00

Micanozole cream15g 53.95 Daktarin 176.65

Diclofenac gel 20g 53.8 Voltaren 308.00

Lipid lowering agents 

Lovastatin 20mg tablet 14.72 Mevacor 57.25

Miscellaneous

Acyclovir 200mg tablet 20.10 Zovirax 103.95


Are high internal costs behind CPC's fuel price increase?

By M.Ismeth and Ruwan Weerakoon
With the burden of the fuel price increase passed on to the public, including the poorest of the poor who use kerosene oil, the Ceylon Petroleum Corporation has put up a strong defence that it was forced to increase prices due to international fuel price increases and the depreciation of the rupee.

But the internal cost of the CPC also seems to be running high with extra expenditure on refurbishing the head office building at Rotunda Towers, expenditure on vehicles and maintenance of circuit bungalows.

With the CPC incurring losses and forced to pass on the burden even to the poor, the question has been raised whether such high expenditure including imported furniture was required for the CPC head office at Rotunda Towers.

The Rotunda Towers building was refurbished by interior decorators with not only office furniture but also a double bed with a spring mattress. The total cost was around three million rupees. This is in addition to the imported tables costing Rs. 7.1 million and chairs costing another Rs. 7.1 million.

In addition to the expenditure for the CPC head office, another office has been fully furnished at Flower Road and is being apparently used by the Minister of Power and Energy. However it is the Ministry which is allocated money to maintain the office of the minister.

The Auditor General himself has queried some of the expenditure during the past few years while expenditure on imported chairs and tables and other items are likely to come up for questioning in future audit reports.

The issue of additional employees has also been raised though the Chairman Anil Obeysekera has denied the allegations. However it is apparent that the CPC has been politically influenced from the highest levels with the issuing of letters to recruit party supporters to the Corporation.

The CPC's legal fees have also been on the high side and it had sought special permission from the Secretary of the Ministry of Policy Planning to deviate from the normal rule of obtaining the permission of the Attorney General before obtaining the services of private lawyers for its cases. In 1998 alone over Rs. 4 million had been paid. 

The CPC holiday bungalow situated at Browns Hill, Matara for which the Corporation has agreed to pay a monthly rent of Rs. 15,000 is another additional expenditure on the CPC. The bungalow has been visited only by the Minister of Power and Energy General Anuruddha Ratwatte and other ministers. The Chairman had visited the place on two occasions since it was leased in 1999. Other CPC officials do not have access to it.

The bungalow is manned by four employees including two cooks, and is rarely made use of, according to CPC sources.

The CPC bungalow at Watapuluwa in Kandy which was turned into an election office during the last Parliamentary elections in support of Minister Ratwatte is now under repairs at the expense of the CPC.

Here are some of the queries and observations made by the Auditor General himself regarding expenditure of the CPC for 1998.

The Ceylon Petroleum Corporation had sustained a loss of Rs. 185,643,045. due to the sale of LP gas to a company at a reduced price of Rs 10.63 from Rs 21.81 per litre on a formula agreed with PERC.

The Corporation had incurred a sum of Rs. 15,029,506 as demurrage charges due to bursts of hose pipes.

A sum of Rs. 10.4 million had been paid by the Corporation as interest on a loan obtained from the thrift society which is higher than the normal bank rate whereas the Corporation had made a grant of Rs. 25 million to the thrift society during the year.

It had taken a period eight years for the reconstruction of a damaged tank (No 27) at the refinery. The reason attributed for the delay is that the project had been given to a contractor in January 1990 and was expected to be completed by November of that year. Thereafter, on a request made by the contractor the Corporation had granted two extensions of time up to the end of 1999. Total expenditure incurred by the Corporation on this contract up to December 31, 1998 amounted to Rs. 6,807 million.

The Airport Development Project at Katunayake had taken 11 years to complete and a sum of Rs. 72.2 million had been spent on it up to December 31 1998.

Consolidated accounts had not been prepared for the investment (Rs. 270 million) in a subsidiary, Lanka Marine Service Ltd., while the equity method of accounting has not been adopted for the investment (Rs. 29.5 million) in the associate company, Lanka Tankers Ltd., as required.

Provision for income tax had been understated approximately by Rs. 13.5 million due to incorrect tax computation. Also, deferred tax liability of Rs. 248 million as at the year end had not been provided for in the accounts.

Out of a sum of Rs. 2,586,271,971 due from trade debtors, only 278 debtors whose balances totalled Rs. 310,784,490 had confirmed their balances.

Trade debtors amounting to Rs. 645,119,758 remained outstanding for over one year.

Out of a sum of Rs. 236,607,436 payable to foreign debtors, Rs. 50,126,636 had been outstanding for over one year.

Out of the total loans to employees aggregating Rs. 686,392,122, Rs. 17,053,904 was receivable from employees who had obtained employment in three companies. 

A provision of Rs. 9 million has been made as "Special Levy" payable and that is outstanding since 1995.

The Emergency Rehabilitation of Petroleum Project (ERPP) commenced in 1996 to rehabilitate the bulk storage crude oil and ancillary facilities has cost a sum of Rs. 770,572,984 as at December 31, 1998.

The report had attributed the increase of the gross profit of the Corporation to the decrease in crude oil prices and increase of the net profit to increase in the gross margin. 


Drowning fishermen cry out for help

By Tania Fernando
In the aftermath of the recent price hike in fuel, many fishermen are seriously questioning whether they would be forced to change their livelihood to make ends meet.

These fishermen who previously spent Rs. 235 a day on fuel have to now spend Rs. 280.

Ivan Fernando President of the Gampaha District Multi Day Fishing Owners Federation said they had more than 160 boats that run on diesel. "We spend an average of 21 days a trip and use up about 12,000 litres of diesel a trip. After the price hike our expenditure for fuel alone has increased by Rs. 30,000 a trip."

He also said when the boats were purchased about one and a half years ago the project reports were calculated at the rate of Rs. nine for a litre of diesel, but now it had increased to Rs. 27 and would find it hard to repay their loans. 

He said the smaller boats on average use 20 litres of kerosene oil for a trip depending on the distance and the capacity of the boat. At the recent price revision kerosene oil went up by one rupee a litre, forcing fishermen to cut down on the number of trips and distance.

Maximus Coonghe, President of the Sea Street- Kudapaduwa Fisherman Federation lamented that although a committee was appointed by the President to look into the grievances of the fishermen todate they have had no response to their present crisis.

Meanwhile the Acting Secretary to the Ministry of Fisheries W. Samarasinghe said the Committee had finalized a report which would be taken up at Cabinet level soon. 

Maximus also said in the face of fuel hikes it was not possible for them to increase their prices, as vendors who buy fish from them would go in search of someone else.

An angry fisherman Justin Rodrigo charging that the government was delivering them a slow but painful death said some urgent relief was needed if they were to continue with their livelihood.

He said prior to elections the government promised to make a difference for the fishermen, and now they have made a difference by increasing the prices , he said.

Meanwhile, Canisius Fernando, Treasurer of the Sea Street-Kudapaduwa Fisherman Federation asked why the government was maintaining coast guards at a cost when very soon fisherfolk will be unable to even go out to sea. "Last year we stayed away from work for two days, to protest against the fuel price hike in January, at a great cost to our income. We suffered untold hardship, but the Government appears to be taking us for a joke,"Canisius charged.

The fishermen say they are unsure as to what course of action should be taken as a strike would only affect their already badly affected income.

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