The drug price control formula and methodology proposed by the Department of Health will not benefit patients because it will distort prices and even lead to higher retail prices, Teodoro Padilla, executive director of the Pharmaceutical and Healthcare Association of the Philippines said.
An earlier variant of the plan would have made morphine and other pain-killer opioids cheaper than paracetamol, thus giving substance abuse a shot in the arm.
“The price distortion stems from the DOH formula that sets very low prices at the manufacturers’ level and yet mandates retailers to impose up to as much as 45-percent mark-up which, at present, generally does not reach that level, particularly with most outlets,” he said in a press statement.
He added: “The proposed scheme would, therefore, lead to either a price freeze or even higher drug prices at the patient level. This is like squeezing rice farmers but mandating retail prices to go up. The result is the farmers will not plant, and there will be a shortage. It will be the same with us.”
There are also instances when the methodology yields higher prices.
As an example, Padilla said a hypertensive drug being sold at P44.70 may now be sold to patients for P52.42 under the price control proposal.
A diabetes drug, on the other hand, may now be sold for P41.32 from its current price of P32.14, or about 29-percent increase in price.
“These are just a few examples. It remains uncertain whether the DOH considered costs of doing business in the country. There are a lot more and our concern is that since we cannot sell at a loss, the country will have to import, which could be costlier. Some manufacturers may also have to review their operations here,” he said.
“Price controls in pharmaceuticals do not work in normal times and only lead to market inefficiencies,” Padilla added, “and the best proof is that many countries, like China, which tried price controls and other interventions, went back to free-market solutions for medicines.”
The industry is also wrongly accused of pricing too high and earning too much profit, when in fact, its prices are at par with comparable countries within ASEAN.
“We actually sell at very low prices to the government on bulk sales basis, and this is the reason government hospitals sell the cheapest medicines in the country,” he said.
A tablet for hypertension sells for as low as 19 centavos in a government hospital; it sells at retail outlets for as high as P34.50.
For the anti-diabetes metformin, a tablet in a government hospital can sell for as low as 56 centavos but as high as P16 retail.
“We have been partners of the government all these years and the DOH knows we have been a source of cheap medicines, that we are responsible corporate citizens. But this partnership can only flourish if the private partners are allowed to survive,” he said.
Padilla also explained that there are legal infirmities in the proposed manner of implementing drug price ceilings since price regulation under the Cheaper Medicines Act (Republic Act No. 9502) is only a reserve or secondary instrument which should be used only in the event that full competition turns out to be ineffective.
PHAP, as a counterproposal, is offering a comprehensive approach to sell various medicines not only at low prices but sustainably making these available to the public.
“We are offering outright discount for medicines by as much as 75 percent for 150 medicines. We are also offering tools such as price negotiation and pooled procurement. These initiatives are sustainable and will result in a greater stability and certainty in product supply not only for currently marketed medicines but also new or innovative medicines. The effect is a win-win for all, especially the patients, and we hope to make these initiatives work, hopefully with the support of the DOH,” Padilla said.