No doubt there are, and will be, diverse opinions expressed by many about drug shortages in Sri Lanka. The writer too expressed his views as noted in articles published in December 2022 and again in January 2025. In these, the importance of ensuring demand is calculated accurately for the supply side of the supply-and-demand equation to work effectively was highlighted. As was pointed out, demand computation cannot rely entirely on usage data, and the importance of corroborating this information with other data such as morbidity data and consultations with medical doctors about future trends and the impact these will have on demand was also emphasised. A suggestion was also made to manage the drug supply chain based on the concept of managing by objectives, or MbO.
In this regard, a proposal was made to have as an objective, the vitality of ensuring availability of adequate stock of (a) essential items to meet the demand for them, by so categorising them, and estimating demand for them as accurately as possible using usage data, morbidity data and data based on medical officer consultations and impact on demand, and similarly categorising items that (b) cost a majority component of the expenditure on drugs using what is called the 80/20 rule. This rule says that approximately 20% of items cost around 80% of the expenditure, and the focus of management should be prioritised to ensure these two objectives (a) and (b) are achieved, of course not at the cost of ignoring the management of other items, but giving priority to the relatively fewer items that matter from a curative and financial perspective, rather than trying to manage all items with equal time and funds. Considering the shortcomings in the overall supply chain, attempting to manage every item on a priority basis would render even critical items being out of stock, as seems to be happening.
The other relevant factor, particularly regarding objective (b), is the limited amount of funds that is available to procure drugs even if the demand estimate produces a higher need than the funds available to meet that demand, and where some high-level decisions have to be made by authorities in consultation with the medical profession on prioritisation. The need to further rationalise the drug formulary for the State sector and to introduce a definitive formulary for the private sector was also highlighted, as the proliferation of drugs in the private sector and the number of brands of the same drug imported by the private sector appeared to be feeding the commercial interests of the private sector rather than the welfare of patients.
The Association of Medical Specialists (AMS) in Sri Lanka, in their statement, emphasised the potential for increased morbidity and mortality rates due to the crisis and urged the government to take immediate action to address the situation and ensure the availability of necessary medical supplies. In addition to what is quoted at the beginning of this article, the AMS also said that a group of medicine suppliers had written to the Health Minister, accusing the Ministry of giving special treatment to certain companies when selecting suppliers for essential medicines. The AMS President had warned that if this continues, a few companies will control medicine prices and cause repeated shortages, as the Health Ministry will have to depend on just one supplier for some medicines.
The AMS President has highlighted a few key issues that need further examination and clarification. It alludes to, among other things, the commercial interests of the private sector taking priority over the needs of patients in public hospitals. In this regard, the following statement gives an indication of where the expenditure outlay for drugs is in Sri Lanka and the significant role played by the private sector. The Sri Lanka Medical Association says that the country’s total pharmaceutical expenditure covering both State and private sectors in 2022 was estimated at Rs. 163 billion per annum, with about Rs. 58 billion for the State sector and Rs. 105 billion for the private sector. As per this data, in Sri Lanka’s pharmaceutical market, private sector imports accounted for 60% of the total market share in 2024. Local manufacturing, primarily within the private sector, contributed only a small fraction, around 6%. The remaining 34% is attributed to the State sector.
Sri Lanka’s imports of pharmaceutical products were reported to be around USD 452 million in 2024. The Board of Investment states that the local pharmaceutical expenditure records a value of USD 750 million, with a projected five-year compound annual growth rate (CAGR) of 4.1%. At present, 85% of pharmaceutical needs are imported, with local manufacturers providing 15% of the requirement. According to import data, Sri Lanka imported nearly 7,000 shipments of pharmaceuticals over a 12-month period from late 2023 to late 2024, supplied by over 1,100 foreign exporters to more than 300 Sri Lankan buyers, marking a growth rate of 15% compared to the preceding year.
The data quoted by the SLMA, the United Nations, and the BOI varies significantly, and it would be in the best interest of all concerned if a single, verifiable set of figures were provided by the government to avoid speculation. However, what is clear is that the pharmaceutical market in Sri Lanka is a very sizeable one, and that approximately 65–70% of this is accounted for by the private sector, with 30–35% by the State sector.
These statistics, in particular the major share of the pharmaceutical market held by the private sector, and the statement by the AMS about the fate of prescriptions—widely known among the public regarding hospitals’ inability to meet drug requirements—suggest that a situation may exist beyond just shortcomings in the State drug supply chain. It is understood that in Sri Lanka, the private sector import of drugs is not limited to a specific, strictly enforced formulary in the same way it is in the public sector. While the public sector restricts prescribing to around 850 items through a formulary, the private sector has historically had a broader range of drugs available without such limitations.
Based on what appears to be a very liberal and open-ended policy for the private sector in relation to drug imports, the commercial interest of the private sector seems to be the beneficiary when more and more prescriptions are diverted from State hospitals to private pharmacies and demand for privately imported drugs increases. Besides this, the contention by some importers that there is a move to divert a bulk of the imports to a select number of suppliers suggests a possible breach in good procurement practices and a potential violation of the country’s procurement laws.
The beneficiary in both scenarios is, of course, the private sector, as they will increase their imports and profits by meeting the demand created by public hospital shortages. It is also possible that some prescriptions issued by doctors are for drugs outside the National Formulary and not stocked in public hospitals, and are available only in private pharmacies—though media coverage portrays these as shortages. Drug shortages in public hospitals should therefore be considered from both perspectives, as it would not be speculation but a fact that the private sector benefits from both genuine and manufactured shortages. It is not implausible that some shortages are deliberately created to provide more business for the private sector. The government should undertake a thorough assessment of shortages in the public sector to determine whether there is possible collusion between some doctors and public officials with the private sector, or whether the shortages are entirely due to weaknesses in the public sector drug supply chain, possibly exacerbated by funding shortfalls or both.
The statement by the AMS that some suppliers had complained of a few companies monopolising drug procurement must be examined. It is not uncommon for corrupt practices to emerge wherein procurement is deliberately steered toward a few suppliers to facilitate price fixing and profit-sharing between the suppliers and officials involved. While private sector procurement is managed by internal company rules and market competition, these companies also have a social and ethical responsibility to offer drugs at economical prices. Public sector procurement, on the other hand, is governed by the country’s procurement laws, and any violation constitutes a punishable offence. Deliberate manipulation, such as using inaccurate demand data to procure insufficient quantities—thereby causing shortages and leading to emergency procurement from select suppliers at inflated prices—is not unheard of.
Sri Lanka, long respected for its universal healthcare system, must ensure that no patient in a public hospital is deprived of the necessary medication. The public sector must adhere to the approved drug formulary, and public sector doctors should not be permitted to prescribe drugs outside this formulary except under defined conditions where an approved process allows for exceptions based on unmet clinical needs.
Reports indicate that Sri Lanka’s public healthcare sector manages the majority of patient care, with 643 public hospitals providing over 86,000 beds and handling nearly 7.5 million inpatient admissions in 2019. The private sector, while growing, is accessible mainly to those who can afford it. The number of private healthcare facilities increased significantly between 2015 and 2019, but only a fraction are hospitals or nursing homes. Despite this, the private sector accounts for only about 5% of bed capacity. However, it plays a significant role in specific areas. The disparity between the number of patients treated in the public sector and the pharmaceutical import values—35% for the State sector and 65–70% for the private sector—suggests that a substantial number of State prescriptions are being diverted to private pharmacies. It also points to the private sector importing and selling many drugs outside the national formulary. Fundamentally, the numbers do not align, and one cannot but feel that the shift toward private sector imports is deliberate rather than incidental.
In conclusion, it could be said that there is more to drug shortages than what meets the eye, and the Minister of Health should investigate the issue more deeply to ensure commercial interests do not stand in the way of public hospital patients receiving their necessary medication. The budget allocation for the public health sector’s drug needs must be critically analysed, an enforceable formulary introduced for all private sector drug imports, and public sector medical practitioners barred from issuing prescriptions for items outside the national formulary except in clearly defined circumstances.
