Community Pharmacies in Nepal Face Existential Crisis
-January 5, 2025 (Poush 21, 2081 B.S)
Nepal has nearly thirty thousand registered pharmacies serving approximately 25 million people, which averages to one pharmacy for every 833 individuals. On the surface, this seems adequate, but behind this statistic lies a harsh reality: Nepal’s community pharmacies are struggling for survival. Government policies, financial pressures, and lack of forward-looking reforms have pushed the business model of these local healthcare providers into crisis.
Impact of Health Insurance and Free Medicine Programs
With the government’s implementation of health insurance and free medicine programs for chronic diseases, community pharmacies have seen a significant drop in revenue. Patients who previously relied on local pharmacies now receive free medicines from government-run outlets, reducing customer flow and threatening the sustainability of these businesses.
Restricted Product Scope
In developed countries, pharmacies operate as multi-dimensional health centers, but in Nepal, community pharmacies are tightly restricted by regulations. They are not permitted to sell items such as skincare products, nutritional supplements, infant care products, or hygiene essentials subject to VAT. This restriction limits potential revenue streams, further endangering their existence.
Low Profit Margins and Mandatory Discounts
Nepalese retail pharmacies are culturally required to offer a 10% discount on all products, reducing their already limited profit margin of 16% to roughly 4.4%. Compared to other countries, this profit margin is low. While a few large businesses with significant investments and multiple revenue streams may manage, smaller local pharmacies are disproportionately affected.
Heavy Tax Burden
The economic model of small community pharmacies is further strained by multiple taxes: registration and renewal fees to the Department of Drug Administration, business taxes to local governments, income tax to the Internal Revenue Department, and property rent tax. For small-scale pharmacies with limited sales, this tax burden makes business continuity almost impossible, forcing many to close, downsize, or operate informally, weakening the sector further.
Prohibition on Charging for Consultation
Pharmacists in Nepal cannot charge for patient counseling, medication guidance, or health advice. While these services are crucial, the lack of recognition devalues pharmacists’ contributions and discourages professionals from continuing in the sector.
Environment of Fear and Intimidation
Community pharmacies frequently face inspections by local authorities, police, and the Department of Drug Administration. While regulation is necessary, these visits are often arbitrary, creating a sense of insecurity and fear among pharmacy owners.
Nepal vs. Global Practices
Compared to global standards, Nepal’s pharmacy sector shows significant disparities. In developed countries, retail pharmacies are integrated with health insurance systems and can sell beauty, skincare, nutrition, orthopedic, and other medical products. They also provide additional services such as blood pressure monitoring, oxygen level measurement, vaccinations, and first aid. In Nepal, such services are legally restricted, limiting the scope of pharmacy practice.
Call for Clear Policies and Reforms
Although community pharmacies contribute roughly 35% to healthcare delivery in Nepal, their role is largely overlooked by government authorities, pharmacy councils, and policymakers. Clear guidelines are urgently needed to define what pharmacies can and cannot do. Suggested reforms include:
- Expanding Product Range: Allow sale of non-prescription products, including VAT-subject items.
- Ensuring Fair Profit Margins: Revise mandatory discount policies to protect pharmacy profitability.
- Recognizing Pharmacists’ Expertise: Allow fees for consultation services.
- Simplifying Regulations: Reduce unnecessary inspections and ensure fair treatment of pharmacy owners.
- Integration with Health Insurance Systems: Include pharmacies in insurance programs to enhance revenue and efficiency.
Community pharmacies are an indispensable part of Nepal’s healthcare system, providing accessible services to millions, especially in rural and underdeveloped areas. Without timely reforms and supportive policies, these services risk disappearing entirely. The government and stakeholders must recognize the importance of community pharmacies and take immediate steps to safeguard their sustainability. Otherwise, the consequences will not only affect pharmacies but also severely limit healthcare access for millions of Nepalese citizens.
– Kabin Maleku
