DOH policies on medicines

We write in response to the opinion articles written by Mr. Alex Magno on two occasions (14 and 26 November 2019) concerning the proposed maximum retail price (MRP) of the Department of Health (DOH). We wish to clarify several points on the issue based on facts and official policies of the DOH.

Firstly, it is well within the authority of the DOH to recommend maximum prices for medicines to the President, as mandated by Republic Act No. 9502 or the Universally Accessible Cheaper and Quality Medicines Act of 2008. Chapter 3, Section 17 of the said act clearly states that:

The President of the Philippines, upon the recommendation of the Secretary of the Department of Health, shall have the power to impose maximum retail prices over any drugs or medicines as enumerated ... (emphasis supplied)

Moreover, Chapter VI Section 3 of the Implementing Rules and Regulations of the said act further contextualizses the scope of MRP, to quote: Coverage of MRP. The MRP shall be construed as the imposition of maximum prices at all levels of the supply chain including but not limited to manufacturer’s price, trader’s price, distributor’s price and wholesaler’s price and retailer’s price.

Price regulation is not unique in the Philippines. In fact, many countries benchmark their prices against others and use this price information to impose wholesale price caps for medicines. The proposed expanded MRP covers high-cost, single-sourced and patented medicines, which in most cases, come from the same manufacturer. The crux of this strategy is to address the existing price gap and inequity, the same medicines cost more in the Philippines than in the EU because the prevailing setup defies all principles of social justice and equity. Moreover, regulation of mark-ups at different levels of the supply chain (i.e. importation, manufacturing, wholesale, retail) forms one component of the overall pricing strategy in many settings, which has shown to reduce prices in the short term.

To set the record straight, the DOH has adhered to the principles of rigor, transparency, and openness to its stakeholders, especially with the price review conducted prior to submitting the proposal to the Office of the President. The same shall likewise be observed in the planned expansion of the scope of MRP. Initial plans to expand the MRP began as early as 2016, during the time of Secretary Paulyn Ubial. In 2017, the EU Technical Assistance conducted a review DOH Drug Pricing Policies and found that the Philippines continues to have wide price differentials relative to neighboring ASEAN countries, among others. The use of government instruments to lower the prices of medicines, including the regulation of mark-ups at the different levels of the supply chain, was therefore recommended.

The MRP policy paper was also consulted with various stakeholders, including the industry. Several updates have been given on our current efforts through various public fora and series of consultations which have been well attended. The industry was also given an opportunity to submit their position papers and even had an audience with Secretary Duque last 21 October 2019, along with key patient organizations. However, the consumers and patients viewed their proposal on pooled procurement scheme only for DOH hospitals as still not addressing the differential pricing and high mark-ups observed in the bigger private sector, where the majority of Filipinos access their medicines through drugstores and private hospitals.

Secondly, we wish to clarify that the points raised by Mr. Magno in his article entitled “Tampering” are in fact the effects of the 2009 price negotiation between the government and the pharmaceutical industry. Under the government-mediated access price scheme (GMAP), 69 drug molecules were allowed voluntary price reduction. However, studies which evaluated the impact of the GMAP showed that this did not lead to significant reduction of the household financial burden of medicine costs, because: 1) the drugs listed in the GMAP did not necessarily respond to the leading causes of morbidity in the Philippines; 2) the GMAP was brand-specific, hence price reductions were not observed with other brands carrying the same generic name; and 3) drug prices under GMAP increased over time, as the DOH has had no control over them after being price-reduced voluntarily. Part of the recommendations of the study included the conduct of an extensive review of the mandatory price reduction scheme, and consultation by the government with medical practitioners and patient groups to identify other drugs that should be added to the list.

Thirdly, the aim of the price regulation is not to harm the patients but to make the drugs more affordable to them. The real objective of MRP is to set fair drug prices in the country in accordance with the Filipino’s capacity to pay, and in line with our mandate to protect consumer rights and right to health. In fact, what really hurt patients are the persistently high drug prices that keep cures out of their reach and lead them to financial ruin. As aforementioned, drug prices in the Philippines have been known to be higher compared to even high-income countries. The latest survey results of the Ulat ng Bayan September report conducted by Pulse Asia revealed that 99 percent of Filipinos do not buy all of their prescription medicines because they find them expensive. Whilst the government spending on health has increased six-fold over the past years, this still appears insufficient as it could not keep up with the medical inflation rate in the country (which rose to 12.4% in 2018), coupled with the mounting and competing needs of Filipinos.

We hope that the following important points have already clarified the various arguments raised by Mr. Alex Magno regarding the legality and the rationale behind imposing price caps on high cost medicines. Ultimately, the MRP is the government’s proactive measure to ensure that every Filipino will have access to affordable and quality life-saving and essential medicines. – Rolando Enrique D. Domingo, MD, DPBO, Undersecretary of Health, Office of the Chief of Staff and Health Regulation Team