ECONOMYNEXT – Sri Lanka has given orders of 90 billion rupees to the State Pharmaceutical Corporation for medicines and a further 20 billion will be allocated for this year, which is a rise of 230 percent, Health Minister Nalinda Jayatissa said.
In 2024, only 48 billion rupees was spent on imported medicine taken form the SPC.
“This year we expected 60 billion rupees, because only 48 billion rupees were spent last year,” Minister Jayatissa told parliament.
“Now it has increased to 90 billion rupees and in the next one and a half months we propose to give another 20 billion rupees.”
Sri Lanka this year was spending 183 billion rupees on medical supplies through various agencies under the Ministry of Health, he said.
It is not clear why the number went up, but in 2023 and 2024 Sri Lanka’s state hospitals were hit by frequent drug shortages due to delays coming from a currency crisis which was the worst triggered by the central bank in its history.
Minister Jayatissa had said earlier that drugs have to be ordered several months ahead or in the previous year for them to be delivered in an orderly manner in the current year.
As a result, efforts have been made to order drugs as fast as possible in 2025 so that manufacturers have sufficient lead times to deliver.
Cabinet approval has also been given for 46.7 billion rupees for local purchases, he said.
After the currency crisis, authorities said people who had previously used the private hospital system had shifted to the state system as the rupee depreciation shrunk their disposable income.
In 2023 the then Minister of Health said due to rise in admissions the health budget was expected to go up from 140 to 200 billion rupees due to steep rise in admissions and OPD use by middle class patients who could not longer afford private health care.
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Sri Lanka also has a system where drugs are purchased from local firms without competitive tender on a controversial cost-plus formula which was started ironically during a so-called ‘Yahapalana’ regime.
The regime also started price controls, creating a separate agency for the purpose which critics warned would promote low quality generics from companies that no responsibility to protect a brand and reduce the availability of so-called ‘original’ drugs which have been subject to clinical trials.
After the rush for generics an entire debate has sprung in the country on how to ensure the ‘quality’ (i.e efficacy) of cheap drugs.
There have also been several deaths from generics as corruption intensified with the new regulations.
In 2015 when drug price controls were mooted, analysts also warned that instead laws should be brought against the central bank to reduce its independence to print money and depreciate the currency instead of bringing price controls on drugs.
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Sri Lankan drug prices went up dramatically after macro-economists cut rates and printed money to ostensibly close an ‘output gap’ with ‘monetary accommodation’ or ‘eased monetary conditions, rejecting stability. (Colombo/Oct22/2025)
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