Essential medicine list and pricing are two important policy issues directly linked to people’s health, lives, and financial security. In Bangladesh, where people pay a large share of healthcare costs out of pocket and where medicines constitute a significant portion of that expenditure, these issues hold even greater significance. Hence, deciding which medicines are essential, how much they should cost, and whether they will remain available are not merely administrative matters but fundamental components of public health policy.
The recent cancellation of the Essential Medicines List 2026 and the Medicine Price Determination Method 2026 has brought these long-standing issues back in focus. Since neither policy was implemented, their cancellation is unlikely to have any immediate impact. It also gives us an opportunity to take a step back, learn from past experience, and develop a better, more practical and evidence-based framework. In the meantime, the old legal framework will be in place.
Since 1994, Bangladesh has largely relied on a cost-plus pricing formula for 117 essential medicines, under which a prescribed markup is added to the cost of raw materials and packaging. The problem is that prices have not been adjusted regularly. The last broad revision of the prices happened in 2022. As a result, producing many of these medicines is no longer commercially viable. Several manufacturers have suspended production of loss-making medicines.
We must recognise that medicines are also commercial products. Their prices need to reflect changes in production costs, including raw materials, energy, labour, packaging, transportation, and exchange rates. If prices remain frozen while costs rise, the gap between regulated prices and actual production costs eventually becomes unsustainable. This can discourage production and reduce market supply, creating risks for patients as well as manufacturers.
A major reason for this prolonged policy paralysis is political reality. Governments are understandably reluctant to increase medicine prices fearing public backlash. But ignoring economic realities does not eliminate them. If regulated prices don’t reflect actual production costs, manufacturers may gradually stop producing low-priced essential medicines. A pricing policy that weakens the pharmaceutical industry’s sustainability cannot, in the long run, serve patients either.
The central policy balance should therefore be clear: medicines must remain affordable for patients, while manufacturers must receive prices that allow them to produce quality medicines without incurring losses. Affordability and industry sustainability should not be viewed as competing objectives; they are two essential goals of the same public policy.
To this end, a strong, multidisciplinary technical taskforce could be established under the recently formed National Drug Advisory Council (NDAC). The taskforce should function primarily as an evidence-generating and technical body, while the NDAC and the government should make final policy decisions in accordance with the law. This would combine technical expertise with legal and institutional accountability.
The first question in developing a new essential drug list should be: what makes a medicine essential? A drug should not be classified as essential simply because it is widely sold or frequently used. The assessment should consider disease burden, mortality and disability, the medicine’s indispensability in treatment, evidence of efficacy and safety, availability of alternatives, cost-effectiveness, and the financial burden on patients. Its position in clinical guidelines and its strategic importance to the national health system should also be considered. Such an approach would help ensure that the list reflects public health priorities rather than simply market demand or historical practice.
Medicine pricing requires similar realism. The cost-plus formula may have been appropriate for its time and economic circumstances. But today’s market is considerably more complex. Simply adding a fixed markup to the cost of raw materials is no longer sufficient. Prices need to be reviewed periodically in response to changes in production costs, exchange rates, raw material prices, and broader market conditions.
However, the country’s administrative reality makes timely revision difficult. Since medicine prices are determined through government processes, necessary adjustments can be delayed by bureaucratic and political considerations. One possible solution is establishing an independent authority to determine drug prices, drawing on other countries’ experience where applicable—i.e. India’s National Pharmaceutical Pricing Authority.This specialised professional body could review prices regularly using clearly defined rules, production-cost information, and market data. If established within a clear legal framework and given a reasonable degree of operational independence, such an authority could reduce the burden on the government when medicine prices need to be adjusted.
There is, however, a legitimate counterargument. Creating another regulatory authority would require pharmaceutical companies to coordinate with an additional institution. In Bangladesh, this could increase administrative and compliance costs, some of which might ultimately put further pressure on medicine prices. Hence, we should not assume that simply creating another authority will automatically produce better regulation.
The Bangladesh Association of Pharmaceutical Industries (BAPI) has reasonably argued that, like other commercial products, medicine prices could largely be determined by manufacturers and moderated through market competition. In a competitive market, companies would have to consider consumers’ purchasing power and demand while covering production costs and maintaining business sustainability. Such an approach would also reduce the government’s direct involvement in determining individual medicine prices.
But medicines are not ordinary commercial products. They are essential and, in many cases, life-saving commodities. Leaving pricing entirely to market forces could expose patients to excessive prices, while excessive price controls could undermine production and supply.
The fundamental question, therefore, is not simply whether the government or the market should determine medicine prices. The real question is how to build a pricing system that protects patients’ ability to pay, ensures industry sustainability, promotes healthy competition, and guarantees the availability of essential medicines.
This may require a considerably sophisticated regulatory framework. Transparent pricing principles, regular reviews, reliable market information, stakeholder consultation, and mechanisms to protect vulnerable patients should all form part of the system.
The cancellation of this year’s essential medicine list and pricing method should not become another episode of policy uncertainty. Instead, it should be treated as an opportunity to rethink the entire framework. Bangladesh needs to move beyond an outdated system and establish a modern medicine policy based on evidence, transparency, accountability, and economic realism. The new framework should recognise both the public health importance of medicines and the economic realities of pharmaceutical production.
Dr Syed Abdul Hamid is professor at the Institute of Health Economics in the University of Dhaka and convener of Alliance for Health Reforms Bangladesh (AHRB).
Views expressed in this article are the author's own.
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