Abu Dhabi: The Ministry of Health is currently in discussions with pharmaceutical agents across the UAE regarding their demand to free the exchange rate of the dirham against the euro, which may result in a price increase of 18 per cent for drugs being imported from Europe.

"The ministry will consider adjusting the exchange rate of the euro against the dirham to the market rate, but on condition that a reduction is done on the CIF value (factory price) of the drugs, so that prices of certain medicines will only increase by not more than 8 per cent," said Humaid Mohammad Al Shamsi, Assistant Undersecretary of Pharmacy and Supplies, MOH, told Gulf News.

The exchange rate of the dirham against euro is fixed by the ministry at 4.3 while the market rate is 5.15. Drug agents say that they lose almost one dirham in each euro which is about 20 per cent of the drug price. A drug consultant said that drug agents understand the objective of the Ministry of Health to maintain the price level in order to make medicines cheaper for patients.

Profit margins

"But what we do not understand is why local agents should bear it while their profit margins have been reduced twice during the last two years," said the consultant, who wished his name is not identified.

Last week, 20-25 members from the 'Protection of Consumer Committee' (PCC) met with pharmaceutical agents to discuss ways of reducing CIF value of medicine imported from Europe with 5-20 per cent. "I am expecting a 5-20 per cent reduction in CIF value (factory price) amongst 25 pharmaceutical agents across the UAE. We will renew discussions next week and finalise matters," Al Shamsi said.

Al Shamsi said the ministry cut prices of drugs by 15 per cent in 2004, and further slashed prices by about 20 per cent in 2005 on profit margins of both distributors and pharmacies.

The price for medicine, he explained, depends on diverse economic and scientific aspects and the second is the reason for the MOH involvement since medicine includes generic and scientific factors.

The scientific components in a drug are what highlights the quantity and quality of the product, thus determining the profit margin and pricing placed.

Final discussions regarding the reduction in prices will take place next week where the MOH and agents across the UAE will come up with a final CIF price.