Sri Lanka’s pharmaceutical crossroads: A call for quality, structural reform and industry dialogue

BY  Nishel Fernando

In the complex ecosystem of national healthcare, the pill a patient swallows is the final link in a long, often invisible chain of science, manufacturing logistics and regulation. For Sri Lanka, that chain is currently under immense strain. While the public conversation often fixates on the price of medicine, the industry experts are raising a far more critical alarm regarding the quality, efficacy and availability of essential drugs. 

The prevailing consensus among the veteran pharmaceutical professionals and clinicians is that the country’s regulatory framework has become outdated, reactive and structurally unsound. To guarantee that Sri Lankan patients receive safe, effective and modern treatments, there is an urgent need to shift the national mindset from policing price to assuring quality, fuelled by a transparent dialogue between the regulator and industry.

Historical context and policy evolution

To understand the current regulatory entanglement, one must look back at the evolution of Sri Lanka’s pharmaceutical policy, which has often been shaped as much by political ideology as by medical science. The foundational mythos of the sector often circles back to the ‘Bibile Policy’ of the 1970s. While frequently invoked today as a populist slogan synonymous with low prices, the original policy crafted by Professor Senaka Bibile and Dr. S.A. Wickramasinghe was a product of its time—a Cold War-era strategy designed for a closed economy where the state was the sole importer and distributor. 

This state-centric model was effectively dissolved in 1977, with the liberalisation of the economy, leading to a period of deregulation until 1980. That year, the government introduced the Cosmetics, Devices and Drugs Act, modelled after Canadian legislation. For decades, this act served as the regulatory bedrock, focusing primarily on the three pillars of pharmaceutical integrity: safety, efficacy and quality. 

However, the drive for reform persisted. In 2005, a National Medicine Policy was drafted by the experts and World Health Organisation, accepted by the Cabinet in 2007 but largely left unimplemented.

2015 regulatory shift

The real turning point—and the source of much of the current confusion—arrived in 2015. Driven by a political imperative during the ‘100-day programme’ of the new government, a new National Medicines Regulatory Authority (NMRA) Act was rushed into existence. Critics argue that this 2015 legislation, while containing well-intentioned elements, was a chaotic mix of populist measures and regulatory overreach. Crucially, it introduced two new criteria for drug approval that did not exist before: ‘Price’ and ‘Need’. 

Whereas the previous system judged a drug solely on whether it worked and was safe, the new regulator was empowered to block drugs based on market saturation or cost. This shift fundamentally altered the landscape, giving the regulator the power to determine the market dynamics, often at the expense of patient choice and access to high-quality innovator products.

Quality assurance vs quality control

A central flaw in the current system is the reliance on an outdated concept of ‘Quality Control’ rather than the globally accepted standard of ‘Quality Assurance’. In the popular imagination, drug safety is ensured by testing a sample of pills from a batch before they reach the public. However, this method is statistically fragile. In a batch of one million tablets, testing a random 50 does not guarantee the safety of the remaining 999,950. 

If the manufacturing process itself is flawed, a ‘passed’ sample is merely a lucky draw. Modern pharmaceutical safety relies on Good Manufacturing Practices, which ensures that quality is built into every step of the production process, from the raw materials to the final coating. This is where Sri Lanka’s infrastructure falls short. 

The NMRA’s laboratory facilities, donated by the Norwegian government in 1991, have seen little upgrade in capacity since. Experts estimate that the lab can currently test perhaps only 5 percent of the drugs in the market. This lack of capacity means the regulator cannot effectively police the quality of imports through testing alone. 

Furthermore, the country lacks a bio-equivalence centre. For generic drugs—which copy the chemical structure of original ‘innovator’ brands—proving that they dissolve and absorb into the bloodstream exactly like the original is crucial. Without local facilities to verify this, Sri Lanka is forced to rely on paper certificates provided by the manufacturers, which can be forged or based on dubious data. The regulators are essentially flying blind, trusting documents rather than independent scientific verification.

Price controls and market impact

The introduction of strict price controls has had a perverse effect on the quality of medicines available in Sri Lanka. While intended to make drugs affordable, these caps have often driven reputable internationally benchmarked quality manufacturers out of the market. Global pharmaceutical giants, whose products are backed by extensive clinical trials and rigorous internal quality standards, often cannot compete with the rock-bottom prices mandated by local regulations. 

When an innovator withdraws, the gap is filled by cheaper generic manufacturers. While many generics are excellent, the pressure to meet low price points can incentivise the use of inferior Active Pharmaceutical Ingredients or cheaper manufacturing methods. A drug might contain the correct chemical but if it is full of impurities or formulated poorly, it may not work effectively—or worse, it could cause harm. 

The withdrawal of innovator brands also creates a knowledge vacuum. The innovator companies possess the original research and safety data for their molecules. When they leave, the local doctors and regulators lose access to that resource base. In emergencies or cases of adverse reactions, there is no technical support available, leaving the local healthcare system isolated.

Structural deficits and brain drain

The establishment of the NMRA in 2015 was meant to create an independent, powerful regulator. In practice, it created a semi-autonomous body that inherited the bureaucratic struggles of its predecessor without acquiring the necessary modern expertise. The authority collects significant revenue—charging up to US $ 3,000 for medicine application fees—but these funds are rarely reinvested in human capital. 

There is a critical lack of international training for the regulatory staff. In advanced jurisdictions such as Australia or the UK, the regulatory staff are trained in management and specialised assessment. In Sri Lanka, the system relies heavily on generalists or fresh graduates, who may lack the industry experience to navigate the complex realities of modern pharmaceutical manufacturing. This creates a dangerous dynamic, where the inexperienced regulators, fearing mistakes, default to a posture of suspicion. 

The industry is often viewed not as a partner in healthcare delivery but as a potential ‘crook’ to be policed. This adversarial relationship leads to delays, arbitrary rejections and a climate of fear where decision-making is paralysed.

A roadmap for reform

Solving this crisis requires a multi-pronged approach that addresses both the structural deficiencies of the regulator and the economic realities of the market. The first step is a structural overhaul of the regulatory body. The NMRA needs to be staffed with full-time specialists, who are paid market-competitive salaries and provided with ongoing international training. 

The goal should be to build a regulator that is technically sound and confident enough to make decisions based on science, rather than fear. 

Given the impossibility of testing every batch of imported drugs, Sri Lanka must shift its focus to Post-Marketing Surveillance. A robust system needs to be established where random samples are continuously pulled from pharmacy shelves and tested. This ‘market vigilance’ acts as a powerful deterrent; if the manufacturers know there is a real risk of being caught with substandard products in the market, they are less likely to cut corners. 

This surveillance must be paired with a rigorous adverse drug reaction monitoring system. Currently, anecdotal reports of organ failure or inefficacy often disappear into the void. A centralised, data-driven system would allow the regulator to identify and recall dangerous batches swiftly.

Strategic procurement and dialogue

To encourage high-quality local manufacturing and retain trusted players, the government must rethink its procurement strategy. For essential, life-saving drugs, the state could offer buyback guarantees. By committing to purchase a specific volume over a set period at a fair price, the government can induce manufacturers to invest in the high standards required for critical medicines. Such a system would stabilise the market. It would allow the reputable companies to plan their production and pricing, ensuring that the state gets high-quality drugs at a predictable cost, rather than being at the mercy of fluctuating emergency tenders that often attract the lowest-quality bidders. 

Perhaps the most immediate and cost-effective reform is a change in attitude. There is a pressing need for a structured, technical dialogue between the industry, regulator and Health Ministry. This should not be a venue for airing grievances but a ‘World Economic Forum’ style platform for solving technical challenges. 

The ‘us versus them’ mentality must be dismantled. By treating the pharmaceutical industry as a stakeholder rather than a suspect, the government can leverage private sector expertise to solve the public sector problems.

Conclusion

The ‘mess’ in Sri Lanka’s pharmaceutical sector is not the result of a single bad decision but a cascade of historical policy shifts, structural neglect and a focus on short-term populism over long-term safety. The current trajectory, characterised by the exit of quality brands and the dominance of price over efficacy, poses a silent but severe threat to public health. 

Reform is not just about writing new laws; it is about building a modern infrastructure of quality assurance, investing in human capital and fostering a mature partnership between the state and industry. 

The cost of inaction will not be measured in rupees but in the health and lives of the Sri Lankan people. The time to move from political slogans to technical solutions is now.