Addis Abeba -The cost of medicines in Ethiopia is an increasingly urgent issue for consumers and the healthcare industry alike. As the nation's healthcare demands increase, fueled by a rising population and the incidence of diseases like malaria, HIV/AIDS, and tuberculosis, the price of pharmaceuticals has escalated significantly. There are a number of contributing factors to this situation, and grasping these factors is critical to resolving the difficulties and considering possibilities for a more viable healthcare system.
Ethiopia depends greatly on imports of pharmaceuticals, and the major suppliers are India, Turkey, and China. The expensive logistics of these imports contribute significantly to increasing the prices of medicines. Transport, customs duties, and supply chain delays increase the cost of imported medicines, which makes the medicines more costly for wholesalers and consumers. Furthermore, the nation's poor infrastructure, particularly in rural regions, also adds to the issue. Fuel price instability and transport bottlenecks lead to stockouts and price instability, which impact the availability of essential medicines.
As the population of Ethiopia keeps on expanding and facing higher incidences of chronic and infectious diseases, the demand for pharmaceuticals has gone up. The health system cannot keep up with this demand, thus creating imbalances between supply and demand. For instance, as more people turn up for the treatment of such diseases as malaria, tuberculosis, and HIV/AIDS, the health system faces higher pressure.
This disparity has led to the prices of life-saving medications rising, and it has become increasingly difficult for the ordinary Ethiopian to pay for even minimal treatment. Further, those in rural regions, where access to healthcare is already restricted, encounter other obstacles in accessing required medication.
The Ethiopian government recently introduced a free-floating exchange rate regime on the birr to stabilize the economy. Although the policy has caused depreciation of the currency, its effects on medicine prices have not been as bad as expected.
Before the free-float policy, much of the foreign exchange for importing medicines came from the black market, where the exchange rates were more unfavorable and volatile. Consequently, the realignment of the official exchange rate has not resulted in the extreme price hikes originally anticipated, even though it still adds to the increasing medicine cost, particularly since importers have to pay higher prices for imported medicines.
The importation of pharmaceuticals in Ethiopia is split between personal imports and retail imports. Personal imports are pharmaceuticals imported by individuals for personal consumption, whereas retail imports are pharmaceuticals imported in bulk by pharmacies, hospitals, and other healthcare facilities for resale. Though personal imports are an important means of satisfying the demands of individuals, retail imports constitute by far the larger segment of the market.
They are essential to fulfilling the demands of Ethiopia's healthcare centers, yet as their prices increase, they become ever more unaffordable to a multitude of people, especially those who lack health insurance or the means to access subsidized government programs.
Due to the increasing difficulties within the pharmaceutical market, the Ethiopian government has undertaken various steps to stabilize the prices of medicines and make essential drugs more accessible. One such major step is the Ethiopian Pharmaceuticals Supply Agency (EPSA), which endeavors to supply subsidized medicines to public health centers. This lowers the cost for those unable to buy medicines from private pharmacies.
The government has also been encouraging the establishment of local pharmaceutical production to minimize reliance on imports. Local production, though, is still in its infancy and is confronted with issues such as poor infrastructure, regulatory challenges, and low production capacity. Consequently, Ethiopia continues to depend largely on imported medicines to satisfy the needs of the population.
In 2021, Ethiopia imported $812 million worth of pharmaceutical products, a significant increase from 2018, when imports totaled approximately $691 million.
Pharmaceutical imports account for a considerable percentage of Ethiopia's economy. In 2023, Ethiopia imported around $676.7 million in pharmaceuticals, which accounted for roughly 0.53% of the nation's gross domestic product (GDP). Although the percentage itself appears quite modest, the role of pharmaceutical imports in the healthcare system cannot be emphasized enough.
Such imports have not only implications for public health but also direct economic implications through their influence on healthcare service costs and the accessibility of basic medicines to the population. With the continuing growth in demand for medicines and the difficulties experienced in local manufacture, the government has no choice but to sustain the pharmaceutical sector as a key sector for investment and development.
In the coming future, the Ethiopian pharmaceutical sector is faced with significant challenges along with promising opportunities. The need for drugs is expected to continue its upward trend with population growth and changing healthcare needs. However, Ethiopia's heavy reliance on foreign drugs means that prices will continue to remain vulnerable to fluctuations based on international supply chain issues, exchange rate fluctuations, and international geopolitical pressures.
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To mitigate these difficulties, the government's emphasis on increasing domestic pharmaceutical manufacturing is a good start, yet it will be years before domestic producers are in a position to fulfill the nation's needs for quality medicines. While this takes place, the government needs to try to strengthen the nation's healthcare infrastructure, especially transport and distribution systems. Investments in more efficient supply chains could make logistics cheaper and more consistent access to medicines, especially in hard-to-reach rural regions, a reality.
Also, public-private partnerships may have a pivotal role in streamlining the medicine market. Through close collaboration with private entities, the government would be able to negotiate prices and arrange more effective supplies of medicines, making them more affordable and accessible to all Ethiopians.
Finally, though the path forward is difficult, the Ethiopian government and health sector can create a more sustainable and affordable healthcare system. By further investing in domestic pharmaceutical manufacturing, infrastructure, and public-private partnerships, Ethiopia can ensure a future where medicines are available to all of its citizens, irrespective of income or geography. AS
Geabral Ashenafi Mulugeta is a critic with a deep interest in economics. He can be reached at [email protected]
