JEDDAH, 4 August 2005 — The pricing policy of the Ministry of Health of imported pharmaceuticals from the European Union based on fluctuating currency exchange rates is causing confusion to pharmacists that end up selling the same drug at two different prices.

Two weeks ago, the Ministry of Health approved reducing the prices of imported EU pharmaceuticals by 10 percent because of the recent decrease in currency exchange rate according to the monthly report of the Saudi Arabia Monetary Agency (SAMA) sent to government administrations. Dr. Khalid Merghalani, the ministry’s spokesman, said that the ministry has already begun instructing pharmaceutical importing agents on the new changes of the prices. The ministry determines the price of a drug by taking the average exchange rate for a riyal during 18 months and use it to set the price.

The ministry has the right to intervene in changing the price of EU drug imports up or down depending on the fluctuating euro exchange rate to the US dollar. Earlier this year, the euro was up and the ministry raised the prices.

Now the euro has dropped so it issued a decision to decrease the prices and allowed importers three months to change the prices on new stock, but many pharmacies still have stock with the old prices some with the same production date as the new stock.

“The problem is that the difference in prices is tens of riyals, not a few halalas, for the same medication,” a pharmacist told Arab News. The pharmacist showed a medication called Xenical for weight loss being sold for SR270 and SR317. Unfortunately some customers cannot afford to pay for the already expensive medications such as for respiratory and heart disease and choose not to buy the medication even if they need it.

“It is important for us to sell the old stock before selling the new and customers get upset when we sell them a medication with the old price. We can’t change the price on the container because it is stamped with the price by the pharmaceutical companies when the importer makes the order from them,” explained the pharmacist.

The same problem was found in several other pharmacies visited by Arab News and they all complain about the inconsistency and confusion. For pharmacies the change in prices of medications does not affect their profits because the ministry has standardized the profit margin at 14.4 percent. However, pharmacies can change the prices for other products sold by them such as shampoos, razor blades and other miscellaneous items that are not price controlled.

For importers the changing of prices is a problem because they make bulk orders from the pharmaceutical companies, sometimes for a whole year, according to the price set at the time of the order. Changing the price every few months not only creates confusion in their records but also with the pharmaceutical companies because the importers have to arrange with them for stamping the new price on the containers, which adds to their costs.

The Ministry of Health is aware of the problem and is discussing ways of dealing with the fluctuation in exchange rates. “Our current policy is to intervene in changing the price if the increase or decrease of the euro exchange rate is more than 10 percent. So when the euro dropped in value we ordered the decrease in imported pharmaceuticals from the EU,” said Dr. Abdul Aziz Al-Saleh, director of medical and pharmacy licenses department at the Ministry of Health.

“The problem of course is that the pharmacies have old stocks and they cannot change the price on them. We are looking into standardizing prices using the dollar because the riyal is pegged to the dollar and so it is more consistent. Currently, the price is set at the medications’ manufacturing place of origin by the euro or dollar based on the SAMA rate and this keeps changing,” he told Arab News.