Why drug prices in Bangladesh remain fixed even as production costs surge

Bangladesh's pharmaceutical industry is confronting an unusual crisis: production costs are rising sharply, yet retail prices for hundreds of essential medicines have remained almost entirely frozen. The result is a widening mismatch that has pushed many drugs into sustained losses, forced companies to discontinue essential items, and raised fears of growing dependence on imported and far more expensive alternatives.

The tension stems from a government-controlled pricing system that has barely moved since 2022, even as global raw material prices climbed, the dollar became costlier, borrowing rates surged and utility tariffs jumped. These pressures have created a situation in which manufacturers are bound by fixed ceilings, with no legal room to adjust retail prices on their own.

Industry leaders say the gap between rising production costs and static selling prices has become so large that many essential drugs can no longer be produced without incurring losses. Several companies have already suspended dozens of medicines, including for epilepsy, infections, psychiatric care and anaesthesia. Even large firms, which typically cross-subsidise loss-making items through more profitable ones, acknowledge they are nearing the limits of what they can absorb.

Renata CEO and Managing Director S Syed Kaiser Kabir said raw material costs have climbed "above the price of many medicines", worsened by currency depreciation and high interest rates. He noted that more than 150 products were halted in 2025 alone. 

ACI Pharmaceuticals continues to manufacture around 30 loss-making medicines simply because patients need them, but CEO Mohibuz Zaman warned that electricity and utility hikes, salary adjustments and regulatory costs are pushing companies "between two sharp edges".

At the smaller end of the market, the strain is severe. Firms with limited product lines lack the cross-subsidisation cushion available to large manufacturers. Apex Pharma, which has already discontinued more than 40 items, reports losses exceeding Tk30 crore. Rephco Pharmaceuticals has stopped nearly half of its 120 essential medicines. Industry insiders say almost all of the country's 250-plus pharmaceutical firms, except the top ten are under intense financial stress.

The crisis is sharply illustrated by the case of phenobarbitone, an essential anti-epileptic drug. Its government-set retail price is Tk0.47 per tablet, while the actual production cost is Tk0.85. Local production has ceased, and patients now rely on imported versions priced at Tk8–10 each. Industry leaders argue that even a Tk1 retail price would make local production viable, saving consumers from tenfold increases.

The pricing framework sits at the heart of the problem. 

After 2018, price controls tightened significantly, and no broad revisions have taken place since 2022. Manufacturers apply for adjustments on a case-by-case basis, but approvals, when granted at all, take months to come into effect. The High Court has recently asked authorities to enforce Section 30 of the Drug and Cosmetics Act 2023 more systematically, including preparing a list of essential medicines and updating prices regularly, but the direction has yet to translate into comprehensive reform.

The Directorate General of Drug Administration (DGDA), which approves price changes, says it is unaware of the scale of the problem. DGDA director Dr Md Akter Hossain said price requests would be reviewed if submitted and that the agency intends to address broader approval issues soon. The Consumers Association of Bangladesh (CAB), however, opposes blanket price increases, arguing that a portion of medicines saw unjustifiable hikes in 2022. CAB wants prices set strictly according to production costs and purchasing power, with companies barred from raising prices independently.

Health economists caution that expecting stable drug prices despite large increases in the cost of raw materials, energy and transport is unrealistic. Professor Dr Syed Abdul Hamid of the University of Dhaka said commercial products cannot stay fixed "year after year", warning that if local firms reduce operations further, the market will inevitably shift toward imports that are significantly more expensive.

For now, Bangladesh faces a difficult balancing act between keeping essential medicines affordable and ensuring the pharmaceutical industry remains financially viable. Without a systematic revision of price controls, manufacturers warn that more products will disappear from local production lines, increasing shortages and pushing patients toward higher-priced imports - precisely the outcome price caps were designed to avoid.