UAE PRICE CUT HIGHLIGHTS COST-CONSCIOUS DRUG STRATEGY

The UAE is to implement new drug price cuts from September. New cost-conscious legislation approved by the country's health minister will reduce retail profit margins from 55% to 44%. For the first time, product prices will also have to be listed on packaging, together with the name of the local distributor. As a result of the controls, drug prices are expected to fall on average by 7%.

The moves come in light of the government's increasing commitment to price restrictions in the drug industry. In February 2005, the Ministry of Health refused to approve 30 new products on the grounds of "excessive pricing," claiming that the products' prices in other Gulf Co-operation Council (GCC) states was lower. Pharmacies are also being threatened with direct distribution by the Health Ministry if they refuse to implement the new price cuts.

The local manufacturing industry has also protested the government's changed mood on pharmaceutical pricing, which also includes greater use of generic medicines. Domestic industry leader Julphar faced prosecution earlier this year after refusing to comply with a previous order reducing profit margins from 70% to the current 55% level. Local sources say one punishment the regulators may use in future will be the cancellation of import licenses for those found in violation of the new measures.