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[e-drug] Philippines Generics law

  • From: James Love <love@cptech.org>
  • Date: Thu, 24 Feb 2000 02:47:26 -0500 (EST)

E-DRUG: Philippines Generics law
[copied from Pharm-Policy; WB]

We are still waiting for the USTR to provide justification
for its 301 listing of the Philippines for generic
drug laws. Here is a November 9, 1999 article
in the Philippine Daily Inquirer about the Philippine
legislation. Note also that the Philippines has a
per capital gross domestic product of about $100 per month.


House to probe
drug firms
By Rocky Nazareno
and Stella O. Gonzales

THE HOUSE of Representatives starts today its investigation of
the overpricing of medicines by drug companies which has placed
the life saving-commodity beyond the reach of many Filipinos.

At the Department of Health, Secretary Alberto Romualdez
yesterday vowed to reduce prices of medicines by 30-60 percent
starting next year.

Romualdez said the price reduction would be made possible through
a series of orders that would include stricter compliance with
the Generics Law, limiting the use of branded drugs, and
requiring pharmaceutical companies to manufacture the generic
equivalents of their branded drugs.

Malacañang also announced moves to stop the overpricing of

The steps include investigating firms for ''transfer pricing,''
strict implementation of the Generics Drugs Act, and setting up
distribution centers for low-priced medicines.

House Majority Leader Manuel ''Mar'' Roxas II yesterday filed a
resolution calling for an investigation of the alleged
overpricing of medicine by as much as 500 to 1,000 percent.

''There is a multi-faceted issue to drug over-pricing and this
should be tackled immediately because the poor has long been
deprived of low costs of medicine and health services for far too
long,'' the Liberal Party congressman said.

Roxas said he would raise the practice of overpricing drugs when
the House committee on health meets today to discuss House Bill
No. 76.

The bill seeks tax relief on the importation of medicine,
equipment and other raw materials used for the manufacture of

Roxas said drug prices were overpriced because over P1 billion or
25 percent of the costs incurred by the pharmaceutical industry
had been earmarked for marketing costs.

He said independent analysts ''had suggested that the high cost
of medicines in the local market is a function of the
pharmaceutical industry's dependence on marketing, advertising
and promotions as a tool to ensure steady sales.''

Roxas said marketing costs included the ''representation expenses
to entice physicians to prescribe their branded drugs to even
poor patients.''

The Capiz congressman said the ''huge budget set aside by medical
companies for the purpose of luring physicians into prescribing
their drugs defeats the objectives and mission of the Generic
Drugs Act.''

He noted that only ''one out of 10 consumers buy generic drugs
because doctors and pharmaceutical companies continue to
recommend branded products.''

This translates to a mere 40-percent compliance of the Generic
Drugs Law, 11 years after its implementation. Compliance with the
law hit a high of 80 percent in 1988.

He said sales of generic drugs represented only 8 percent of

total pharmaceutical sales in 1996.

Other factors that have led to the high costs of medicines are
''graft and corruption in government purchases and collusion and
price-fixing by pharmaceutical companies with retail outlets,''
Roxas said.

He said drug firms were also passing on to consumers their tax

Gov't pharmacies

The Department of Health, through its hospital pharmacies, will
soon sell drugs to patients.

''The actual significant reduction will not be in place until
January or February,'' Romualdez said. He defined ''significant
reduction'' as ''30-60 percent lower than the present price.''

Romualdez complained that multinational pharmaceutical
companies wielded a ''strong influence'' and ''can get foreign
embassies to warn about sanctions'' if the DOH pursued its plan
to limit, if not totally ban, the use of branded drugs.

''The European Union and some European countries agree with the
PHAP (Pharmaceutical Health Care Association of the Philippines)
stand that what we are doing is infringing on trade regulations
and this is not within the province of the DOH,'' he said.

He said ''trade sanctions'' had been ''explicitly discussed'' by
the PHAP and the US and European embassies.

These parties, he said, were looking at possible court actions
against any order the DOH might issue.

The DOH chief said the pharmaceutical companies believe that
drug pricing was not a health issue but a trade issue ''and the
has no business taking action on drug prices.''

''We have 200,000 infants dying unnecessarily of causes that
could likely be treated with antibiotics. Every year 200,000
babies die because of high drug prices, infections, communicable
diseases. If the state of health and death of thousands of
Filipinos is not a health issue, then I have to see a definition
of what they consider to be a health issue,'' Romualdez said.

The data cited by Romualdez is apparently the figure worldwide.
Data from the National Statistics Office show that 30,631 infants
died in 1995 due to various causes.

Romualdez said another factor that had been hampering the DOH
program to reduce the prices of medicines was the refusal of
pharmaceutical companies to submit their actual cost of
production in manufacturing drugs.

Romualdez had formed a consultative committee that included a
representative from the PHAP and a local drug manufacturers group
to study the DOH's proposals to reduce drug prices. The committee
has about 20 days to finalize its recommendations.

But with or without the inputs from the pharmaceutical industry,
Romualdez said the DOH would implement these policies.

''The department is willing to take unilateral action,'' he

The DOH is also trying to encourage generic prescribing among
doctors under the principle that generic drugs, while cheaper,
are as effective as their branded counterparts.

The Bureau of Food and Drugs, since three months ago, has been
checking prescriptions issued by doctors to determine compliance
with the Generics Law.

Under the law, doctors are supposed to write the generic name of
a drug and, if he so wishes, indicate in parenthesis a brand of
the drug.

BFAD reported to Romualdez that it has been issuing ''warnings''
to an average of 20 doctor-violators per day nationwide.

Romualdez claimed that generic prescribing was now about 50

Presidential spokesperson Fernando Barican said the President
Estrada ordered the DOH to investigate ''transfer pricing'' by
pharmaceutical firms, which resulted in the steep costs of
medicines in the country.

''One of the things that the DOH is doing is to look into the
transfer pricing, yes,'' Barican said when asked if the drug
firms responsible for the overpricing will be investigated.

Barican said the President identified the following areas where
''possible government support can be applied.''

Importation and manufacturing
Marketing distribution
Retail trading

''The President has standing instructions to the DOH (Department
of Health) to look closely at the supply chain of drugs and
medicines and determine where the government can introduce
measures to lower prices of health-related products,'' Barican
said in a statement. With a report from Juliet L. Javellana

November 9, 1999

James Love, Director | http://www.cptech.org
Consumer Project on Technology | mailto:love@cptech.org
P.O. Box 19367 | voice: 1.202.387.8030
Washington, DC 20036 | fax:

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