Tuesday, June 09, 2009

Liberal politics and drug price control

The cheaper medicines law (RA 9502) turned 1 yr old last Saturday, June 6. The day before that, June 5, the Department of Health (DOH) conducted an Advisory Council meeting on price regulation, I was one of those invited, I went there. Issuance of maximum retail price (MRP) or price control of certain medicines was among the topics discussed. The DOH later requested if we can submit our written position paper to them, I wrote one. Later I decided to submit the same position paper to Sen. Mar Roxas because ultimately it will be the legislators who will decide how much pressure they will press on the DOH to produce a list of MRPiable drugs.

My beef now is on liberal politics of the Senator because he is the President of the Liberal Party in the Philippines. Liberal politics in its classical tradition, is a radical philosophy because it advocates a Lean state, limited government, free market, private property rights, individual responsibility. Thus, it is the exact opposite of big and interventionist State, high taxes, forced collective/public property ownership embodied in many nationalist and socialist-leaning political parties and ideologies.

Many of the provisions contained in the cheaper medicines law mainly authored by the Senator and LP President are actually anti-liberal and very statist. It is understandable if the main authors of that law are from the left political parties like Bayan Muna. Consider the following:

1. MRP or price control -- this is 180 degrees apart from competitive price setting by the market if the number of suppliers in relation to demand and consumers is unrestricted.

2. Compulsory licensing (CL) -- again this is the exact opposite of private property rights. Your invention is also my invention. I have no invention of my own so you can't get back and free-ride on me. Pretty soon, very few will dare to become an inventor as there are hundreds of envious eyes watching the inventors and innovators.

3. Government use -- a cousin of CL, applicable for medicines whose government-issued patents are to be revoked and dishonored by the same government for its own use.

4. Parallel importation -- another a cousin of lesser magnitude of CL. Disrespect IPR and private property rights of an invention, get the goods and drugs from abroad.

5. Silence on high and multiple taxes on drugs -- this is approving, allowing, consenting, to the multiple taxes on drugs that make medicines about 20 percent more expensive: import tax + import documentary stamp tax + import processing fee + local government tax + value added tax, etc.

Luckily, the law is not that 100 percent intrusive. It has some safeguard measures saying that those provisions (1-4) cannot be issued anytime, anywhere, arbitrarily. Only on situations of national health emergencies that those confiscatory provisions can be invoked.

So now, where is any national health emergency in the Philippines? A(H1N1) flu pandemic? No. But even if the answer is a far-out Yes, then the CL, MRP, parallel importation, government use, should apply only on medicines against the said flu virus. Not on other medicines.

In my letter to the Senator, I have argued that there is a very narrow field of competition among pharma manufacturers and distributors in the country for a number of diseases. If this is a problem, then the solution is to encourage more players from abroad to come here and press on the accelerator pedal of competition. Then patients and the public will have more choices, say minimum of 10 or 15 different drugs from 10 different drug producers per disease, not just 2 or 4 competing medicines per disease.

Interestingly, even the leaders of the Philippine Chamber of Pharmaceutical Industry (PCPI), an association of Filipino pharma manufacturers and distributors, are not in favor of drug price control. One thinking or hypothesis is that only the multinational pharma companies are opposed to drug price control because they're the ones selling branded, patented and expensive drugs. Wrong. The local pharma manufacturers are against price control because now they see an opportunity of launching and selling effective and highly saleable drugs. If they become successful on this, the danger of price control will soon affect them.

The DOH people are not so gung-ho on price control. I think it is really the LP President who is going on this because of his Presidential ambitions.

The the next ballgame will be in the Office of the President, President GMA will sign the price control list or not. If GMA will not sign it, then Sen. Roxas will jump on it and blame the adminstration for "high medicine prices", picture himself as the hero and administration as the villain. If the President will sign it, the Senator can still claim that it was his endless pressure that made the President sign the drug price control order.

With this kind of political maneuvering where party ideologies and principles are entirely lost or abandoned, it will be the Filipino people and voters who will get confused in the coming elections and later, will be adversely affected with continuing political opportunism of their political leaders.

Below is one of the news reports today on drug price control.


Tuesday, June 09, 2009

Lawmaker predicts drop in retail prices of essential drugs

The Department of Health (DOH) on Monday submitted to the Senate oversight panel the ceiling price for essential medicines as determined by the department and the Department of Trade (DTI).

Sen. Mar Roxas, chairman of the oversight committee on quality medicines, lauded the health department for finally setting the maximum retail price (MRP) for 22 essential medicines consisting of drugs to treat hypertension, diabetes, asthma and cancer, as well as antibiotics.

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