Drug price control 3: Cost containment and long-term costs

(Note: this is my article yesterday at thelobbyist.biz. Original title of this paper was "S-T health cost containment vs. long-term costs")

Singapore – Short-term health containment measures by governments like drug price control , have long-term costs to patients and the public. This is mainly in the form of non-launch or launch delay of new and more powerful, more disease killer drugs and vaccines by the innovator pharma companies, to countries which have price control, compulsory licensing and related policies.

That was the conclusion of a paper presented by Prof. Julian Morris, a professor at the University of Buckingham in London, and President of the International Policy Network (IPN), also in London. A number of leaders of free market think tanks from China, India, Malaysia, Thailand and Indonesia also came.

I attended the Think Tanks’ IPR meeting held yesterday at Hyatt Hotel here in Singapore. The other speakers in the meeting-seminar were Philip Stevens, previously with IPN and now an independent consultant, Dr. Amir Ullah Khan, Dean and Director of Research, Bangalore Management Academy in India, and myself.

My presentation was entitled “Politics of health cost containment: Philippines” and I talked among others, the country’s year and a half experience in drug price control since it was imposed in mid-August 2009. I went to the DOH website and found these quotes from Sec. Enrique Ona’s speeches.

“…after the results of our monitoring showed that volume of sales appears to NOT have significantly gone up for the drugs that we have targeted and that the poor --- the lower income brackets of our society --- still cannot access and afford the medicines despite major price reductions.”
-- Speech at PHAP Assembly, August 26, 2010,

“..noncommunicable diseases (NCDs) already dwarf the burden of TB, malaria and HIV/AIDs combined…we find ourselves with the least capacity to confront the high costs and demands for long-term care and more specialized services for these lifestyle diseases.”
-- Health Partners’ Meeting, September 14, 2010,

So, if drug price control policy did not attain its objective – making effective branded drugs by some multinational pharma be more affordable to the poor, even if there are cheaper generics available for the same drug molecules – why was the policy not withrawn to remove the business and health uncertainties it has created?

Related to the paper by Prof. Morris, the long-term damage to the Philippines’ health and foreign investment climate has been set. New, more disease-killer but patented drugs will be made available in Singapore, Hong Kong, S. Korea, etc. but not in the Philippines. Producers of such more effective drugs will delay bringing them to the country until perhaps the patent is about to expire. So Filipino patients desperate to get such new drugs and treatment will have to travel to other countries where those new drugs are available because there is no threat of price control or compulsory licensing there.

On the second statement, if communicable diseases like TB, malaria and HIV are no longer the main killer diseases in the country, rather the “lifestyle diseases” are, why should government pour huge tax money and dictate drug prices on treatment against lifestyle diseases?

Note that most of the drugs covered by price control were for lifestyle diseases: anti-hypertension (like amlodipine and telmisartan), anti-cholesterol (like atorvastatin), anti-diabetic, anti-biotic, some anti-cancer. It seems that no drugs against TB, malaria and HIV were included in the price control

Now that policy is hardly discussed in the country anymore. People and industry players, from multinational to local pharma, drugstores, hospitals, and consumer groups and the public have accepted that the supposed short-term cost-containment measure has become a long-term form of intervention.

The focus of public discussions on the health sector is how to attain universal health care (UHC). Government focus is for PhilHealth membership to really reach 85 percent of the population, vs. current coverage of only about 30 to 35 percent, even after Philhealth has been around for the past 15 years or so.

I have attended a number of seminars and conferences in Manila recently on UHC, especially those sponsored by MeTA-Philippines, the Coalition for Health Advocacy and Transparency (CHAT). I notice that private health insurance players were never invited as among the speakers.

For me, health cost containment can be attained better if people will be encouraged to purchase their own private health insurance on top of mandatory Philhealth membership as most killer diseases are now lifestyle-related.

Why? People who have lung cancer or throat cancer due to heavy smoking, those who have liver cancer due to heavy drinking, or those with bad hypertension and high cholesterol due to sedentary lifestyle and over-eating, should not pass the high cost of their treatment to the public and other Philhealth members, including those who take care of their body carefully. Because that would mean regular hike in the mandatory contributions to Philhealth. Those patients can draw from the Philhealth fund and from their private health insurance, in order to reduce out of pocket expenses.

Indeed, short-term cost containment by governments often produce long-term costs that will ultimately hurt patients and the public themselves.