The mysterious arrests this past Friday of top officials of two drug companies in the country—followed by their as mysterious release on Sunday—have left many scratching their heads. The arrests, as well as the hasty release, seem to have been made with direct executive fiat.
This is troubling. Either the arrests were made, as some industrialists have alleged, to settle political vendetta without marshalling enough evidence (and which was why those arrested had to be promptly released). Or the District Administration Office, Kathmandu, had legitimate grounds to make the arrests (in which case their release without completing due process is as perplexing). There is room for suspicion also because Friday’s raids were made at Lomus Pharmaceuticals and Deurali-Janta Pharmaceuticals Private Limited. The drug companies are owned by former Federation of Nepalese Chambers of Commerce and Industry (FNCCI) President Pradeep Jung Pandey and new president of Confederation of Nepalese Industries (CNI) Hari Bhakta Sharma, respectively. The business community suspects the political parties in power had a bone to pick with them. Moreover, the stated reason for the twin raids—selling goods at above the MRP—is applicable to many other industries. So why were the two drug-makers singled out?
Such arbitrary measures, as the FNCCI has argued, could discourage even well-meaning industrialists from investing in Nepal. The federation also argues that the price of goods in a free-market economy should be determined by the market—not the government—and so it is wrong to penalize industries for setting the price of their goods. The way we see it, since a case concerning whether the government can set the price of goods is now being considered by the Supreme Court, the government could have waited for the final verdict. Again, these are legitimate concerns. But the other side of the story is no less compelling. True, the market should not be tempered with in a free-market economy, but surely it is also the government’s duty to ensure that all its citizens can afford vital medicines and other daily necessities. If the market was left to set the price of everything, soon even life-saving medicines could be out of reach of most Nepalis. Moreover, it is a bit rich of industrialists to claim, after the twin raids, that they contribute to economic growth and employment generation when most of them hesitate to pay even minimum wage to their employees (but not to try to buy favors from the political parties in power).
For a country at Nepal’s stage of development, whether someone likes it or not, the state must have a role in ensuing, at the least, optimal health and education outcomes for all its citizens. But the recent government action is the wrong way to go about it. For instance, if it wants to avail cheap drugs to all its citizens, why doesn’t the government revive the bankrupt Nepal Drugs? It can produce basic drugs like paracetamol cheaply, in which case private producers will also be forced to reduce their prices to stay competitive. This will also help with what should be another long-term national goal after the recent blockade: to increase the capacity of local drug producers, including Nepal Drugs, so that their products can slowly displace India-made medicines which currently occupy 60 percent of Nepali drug market. But this can happy only when the government and the private sector cooperate. Friday’s raids, unfortunately, will only add to mistrust between the two sides.
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