* This is my article yesterday in thelobbyist.biz.
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The main and unstated purpose of imposing the policy was
electioneering. The May 2010 election was just nine months away and the former
President and her arch critic that time, former Senator Mar Roxas who was
aspiring to run for President under the LP, they both needed to appear
“pro-poor, pro-patients” to get more voters support.
The stated purpose was to make popular but expensive
medicines become cheaper, even if alternative generic, cheaper medicines were
available at that time.
So, after four years of forcible 50 percent price
discount on certain popular brands, have the poor patronized the innovator (or
originator or multinationals’) brands?
In a “Policy Dialogue on UHC and Access to Medicines”
last July 25-26, 2013, sponsored by the DOH, Zuellig Center for Asian Business
Transformation (ZCABT), and MeTA Philippines, held at the Asian Institute of
Management (AIM), Deejay Sanqui of IMS
Health made a presentation, “Pharmaceutical Market Perspective.”
For a start, here’s a situationer. The total Philippine
pharmaceutical market as of end-2012 was valued at P131 billion. Minus the
nutritionals, it was worth P124.5 billion.
The most popular molecule that was put under price
control was amlodipine, an anti-hypertension drug. And the most popular brand
was Norvasc, made by Pfizer. Since it was a highly popular, highly saleable
brand but considered “high-priced”, forcing its price to be slashed by half
would result in the poor and middle class shifting to it away from the cheaper
generic brands of amlodipine. Did this happen?
No. From the IMS data, even before the MRP policy was imposed in mid-August 2009, the vertical line in the chart below, there were plenty of generic brands of amlodipine already available, and many people were buying them. When Norvasc 5mg tablet’s price was slashed from P44 to P22, the poor did not shift to it because there were already amlodipine 5mg generic brands that were selling for only P10, even P7.50, so the P22 was still high. The main beneficiaries of the drug price control policy were the rich and upper middle class who were patronizing Norvasc, whether its price was P50 or P30 or P20 a tablet.
No. From the IMS data, even before the MRP policy was imposed in mid-August 2009, the vertical line in the chart below, there were plenty of generic brands of amlodipine already available, and many people were buying them. When Norvasc 5mg tablet’s price was slashed from P44 to P22, the poor did not shift to it because there were already amlodipine 5mg generic brands that were selling for only P10, even P7.50, so the P22 was still high. The main beneficiaries of the drug price control policy were the rich and upper middle class who were patronizing Norvasc, whether its price was P50 or P30 or P20 a tablet.
For simvastatin, an anti-cardiovascular (heart) diseases drug
molecule, the same trend was developing – many cheaper generic drugs were
already available for the poor even before price control was imposed, again
marked by the vertical line in the chart below. In fact, the share of the
innovator brands that time was already small, perhaps below 15 percent of the
total market value for simvastatin. There was really NO need to impose price
control for this molecule.
But then again, “helping the poor” was just an alibi for
the two political camps then. Their goal was simply to look “pro-masa,
pro-mahirap” even if the poor would not directly benefit from such coercive and
arm-twisting in forced price discount.
Another popular drug molecule against breast cancer and
related diseases, Tamoxifen, was also put under price control. What was ironic was that the share of the
innovator or originator brand was almost nil. Prescription for generic variants
was already very high, before, during and after MRP policy.
One may wonder, if the policy did not benefit the poor
but only the rich and upper middle class, why is the policy not withdrawn?
That is one ugly aspect of heavy government intervention.
Once a policy or regulation was imposed, it almost always becomes permanent and
long-term, never temporary or short-term. The two main protagonists, now
Congresswoman Gloria Arroyo and DILG Secretary Mar Roxas, plus former DOH
Secretary who became Civil Service Commission (CSC) Commissioner Francisco
Duque, have been out of medicines policy after the 2010 elections, yet the
damage done by their policy remains until today.
What is that damage? The politics of envy, that if a
company is able to produce useful, popular and revolutionary products, the
politics of envy and government coercion will penalize that company by forcing
it to give mandatory, forcible and coercive price discount. And since all the
affected companies were multinationals, the message across other foreign
investors and suppliers was negative.
There are no government moves or attempts to withdraw
this policy. All the innovator/originator and generic manufacturers, the
drugstores and hospitals, have already adjusted to that ugly reality.
What the policy can teach us is to avoid, to refrain,
inviting government to come and impose price regulation and price control. In
whatever sector or sub-sector of the economy.
Government can do better if it will encourage and allow
more players and competitors, local and foreign, to come in. More competition
almost always results in price reduction or stability, benefitting the
consumers, patients especially.
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See also:
Fat-Free Econ 22: Three Years of Drug Price Control Policy, August 30, 2012
Drug Price Control 33: Debate with a Cat, June 15, 2013
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