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THREE major pharmaceutical groups have resolved to stop the supply of drugs and medications to all health facilities across the country and the National Health Insurance Authority (HHIA) on credit basis with immediate effect.
The entities - Ghana National Chamber of Pharmacy, Pharmaceutical Manufacturers Association of Ghana (PMAG) and the Pharmaceutical Importers and Wholesalers Association of Ghana (PIWA), said henceforth, all
supplies would be on cash and carry basis until the turbulent economic condition stabilises.
They also urged the government to release, as a matter of urgency, all outstanding debts owed their members to prevent the shortage of products in the country.
Announcing this at a news conference called by the three groups in Accra yesterday (October 19), the President of PIWA, William Adum Addo, said the present economic situation, which had led to high cost of operations and importation of drugs, had
forced the associations to take that action to keep their businesses afloat and settle their indebtedness to financial institutions.
He said the government was owing them for nine months, “running into several millions of Ghana cedis.”
Players in the pharmaceutical industry used the conference to highlight the impact of the current economic situation on pharmaceutical businesses and the remedy to save the industry.
Payment terms
Describing the pharmaceutical industry as a credit-driven one, he said health facilities in the public sector paid them on the average six and 12 months because of the delayed payments from the National Health Insurance Scheme (NHIS).
Majority of private sector facilities on the other hand, also made payments for all supplies within three to four months.
Addo said under the current circumstances where there had been a daily devaluation of the cedi, pharmaceutical supplies on credit under those terms had led to the erosion of operational capital of pharmaceutical importers and manufacturers.
All transactions, with immediate effect, shall be on cash basis until the economy stabilises. The NHIS and all Private Health Insurance companies are encouraged to give accredited facilities seed funds to buy medicines on cash for supplies to patients under the schemes.
“All end-user institutions such as retail pharmacies, private hospitals and clinics are encouraged to secure loans from banks to buy medicines on cash,” Addo said.
Exchange rate
Addo said over the past year the exchange rate of the cedi to the dollar had risen from GH¢5.80 to GH¢13.90 and still continued to rise.
This means that importers of finished pharmaceutical products, manufacturing inputs and equipment for pharma operations will need more cedis for their operations. This confirms the ravaging nature of the cedi devaluation and its direct impact on pharmaceutical operations,” he stated.
Sustaining industry
The Chairman of the Ghana National Chamber of Pharmacy, Harrison Abutiate, explained that the industry for some time now had been observing the way the country’s economy had been going through turbulent times as a result of the COVID-19 pandemic, the Russia war on UKraine, and unstable cedi and dollar exchange rates.
That, he explained, had affected various commodities on the market. However, medicines were not common commodities of trade.
“When we look at the short, medium and long-term effects on the economic situation on the industry, we are the gatekeepers of medicines that keep the nation healthy, and unless some drastic actions are taken the entire industry will collapse.”
As a step to halt further deterioration of our finances and help pharmaceutical manufacturers, importers, wholesalers and retailers to continue to be in business, our payment terms and business models have to change to sustain the industry,” he asserted.
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