Despite a powerful drug regulatory authority on paper, Sri Lanka’s medicine safety net is dangerously frayed. While the State Pharmaceuticals Corporation follows strict quality checks, the private sector—which handles 60% of the market, operates with minimal independent oversight, leaving patients exposed to potentially substandard drugs.
The National Medicines Regulatory Authority was established under Act Number 5 of 2015 with an ironclad legal mandate to regulate every aspect of medicine quality in Sri Lanka. The law is unambiguous: the NMRA must verify that every single imported product meets defined pharmacopoeial or manufacturer specifications both before it enters the country and after it reaches the market. Yet a growing body of evidence from the Auditor General, parliamentary committees, and international agencies suggests a troubling gap between what the law demands and what actually happens on the ground. This implementation gap has become the defining characteristic of pharmaceutical regulation in the country, creating a two-tier system where patients in the private sector cannot assume the same level of protection afforded to those in the public hospital system. The consequences of this regulatory failure extend beyond mere administrative shortcomings; they potentially impact the health and safety of millions of Sri Lankans who purchase medicines from private pharmacies every single day.
Sri Lanka’s pharmaceutical supply chain operates through three distinct channels. The state hospital system relies entirely on the State Pharmaceuticals Corporation, which has built a reputation for rigorous quality compliance over decades of careful procurement practices. The private sector, however, is supplied by both the SPC and a multitude of private importers who operate under a fundamentally different regulatory framework. Statistics reveal a startling imbalance: private importers now account for approximately 60% of the total expenditure on drugs and medical supplies entering the country. This dominance of the private sector in the pharmaceutical landscape brings with it a corresponding responsibility for quality assurance, and this is precisely where the conundrum deepens. When the majority of medicines consumed by the population enter through a channel with weaker oversight mechanisms, the entire healthcare system becomes vulnerable to substandard and falsified products.
When it comes to quality assessments, the SPC follows a long-established transparent procedure that has been refined over decades of experience. Every drug imported by the state sector undergoes mandatory quality compliance checks against strict pharmacopoeial standards prior to importation. This pre-shipment verification process acts as a robust filter, ensuring that only medicines meeting stringent specifications enter the public hospital system. The SPC’s quality assurance framework includes testing at multiple points: pre-qualification of manufacturers, batch testing before shipment, and random sampling after arrival. This comprehensive approach has earned the SPC a reputation for reliability that extends throughout the region. The procedure followed by the private sector, however, is understood to be fundamentally different. The responsibility for checking quality compliance rests entirely with the importers themselves, with no independent oversight of the process. Although the NMRA is legally required to provide this oversight for all imports regardless of sector, evidence suggests that this simply does not happen with the consistency the law requires. The private sector operates on what amounts to an honor system, where importers self-certify the quality of their products without mandatory independent verification.
The Legal Framework: What the Law Actually Requires
The NMRA Act Number 5 of 2015 leaves no room for ambiguity regarding the authority’s responsibilities. Parliament crafted this legislation with the explicit intention of creating a powerful central regulator capable of protecting public health through comprehensive oversight of all medicines entering the country. The following sections of the Act and associated regulations explicitly detail the authority’s duties that must be fulfilled for every medicine entering the country, regardless of whether it enters through public or private channels:
• Mandate to Ensure Quality: Section 3(a) of the Act states the NMRA must ensure the availability of efficacious, safe and good quality medicines to the general public. This is the primary objective around which all other functions revolve, establishing patient safety as the paramount concern that overrides all other considerations. The language is mandatory, not discretionary, using the word must rather than may, indicating that Parliament intended this to be an enforceable duty rather than a mere aspiration.
• Central Regulator Role: Section 3(b) designates the NMRA as the central regulator for all matters connected with registration, licensing, manufacture, and importation. This provision eliminates any ambiguity about which agency holds ultimate responsibility for pharmaceutical oversight, consolidating authority in a single body that can be held accountable for failures. No other agency shares this responsibility, meaning the NMRA cannot deflect blame to others when quality failures occur.
• Quality Assurance Responsibility: Section 14(c) empowers the authority to regulate the registration, licensing, and importation of medicines to ensure quality standards are consistently met across all sectors of the healthcare system. This provision grants the NMRA the legal tools necessary to enforce compliance, including the power to suspend or cancel registrations, impose fines, and pursue criminal prosecutions against violators.
• Verification of Batches: Section 52 specifically prohibits the sale of any prescribed medicine unless the batch from which it is taken has been approved as reliable. This provision should theoretically guarantee that every single package of medicine reaching a patient has received explicit regulatory approval based on verified quality data. The term approved as reliable implies an affirmative act of verification by the regulatory authority, not merely passive acceptance of manufacturer documentation.
• Mandatory Technical Reviews: Section 1.3.1 of NMRA procedural documents clarifies that the Medicines Evaluation Committee uses registration and certification procedures to carry out technical reviews and surveillance of medicines to ensure quality and safety throughout the product lifecycle. This committee is supposed to function as the scientific backbone of the authority, bringing expert judgment to bear on registration decisions.
• Post-Marketing Surveillance: The Market Control Division is legally responsible for implementing market surveillance programs to monitor product quality throughout the supply chain and prevent the entry of substandard products into the Sri Lankan market. This division is supposed to conduct regular inspections, collect samples for testing, and take enforcement action when violations are discovered.
Specific Requirements for Importers
For importers operating in both the private and public sectors, the NMRA is expected to maintain specific mandatory documentation for all medicinal products entering the market. These requirements are not suggestions or guidelines; they are legal obligations backed by the full force of the NMRA Act. The critical question that must be posed is whether the following requirements are being adhered to for all drugs entering the market, and if not, why the regulatory authority is failing to enforce its own mandates. Each requirement serves a specific purpose in the overall quality assurance framework:
• Certificate of Analysis: For new registration or renewal, manufacturers must provide a Certificate of Analysis of the finished product. This document serves as the primary evidence that a specific batch of medicine meets the quality specifications claimed by the manufacturer. The certificate must come from the manufacturer’s own quality control laboratory and should include detailed test results for all relevant parameters including potency, purity, dissolution, and stability. Without this document, there is no verifiable evidence that a product meets the standards under which it was registered.
• Evidence of Importation: Under Section 65(d), the NMRA recently mandated that all Market Authorization Holders submit evidence of importation and production for the past two years to ensure continuous availability and compliance with registration requirements. This requirement addresses the problem of ghost registrations where products remain on the approved list despite never actually being imported. It also helps the NMRA track actual market volumes and prioritize surveillance resources accordingly.
• Batch Specific Surveillance: The National Medicines Quality Assurance Laboratory is responsible for analyzing imported medicines at different points in the distribution chain, using samples submitted for registration, complaints, and surveillance from both government and private institutions. The NMQAL is supposed to function as the definitive arbiter of quality disputes, with the technical capacity to conduct full pharmacopoeial testing on any product in the market.
• Manufacturer Compliance: All manufacturers must conform to Good Manufacturing Practices, which the Act defines as the guidelines issued by the World Health Organization. This requirement applies equally to domestic producers and foreign manufacturers whose products enter Sri Lanka. GMP certification ensures that products are manufactured in facilities with proper quality systems, trained personnel, and adequate environmental controls.
Recent Strategic Changes and Initiatives
It is understood that the NMRA has recently introduced new measures to tighten control over imports, moving away from ad hoc manual checks to systematic digital tracking. These changes represent an acknowledgment that previous approaches have been insufficient to address the scale of the private pharmaceutical market. The authority appears to be responding to the criticism contained in various audit reports, though questions remain about whether these measures go far enough:
• Mandatory Labelling: Effective from September 1, 2024, a new labelling requirement making stickers compulsory for all batches released to the market was implemented to prevent falsified products from entering the supply chain undetected. These stickers are supposed to include unique identifiers that can be verified by pharmacists and patients, creating an additional layer of security against counterfeit products.
• Digital Data Collection: In early 2024, the NMRA launched a mandatory data collection initiative requiring all local agents and importers to provide accurate information on all medicines imported since January 2023, creating a comprehensive digital record of pharmaceutical imports. This initiative aims to address the data loss issues identified by COPE and create a reliable baseline for future surveillance efforts.
• Renewal Grace Period: A six month grace period starting January 1, 2026, was granted for the renewal of foreign manufacturing premises. Sites for which renewal applications are not submitted will be discontinued from the approved suppliers list. This requirement ensures that the NMRA maintains current information about manufacturing facilities and can verify that they continue to meet GMP standards.
While the NMRA reportedly uses risk based surveillance involving testing samples rather than every single unit, it is legally required to verify that every imported product meets defined pharmacopoeial or manufacturer specifications before and after it reaches the market. This tension between practical constraints and legal requirements lies at the heart of the current conundrum. The authority cannot simultaneously claim to be complying with the law while testing only a tiny fraction of the products for which it bears responsibility.
Audit Findings and Independent Assessments
In recent times, various audits and high level assessments have been conducted to examine the extent of compliance with the law pertaining to medical products. The following are noteworthy for they have scrutinized the gap between the NMRA’s legal mandate and its actual performance, providing empirical evidence of systemic failures:
- Auditor General’s Reports
The Auditor General of Sri Lanka has conducted several performance audits on the NMRA and the pharmaceutical supply chain, with notable reports in 2022 and 2023 revealing systemic failures that call into question the entire regulatory framework:
• Backlog in Registration: Audits found that the NMRA had a massive backlog of thousands of applications, leading to provisional registrations that bypassed full quality testing requirements. This practice effectively allows medicines to reach the market without the comprehensive evaluation the law demands. Provisional registrations were intended for emergency situations, but the audit found they had become the norm rather than the exception. Some products remained provisionally registered for years without ever undergoing the full assessment required by law.
• The Waiver of Registration Crisis: The most significant finding was the overuse of Section 109 of the NMRA Act which provides for emergency waivers. Audits revealed that during the 2022 to 2023 economic crisis, the NMRA allowed hundreds of drugs to enter the country without the legally required quality checks, bypassing the very safeguards the law was designed to maintain. While the economic crisis created genuine supply pressures, the audit questioned whether the scale of waivers was justified and whether any attempt was made to conduct even basic quality checks on these products.
• Failure of the NMQAL: The National Medicines Quality Assurance Laboratory was found to be critically under resourced, testing only a tiny fraction of the thousands of items imported by the private sector. Without adequate laboratory capacity, quality verification becomes impossible regardless of legal mandates. The audit found that the laboratory lacked essential equipment, suffered from frequent reagent shortages, and had a staffing level far below what would be required to test even a representative sample of imported products.
- The COPE Investigations
The Parliamentary Committee on Public Enterprises has summoned the NMRA multiple times between 2023 and 2025, and their assessments painted an equally troubling picture of an agency struggling to fulfill its basic functions:
• Missing Data: A well publicized investigation into the NMRA Data Deletion incident highlighted that the authority lost critical digital records of importers and quality certificates, making it legally impossible to verify compliance for an extended period. When records vanish, regulatory oversight vanishes with them. The committee heard testimony that the data loss resulted from inadequate IT systems and poor backup procedures, raising questions about the competence of the authority’s management.
• Staffing Shortages: COPE identified that the NMRA lacked the requisite number of pharmacists and quality assessors to effectively monitor the more than 4,000 items imported by the private sector. The authority is attempting to regulate a massive pharmaceutical market with a technical staff smaller than that of a single large private hospital. The committee noted that the NMRA’s recruitment procedures were slow and cumbersome, making it impossible to fill vacancies in a timely manner.
- WHO and World Bank Gaps Assessments
In preparation for the USD 150 Million PHSEP and the Digital Transformation Project, the World Bank and World Health Organization conducted situational analyses that identified additional systemic problems requiring urgent attention:
• Regulatory Capture: Concerns were raised that the private sectors product listing approach allows for massive brand proliferation without adding therapeutic value, creating an unmanageable regulatory burden while offering no corresponding benefit to patients. The assessments suggested that the registration process had become a mere formality rather than a genuine quality filter, with little scrutiny of whether new products offered any advantage over existing ones.
• Information Asymmetry: Because the private sector operates on a market authorization basis, the NMRA was found to be reactive, testing only after complaints were received, rather than proactive in preventing substandard drugs from reaching patients in the first place. This reactive posture means that problems are discovered only after patients have already been exposed to potentially harmful products.
Why the NMRA Struggles to Comply with the Law
Assessments suggest three main reasons for the persistent non-performance that has been documented by multiple independent bodies. Understanding these root causes is essential for developing effective solutions:
• Institutional Capacity: The NMRA is required to regulate more than 4,000 private sector items reportedly with a technical staff smaller than that of a single large private hospital. This fundamental resource mismatch makes comprehensive oversight mathematically impossible under current structures. Even if every staff member worked around the clock, they could not physically review all the documentation, inspect all the facilities, and test all the products for which the authority bears legal responsibility.
• Regulatory Blind Spots: While the law requires quality assurance, the specific regulations detailing how this should be accomplished have not been updated since 2019, failing to reflect the massive surge in private imports that has occurred in subsequent years. The regulatory framework has not kept pace with market realities, leaving the NMRA with outdated tools to address contemporary challenges.
• Budgetary Constraints: Testing a single drug batch at the National Medicines Quality Assurance Laboratory is expensive, yet the NMRA fee structure is too low to cover the cost of testing thousands of items comprehensively. The authority cannot spend money it does not collect. The fee structure was set years ago and has not been adjusted for inflation or the increased complexity of modern pharmaceutical analysis.
Current Corrective Steps for 2025 and 2026
To address these audit findings, the following national projects are said to be underway with the goal of bridging the gap between legal mandate and operational reality. These initiatives represent the most significant reform effort since the NMRA was established:
• NMRA Act Reform: Discussions are ongoing to amend the Act to make post market surveillance fees mandatory for private importers to fund their own quality testing. This would create a dedicated funding stream for the laboratory capacity the authority so desperately needs. The proposed amendments would also strengthen enforcement powers and streamline registration procedures.
• Digital NMRA World Bank Funded: This project aims to automate the verification of batch certificates so that no private shipment can be cleared by Customs without a digital link from the NMRA. While this sounds very modernistic, it is important to ascertain the functionality of this procedure and whether it has in fact been implemented as a mandatory requirement. The system would create an electronic gate that prevents non-compliant products from entering the country.
The Critical Distinction Between Law and Practice
To ensure a balanced perspective for anyone examining this situation, the conundrum can be summarized by understanding the fundamental disconnect between what the law demands and what resources and systems allow:
• The Legal Illusion: On paper, the NMRA appears as a powerful guardian of quality for all 4,000 plus items in the private sector. This is the legal illusion that the Act of Parliament creates, leading citizens to believe their medicines are thoroughly vetted before reaching pharmacy shelves. The law creates expectations that cannot be met under current circumstances.
• The Ground Reality: In practice, the private sector operates with consequential independence arising from the NMRA lacking laboratory facilities to test the thousands of batches arriving for the private market. It therefore acts primarily as a reactive regulator, investigating after problems are reported, rather than a proactive one that tests every batch before it reaches the shelf. The authority is constantly playing catch-up rather than preventing problems before they occur.
• The SPC Advantage: As noted, the state sector maintains a much tighter net because its procurement is centralized and its contracts specifically mandate testing as a prerequisite for importation. The private sectors market authorization model simply lacks an equivalent mandatory pre shipment testing cycle for every individual shipment. This creates a two-tier system where patients are protected differently depending on where they obtain their medicines.
Moving Forward with Reform
The NMRA currently manages a market authorization system for the private sector that allows for massive brand proliferation reportedly exceeding 4,000 items, as it does not have to comply with a formulary as the SPC does which operates on a restrictive formulary of fewer than 1,000 items. The World Bank and World Health Organization have identified this lack of a National Private Sector Formulary as a primary driver of both regulatory failure and the high out of pocket expenditure burdening Sri Lankan patients. The current system encourages importers to bring in every possible brand, regardless of whether it offers any therapeutic advantage, because there is no mechanism to exclude products that add no value.
The World Bank’s Proposed Correction Strategy
The World Bank has recommended a tiered restructuring of the NMRA to shift it from being a passive registrar to an active manager of the pharmaceutical market. Key reform recommendations include:
• Establishment of a Private Sector Essential Medicines List: The World Bank has pushed for the NMRA to adopt a positive list for the private sector. Instead of registering any brand that meets basic GMP standards, the NMRA would only prioritize the registration and surveillance of brands that fit into a National Formulary based on therapeutic need, mirroring the Essential Medicines List used in the public sector. This approach would focus limited regulatory resources on products that matter most for public health.
Author’s comment: The national formulary is fundamentally a list of generic items, not a list of products by brand name. It is unlikely and could be regarded as unfair for would be importers for the NMRA to register items by brand name, as therapeutic need cannot be determined by the brand of a product. Therapeutic needs are ascertained based on the pharmacopoeial specifications applicable to a generic product. If a particular brand of a generic product includes essential ingredients over and above what is specified in the pharmacopoeial specification, then it could be argued that it is a different generic product, and a question could be asked whether such a product should be included in the formulary or not. In such instances, the decision whether to include it should be made by a set of independent professionals such as pharmacologists who can evaluate the therapeutic significance of any additional ingredients.
• Mandatory Health Technology Assessment: The World Bank is funding the integration of HTA units within the Ministry of Health. The recommendation is that no new drug should be registered for the private sector unless it passes an economic and therapeutic value test, which would naturally shrink the overgrown list of more than 4,000 items over time. This would introduce an evidence based filter into the registration process.
Author’s comment: The observations made in respect of the earlier point apply to this as well, as therapeutic value cannot be determined by brand identity but must be assessed based on pharmacopoeial specifications and clinical evidence. Any assessment of therapeutic value must be conducted by qualified professionals using transparent criteria.
• The Digital Gatekeeper: Recognizing the monitoring challenges mentioned, the Digital Transformation Project is funding a system where the Customs Department and NMRA are linked through an e-portal. If a drug is not on the approved formulary list, it theoretically fails to gain entry into the country, creating an automated enforcement mechanism that does not rely on manual checks.
The Reality of Implementation
While these recommendations exist on paper, the expert methodology for implementing a private formulary will inevitably face significant pushback from multiple quarters. The Private Pharmacy Importers Association, various chambers of commerce, and even some members of the medical profession will likely argue that it restricts consumer choice and limits clinical freedom. The following statement underpins the necessity of finding a solution to ensure that legal and professional guardrails are in place to guarantee the quality of drugs consumed by the public. The political economy of pharmaceutical regulation means that any attempt to rationalize the market will face organized opposition from those who benefit from the current system.
The Auditor Generals 2024 report offered a stark warning: without this narrowing of the private sector list, the NMRA will remain legally liable but operationally incapable of ensuring safety for the foreseeable future. This is the conundrum that Sri Lanka must resolve, for the sake of every patient who trusts that the medicine they purchase will heal rather than harm. The choice facing policymakers is clear: either provide the NMRA with the resources and legal tools necessary to fulfill its mandate, or amend the law to reflect the reality of what can actually be achieved with available resources. The current situation, where the law demands one thing but practice delivers another, serves no one’s interest except those who profit from regulatory weakness.
