Analyzing the Dynamics of Drug Pricing in the Pharmaceutical Industry of Sri Lanka

The pharmaceutical industry in Sri Lanka is faced with complex pricing dynamics that challenge regulators and stakeholders alike. With a focus on the effects of foreign exchange rates, supply country inflation, unemployment rate, inflation rate of Sri Lanka, and growth in gross domestic product, this study explores the variables influencing drug pricing. Utilizing a decade-spanning dataset from the State Pharmaceutical Corporation of Sri Lanka, we conducted a comprehensive analysis of 99 drugs across various classes. Economic factors, particularly foreign exchange rates and supply country inflation, exhibited a strong positive correlation with drug prices, while the GDP growth rate showed a negative relationship with drug prices. Further, the study analyzed the volatility of price changes across different drug classes and supplying countries, which revealed significant variations. Insights into the economic factors influencing drug prices in Sri Lanka are provided by this study, which will help stakeholders in the industry and policymakers ensure that drugs are accessible and affordable.