Bitter Pills:Medicines & The Third World Poor | Page 193
problems that arose has been provided by Dr. Sanjaya Lall of the Oxford Institute
of Economics and Statistics and the late Professor Bibile of the University of Sri
Lanka and former Chairman of the State Pharmaceutical Corporation. (128)
In 1973 the Government of Mrs Bandaranaike announced its new "34 Drug
Programme" under which the State Pharmaceuticals Corporation (SPC) would
centralise procurement of the chemical intermediates needed for local formulation
of 34 drugs. A central aim of the new policy was to cut down on the high transfer
prices manufacturers were paying for imported raw materials. <1291
From the outset the US Pharmaceutical Manufacturers Association were resolute
in their opposition to the new policy. On 10 May 1973 their President, Joseph
Stetler, wrote a six-page letter to Mrs Bandaranaike raising detailed objections
to the new policy. Mr Stetler stated: "These actions, if implemented, would
effectively destroy operations of the modern research-based pharmaceutical
industry in Sri Lanka by removing all business incentives and internationally
respected property rights. By so doing, the plan would call into question the
Government's attitude toward any future private investment in the
country." (l30) (our emphasis)
Lall and Bibile claim that: "A widespread ... campaign of denigrating low-cost
supplies was launched. And a second source of opposition, the private
practitioners, were drawn into the campaign. Reports were made of drugs being
ineffective, substandard or toxic, but little hard evidence was produced." (l31)
According to Lall and Bibile seven small local producers responded favourably
to the new programme but all five foreign subsidiaries initially showed resistance.
Glaxo was the first to accept the programme in principle; Pfizer the last. In Pfizer's
case at least this agreement was a different matter from practical cooperation in
implementing the policy. Lall and Bibile quote the then Managing Director of
the SPC: ".... the SPC made an urgent appeal to Pfizer to make tetracycline
capsules required in the cholera epidemic (in 1974) and offered quality tested raw
materials and capsules."(l32) Pfizer was asked to use raw materials purchased by
SPC from a reputable supplier - the leading West German manufacturer, Hoechst.
Lall and Bibile attribute Pfizer's reluctance to agree to this arrangement to the
fact that they had been importing tetracycline from their parent company at almost
five times more than Hoechst's price. (133) According to the Managing Director
of the SPC, the outcome of the resulting delay during the cholera epidemic was
"that the Hoechst tetracycline lay unused in SPC stores and Pfizer equipment lay
idle, while capsules had to be airlifted to the country at enormous expense".(l34)
Subsequently, the SPC and the Ministry of Industries recommended that Pfizer
should be nationalised to ensure its compliance with the new policy. But powerful
bargaining counters were brought into play. According to Lall and Bibile, "The
reaction of the US was swift, and as it turns out, decisive in preventing such a
measure. The US Ambassador personally intervened with the Prime Minister in
the matter, and .... we can only speculate as to the nature of his intervention ....
The Chairman of the SPC was ordered to 'continue negotiating' with Pfizer; no
further disciplinary action was taken."