Sunday, June 21, 2009

DOH Meeting on Price Regulation, part 1

The Department of Health (DOH), as mandated by the Cheaper medicines law (RA 9502) is to form an Advisory Council on price regulation. The Council was formed early this year and so far they have conducted 5 meetings. I have attended the last 2 meetings -- last June 5 and June 19. I have not attended the first 3 council meetings, two of which were scheduled on days that I was out of the country.

The Advisory Council has a good mixture of participants. I categorize them into 5 groups here:

(1) the two federation of pharma companies, PHAP and PCPI (Pharmaceutical and Healthcare Association of the Philippines, and Philippine Chamber of Pharmaceutical Industry, respectively). The former is composed mostly of multinational pharma manufacturing and trading companies, while the latter is composed of Filipino companies.

(2) drug retailers, particularly Mercury Drugstore, the Drug Store Association of the Philippines (DSAP), and the Generics Pharmacy.

(3) the civil society groups, including Minimal Government Thinkers, Medical Action Group (MAG), Cancer Warriors Foundation (CWF), Ayos na Gamot sa Abot kayang Presyo (AGAP), others.

(4) the multilateral institutions like the European Council (EC), World Health Organization (WHO), GTZ (German foreign aid), etc. Although I think not all of them attend the meetings everytime, only on issues where they have some involvement or projects. The UPSE Health Policy Development Project (HPDP?), funded by USAID I think, also attends the meeting. And finally,

(5) other government agencies like the Department of Trade and Industry (DTI), Bureau of Food and Drugs (BFAD) and the Philippine International Trading Corporation (PITC).

The 4th meeting last June 5 was held at the WHO Western Pacific Regional Office (WPRO). The main agenda then were (a) WHO's national essential medicines facility (NEMF), (b) list of medicines for possible issuance of maximum retail price (MRP), and (3) a draft proposal by DOH to regulate discount cards by pharma companies.

The goal of NEMF is to "harmonize and ensure uniform standards of procurement across the public sector, ensure selection of reliable suppliers of quality products,..." The essential medicines targeted are for (a) TB, HIV and malaria, (b) vaccines, (c) emergency obstetric care, (d) chronic diseases, (e) neglected diseases, and (f) PhP program and "botika ng barangay" (village pharmacy).

The discussion on list of medicines for issuance of maximum retail price (MRP) or price control was long. DOH UnderSecretary Alex Padilla, USec for health regulations, narrated how difficult it is to face sometimes legislators who want price control, just to show to the public that the government is indeed "serious" in enforcing the cheaper medicines law. DOH understands that it's not easy to issue price control and fully implement it, but they are sometimes castigated in media by the legislators as "in cahoots with multinational pharma".

One will understand if PHAP will oppose drug price control because it is the patented and branded drugs by multinational pharma companies that are most likely to be targetted. One may even assume that PCPI will not object to price control because the products of their members are non-patented and generics. But PCPI leaders were very vocal in opposing drug price control. This is because price control is essentially penalizing success. Any drug that has become popular and highly saleable, whether patented or not, can be a target for price control. Many PCPI members are now good manufacturers, they are capable of producing popular medicines. That ugly state intervention in pricing called MRP will soon hit them.

I spoke, of course, on this subject at the meeting. I noted that price control is a favorite advocacy of socialists under economic central planning regime. It is driven by plain envy with "suffering of the masses" as smoke screen.

Suffice it to say that with the exception of 1 or 2 voices in the meeting, almost everyone, including drug retailers, agreed that imposing price control at this time is ill-advised.

The subject of DOH regulation of discount cards by some multinational pharma companies was tackled next. It was the first time I heard that it is an issue. The DOH wanted to produce a draft Administrative Order proposing that whatever is the current discount price by those pharma companies (usually 50 percent off their regular price) should become the “universal price” and must apply to all customers and patients, with or without any discount card.

There were two major arguments I could remember, that were raised in favor of this move First, discount cards favor the rich, they are the ones who can afford to see a doctor regularly and doctors give out discount cards. And since discounts represent some revenue losses to the manufacturers, such loss has to be recouped from the regular customers, the non-card holders, who are the poor. Second, discount cards allow the pharma companies to have access to some health record of the patients, and there is ethical violation there.

I spoke twice on this subject. First, discount cards I think are marketing tools by suppliers and manufacturers; it is a unilateral, voluntary act on their part, hoping to increase their revenues and profit either in the short- or long-term. Such voluntary acts therefore, should be encouraged, not penalized. When discount cards are to be banned and whatever discount price was to be made mandatory, a cousin of price control in effect, I think this is penalizing those who initiated the discount. Such mandatory pricing would be more palatable if government will also offer mandatory reduction in business regulations and taxes for the affected suppliers. Since this is not forthcoming, then the move is pure penalty, not reward for a good job done.

Second, giving out information about the patient’s health record is no different from filling up an application form to apply for a credit card or open a bank account, where the applicant is giving away his/her personal information like monthly salary, if the house is owned or rented, how many cars owned, etc.

The reply to my points were as follows. On the first, it is not easy to expect the government to cut business regulations, much less cut taxes, for suppliers who are offering unilateral discount promotions. On the second, information via credit card application is way below personal health information, they are not comparable. Health is on the top, above almost everything else. Hence, personal health information should not be accessed by just anyone, much less pharmaceutical manufacturers.

Anyway, we were asked to submit our formal position papers on this subject as the Office of the President is also waiting for the proposals of the DOH as collated from its various consultations.

It was a productive and very informative meeting, and I thanked the DOH officials and staff who were there for conducting such meeting and inviting a diverse group of participants.

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