Thursday, September 01, 2011

Drug price control 16: More on Cong. Biron's Bill

It's good to post some articles in facebook or other online discussion groups to elicit comments from friends. I posted for instance my paper, Drug price control 15: Price regulations board last week, August 24, in my facebook wall. I wrote, "Another idiotic congressional bill, creation of a new bureaucracy called the drug price regulations board."

Below are some of the exchanges that followed it.

Aurora: Haha...another regulatory board huh...they can't make the others function properly and they want to create another inutile office:) oh well...that's congress for us:)

Nonoy: Yes, if you're a legislator and got nothing to do, just propose a bill regulating this, regulating that.

Steve: Is it still just a bill, or has it passed into law? If it is still a bill, what are your thoughts about actions on our part to let legislators we don't want the new Board? Or is writing about it on Facebook, and complaining to each other, all we can do? Does an existing agency already have this responsibility? I recall that Franklin Roosevelt was well known for creating competing boards and appointments. Can we change that practice here?

Nonoy: It was a bill before. When the Cheaper Medicines Law was enacted, they killed the creation of a drug price control board, but proceeded with the provision for price control. So Cong. Biron re-filed his bill creating that additional bureaucracy. What do we do, well I went to Congress yesterday, attended the committee hearing, submitted a position paper to the Comm. chairman, talked to him. It's all in the blog article that I posted, if you didnt read it yet.

Steve: Good. How about letters or something from the rest of us? I'm pleased that you met with them yesterday. So many folks just laugh, point fingers and then go watch TV or something, and never figure out why things don't change. Change doesn't come easy under any circumstances, but its impossible if no one tries. Thanks for bringing this info to our attention.

Nonoy: In my blog article, I put there the full name and position of the Committee chairman, my position paper, pictures of the meeting, what transpired. Others can write to him via email perhaps. I'll check his email add.

Steve: Good. And thanks for continuing to bring these things to the attention of people. Now...the rest of us have to follow through and do more than laugh and shake our heads.

Nonoy: I was shaking my head listening to Cong. Biron yesterday. That's why I wrote he treated us to his "public speaking" when it should have been the committee who should be "public hearing" since there were at least 10 invited resource speakers that day.

Steve: In the US Congress they do that, as well. They talk. We listen. They get to "check the box" and file the padded expense reports that they held a public hearing.


Among the points that Cong. Biron said during the Committee Hearing were the following:

1. The current drug price control policy is wrong because of the 22 molecules that were put under price regulation, 16 of them were under "voluntary" price cut of 50 percent. Since it is just voluntary, the pharma companies that were affected can jack up their price again anytime they want to.

2. The price regulations provision of RA 9502 is weak because there is no permanent body that will recommend and monitor price regulations. Why limit to just 22 molecules when hundreds of other molecules can also be covered.

3. The price regulations board will be composed of key government officials in trade and health departments, and consumer groups. Hence, they cannot easily be swayed by industry players who lobby for higher medicine prices.

These arguments are easy to demolish. On #1, the term "voluntary price cut" is wrong. There was political threat that if the manufacturers of all the identified 22 molecules will not bring down their prices by at least 50 percent, their products will be included in the Executive Order (EO) to be signed by the President (Gloria Macapagal Arroyo then) mandating, requiring, and coercing the 50 percent price reduction.

On #2, I have a longer discussion why it is wrong, in my letter to Committee Chairman, Cong. Garcia, posted in the earlier link I gave above.

On #3, The proposed members of the board are the Secretaries of DTI and DOH, the heads of FDA and PhilHealth, an academic economist and two representatives of consumer groups. None of the players who will be affected -- pharma companies (multinationals and local), drugstores and pharmacies, hospitals, health professional associations (physicians, pharmacists, nurses, etc.) are to be represented. It's like creating a huge citizens body to abolish the pork barrel of Congressmen without representation of the legislators themselves.

I hope to articulate these and other issues in the next Committee Hearing soon.

Meanwhile, three years ago, while the DTI and DOH were still conducting public hearing in drafting the Implementing Rules and Regulations (IRR) of RA 9502 or the Cheaper Medicines Law, I wrote this in my other (now inactive) blog.

Dangers of Price Control
September 15, 2008

Price regulation and control is the clearest proof and explicit signal that an economy is not free, that pricing of the regulated commodity is highly politicized. Price control is also a naked and blunt proof that there is price dictatorship: the price dictators decide at what price the producer and/or seller of a final product or service can sell, even though the same people do not decide or dictate the price of all inputs and intermediate products and services needed to produce that final product or service.

Thus, while the rationale or alibi given to institute price regulation and control is to “give justice to the consuming public”, there is great injustice to the producer and/or seller of a commodity whose price has been politicized and regulated. And when prices are controlled, producers who can possibly make some “miracle” products at sky-high and “miraculous” costs will be discouraged from innovating and producing those products. Ultimately, it is the public, the consumers, who will be the losers because they will be deprived of enjoying such revolutionary products.

In the case of drugs and medicines, absence of more effective drugs to evolving diseases will compel patients and their physicians to take measures that are more costly, like using less effective drugs at longer treatment period, longer hospital stay, and even surgery. It is better to allow price segmentation – different prices for different products or services for different people with different budget and different needs. This way, people from different economic status can be served. Patients for instance who need anti-biotics to cure a certain viral infection, can choose from really cheap medicines and they can recover in 2 weeks or more, to medium-priced medicines and recover in 1 to 2 weeks, to expensive but more powerful medicines and recover in just 2 to 3 days. The drug manufacturer can make big profit from more powerful but more expensive medicines consumed by richer patients, so that it can sell less powerful but nonetheless safe, effective and cheaper drugs to poorer patients.

But the provision of medicine price control is already in the new law, RA 9502 or the “Universally accessible cheaper medicines act of 2008”. We can only institute certain mechanisms to lessen and reduce the dangers of price control policy.

The price regulators – DOH and DTI Secretaries and ultimately, the President of the Republic – should hear the concerns and issues more of the people in the private sector involved in the manufacture, distribution and sale of effective and well-demanded medicines. Ultimately, it’s those few medicines that are highly effective, yet high-priced because of the high cost of producing them, that will be targeted for price control, not those less effective, less innovative, less-demanded and lower-priced medicines.

There are plenty of factors that need to be identified and defined in the IRR that the DOH leadership should consider before proposing price regulation. Price control is a serious move, a confiscatory move in fact, that can rob legitimate producers and sellers of their rightful returns for bringing in effective and safe medicines to the public, given the proliferation of ineffective and unsafe, counterfeit medicines. Hence, the issuance of price control should be tempered and controlled as much as possible.

It is unfair when government puts up uncontrolled taxes, duties and fees, other uncontrolled compliance regulations, both of the final product or service and its inputs (from electricity to wages to raw materials, etc.), then control the price of the final product later.

The current law on “affordable medicines” is putting more power and authority, but also more work and reporting responsibility, to the DOH. The DOH Secretary has the power to recommend price control to certain medicines, the power to demand various documents from drug producers and distributors. But the Secretary is also compelled by the new law to:
(a) create and convene a Price Council,
(b) do price monitoring,
(c) require the LGUs and the DTI to submit quarterly price monitoring reports to him/her,
(d) submit bi-annual Monitoring Report to the President and publish it in a newspaper,
(e) submit annual report to both the House of Representatives and the Senate,
(f) submit regular report and comply to any order by the Congressional Oversight Committee, among others. These additional functions on top of the DOH mandate of providing basic and primary health care to the public and other functions, can stretch out the already thin and limited resources and manpower of the DOH.

More power, more responsibilities and accountability. And only dictators and opportunists will favour more power with little or no accountability. And if the DOH Secretary and President of the country are corrupt, they can abuse the price control provision to harass and extort money and favour from the manufacturers and distributors of safe and effective medicines by threatening, “Hey, we will issue price control (or compulsory license) on your most popular and block-buster medicines, unless you pay us…”

This is not to say that the current DOH Secretary and President are corrupt and extortionists. This law will stay with us for the next 20 or 50 years or even longer, unless amended by another law where the price control provision is removed and abolished. The appearance of corrupt and extortionist DOH Secretaries and Presidents of the country in the next 20 or 50 years or even longer, is a big probability considering the bad governance culture and history in the country.

It will be a big disgrace and injustice, therefore, to honest DOH Secretaries and Presidents that their sincere effort at public service will be hijacked and tainted by their dishonest successors. Because the current law allows for such opportunity to abuse and steal.

Hence, mechanisms should be instituted to make it difficult for future corrupt and extortionist DOH Secretaries and Presidents, to impose medicine price regulation and control arbitrarily. Then more innovators and inventors of effective, revolutionary and safe medicines will be encouraged to come in. With more competition among such type of medicine producers, the public will be protected with quality and affordable medicines.

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