Amid mounting pressure from drug manufacturers to raise medicine prices, the government has recalled the director general of the Department of Drug Administration, Narayan Prasad Dhakal, to the Ministry of Health and Population.

Dhakal, who is the head of the national drug regulatory body, is alleged to have conspired with pharmaceutical producers to raise the drug prices.

It is reported that the Office of the Prime Minister and Council of Ministers has formed a three-member probe team to investigate following a complaint lodged at the prime minister’s office about alleged wrongdoing.

“I haven’t received the letter of recall from the ministry, but I was informed about the minister’s decision to recall me on Thursday,” said Dhakal. “We have neither increased the price of any medicine nor given consent to any companies to do so despite pressure from drug manufacturers.”

Of late, pharmaceutical companies in Nepal have been pushing for a price increase for medicines, citing a spike in the cost of raw materials due to the conflict in West Asia. They claim the price of raw materials has increased up to 300 percent due to the war.

Of late, pharmaceutical companies in Nepal have been pushing for a rise in medicine prices, citing a surge in the cost of raw materials.

Along with the higher raw material costs, the companies cite a sharp rise in the US dollar, increased transport fares, a rise in fuel prices, a shortage of medical-grade plastic, among others, as reasons for the price hike.

Representatives of the Association of Pharmaceutical Producers of Nepal had also sought permission to increase the price of all medicines by 10 percent.

According to DDA officials, there are thousands of medicines in the market but the government, in consent with drug manufacturers, had set a price ceiling of 96 essential drugs some nine years ago. Previously, price ceilings for 21 essential medicines were also set.

“Manufacturing companies themselves are free to set prices for their products and increase prices,” an official at the department said, asking not to be named. “We had a plan to set a price ceiling for other medicines as well, but due to a lack of guidelines, the department cannot set a price ceiling at all due to the free market policy adopted by the government.”

Representatives of drug manufacturers said that a smooth supply of medicines is impossible without a price hike, and manufacturers do not need permission to increase the price of every product. They deny any intent to take undue advantage of the situation.

“Despite a sharp increase in the price of everything we use, including raw materials required for drug manufacturing, the price of medicines have not increased yet accordingly,” said Santosh Baral, general secretary of the Association of Pharmaceutical Producers of Nepal. “Without price hike, producers cannot produce medicines without incurring huge losses.”

Baral said that suppliers of raw materials used to give a price list valid for up to 15 days in the past and ask for advance payment, but at present, they cannot even provide a price list of raw materials for a week.

As the price of raw materials fluctuates every day, suppliers say they can only provide rates based on the price paid at the time of purchase, according to drug manufacturers. They say that many companies are facing shortages of medical-grade plastic used to manufacture intravenous fluid containers, and packaging materials have also become expensive.

There are 83 domestic drug manufacturing companies in Nepal and they produce nearly 50 percent of the medicines used in the country. More than 30,000 people are employed in the pharmaceutical sector, which has an estimated annual market of around Rs60 billion.

There are over 25,000 pharmacies operating throughout the country.