Explore new data below, 2,500+ words, nine pages long
including seven tables and one graph, get your favorite drinks and enjoy the
ride.
Price comparison across countries of certain goods and services is useful both for public and private decision making, provided that people are using the appropriate and verifiable conversion factors. Otherwise, the comparison can only lead to confusion, not education, and can lead to wrong public policy formulation.
After my reply to the email of James Auste, head of the
Cancer Warriors Foundation (CWF), to all members of the DOH Advisory Council on
the Implementation of RA 9502 (Cheaper Medicines Law of 2008), see Drug Price Control 32: Policeman of Pharma Companies, Dr. Melissa Guerrero
of NCPAM-DOH iinformed me that prices of anti-cancer drugs in the Philippines
remain expensive and out of reach of many Filipinos and offered to show the
data. I was happy for her offer, and after several emails, she sent me the
data. Posting these with her permission, as they plan to post this also in the
DOH website, for transparency purposes. Thanks a lot for the data, Doc Melissa.
Tables 1 to 4. DOH
Purchase Price Index (PPI), Selected Medicines, 2009-2013, in Pesos
Of the 10 drugs shown above, there is a notable increase
in the PPI from 2009-2010 for all except #s 2, 3 and 10. No price change from
2010 to 2012 for all except #7 (increase) and #10 (decrease). Then a declin in
prices from 2012 to 2013 for all except #8. The change in prices were mainly
due to the change in the name of supplier or trader.
Here are the other 11 drugs.
Price movement from 2009-2010, increase except #s 13,
14,16, 18, 20, 21, which retained their prices or declined (#16). From
2010-2012, prices have generally remained the same except #s 11 and 12 which
declined. And from 2012-2013, price declines except # 16 (same price) and 18
(increased).
Before I show the price comparison of the above medicines
among the Philippines, Thailand and India, I warned readers in my previous
article that there is No
Single National Price for most if not all commodities like medicines in
a particular country. There are many sellers catering to particular customers
and buyers and thus, have different prices for the same product made by the
same manufacturer.
Consider these two graphs below for a particular
medicine. Equilibrium points (where supply meets or intersects demand) A and B
are prices in the pharmacies of the high end hospitals in Metro Manila like
Makati Med and St. Lukes; C and D are prices for cheaper hospitals; E and F are
prices for the big drugstores like Mercury and Rose or Watsons, G and H are for
The Generics, Generika, and points I, J, K and so on are prices of the smaller
drugstores.
Thus, one can make a table of price differences not only
between the Philippines and Country B or Country C, but also among different
drug outlets and retailers within the Philippines. There is NO national price
for a particular commodity in one country. Only the price of the biggest
retailer or second or third biggest retailer, as proxy or estimate of the
prevailing price in a country at a given point in time.
So for inter-country price comparison to become
meaningful and verifiable, I suggested that one
must show, or at least consider and mention the
following:
(a) same or comparable retail outlet, say only from
Watsons;
(b) same reference period, say June 15, 2013;
(c) exchange rate used for converting different currencies
into a common currency on a particular day, say as of June 15, 2013;
(d) taxes and fees, national and local, applied on medicines;
(e) subsidies or mandatory discount, if any, applied on medicines;
(f) other factors.
When those verifiable factors are not shown or even
considered, then the price comparison becomes less effective as the readers
would only blame the country with the higher price, especially the drug manufacturers
and/or drugstores.
It is possible that drug manufacturers and pharmacies in
country A would have higher profit margin than those in countries B and C, even
if they have lower retail prices than their counterparts in B and C.
How? When the government in country A (a) does not impose
taxes on medicines, (b) has lower corporate income tax and other business taxes
than in countries B and C, (c) directly subsidizes a particular medicine so
that it can be sold at a lower price, (d) other factors.
With that caution, here now are the price comparison for
the Philippines, Thailand and India, for the 21 medicines purchased by the DOH.
The current market price for the Philippines referred here is the price of
Mercury Drugstore (it corners about 60 percent of the total retail pharma
market in the Philippines) and an undisclosed "big private
hospital".
There is a huge price differential (4x to 7x) between
those by Mercury/big hospital in the Philippines, and those in India (what
drugstore or hospital in India?) for #s 1, 3 and 7. Also big price differential
between those in the Philippines and in Thailand and again, what drugstore or
hospital in Thailand? There is NO single price for each country for each
medicine or any other commodity.
Note #7 though, even the price in Thailand is about 6.5x higher
than that in India. Any of these factors can possibly explain: (a) that
medicine is under mandatory and forcible big price control in India, (b) that
medicine is subsidized and sold by a government-owned drugstore in India, (c) that
medicine is non-patented in India and is manufactured at very low cost by any
of its thousands of generic producers, (d) other factors.
In the second batch of medicines below, note #20,
Philippine price is 8.7x while Thailand price is 4.6x higher than that in
India. The above possible explanations may also apply here.
The price comparison would have been more level or
glaring if medicines are bought in the same multinational drugstore, like
Watsons.
The second list of medicines sent to me by Doc Melissa is
for breast cancer. There is a substantial price decline for all the eight
medicines except #1, I wonder why since it is the same supplier as in 2012. Maybe
a typo error, P94 instead of P194?
Tables 5 and 6. DOH Procurement Price Index (PPI) for
Breast Cancer Medicines Access Program (BCMAP), in Pesos per vial, as of
mid-June 2013
Below, note #4, Docetaxel 80 mg vial. It was procured by the
DOH from Sanofi at only P10,000K per vial last year, then procured from
Fresenius at only P5,500 per vial this year. But if one will buy that medicine
from Mercury or that undisclosed big hospital, the price is P40,568.
Note: #9, Methotrexate 25 mg/mL vial, supplied by (Altrex)
Naprod Life Sciences Pvt Ltd., India, has been delisted from the Approved
Treatment Protocol.
Why a huge price by Mercury/hospital? Only the company can
provide the answer/s, but some possible explanations are: (a) Mercury/hospital
is selling a new brand by an innovator company other than Sanofi, (b) lots of
women senior citizens (automatic 20 percent discount + 12 percent VAT waive =
32 percent mandatory price discount) are buying that drug, so it is passing the
price to the non-senior citizens female patients. Or (c) Mercury/hospital
simply wants a huge mark up because it is a highly popular medicine.
But wait, Philippine price is actually lower than that in
Thailand, sold at P43,665. Only India has a low price.
One problem in the Philippine health sector is the
existence of a black market in medicines dispensing by some Filipino physicians
themselves. Even the DOH does not know the prices of cancer drugs dispensed by
oncologists to their patients. So the price of the same medicine by the same
manufacturer can vary from one physician to another. I understand that it is
against the pharmacy law, or medical law, for doctors to dispense medicines,
they can only prescribe.
The DOH considers this case of market failure for some
oncology products, so it has created an access program for poor patients. At
those prices, even middle class and some rich patients would wish they can get
those cheaper DOH-procured medicines. To avoid suspicion that the DOH officials
may actually be giving those cheaper medicines to non-poor patients, the DOH
should publish the names of the recipient patients. But this will violate
patient privacy. Some patients will not admit publicly that they are suffering
from cancer because it will affect their career, or might cause depression
among some family members and friends, or various reasons.
Lots of dilemma indeed. That is why in economic theory, market
failure is considered only as a “necessary but not sufficient condition” for
government intervention. There are many instances where government intervention
actually worsens the initial condition, or a case of “government failure worsening
market failure.” So, dahan-dahan,
hinay-hinay lang, people should not propose more government intervention,
regulation and taxation as if such are just temporary measures that can be
discontinued and withdrawn next month or next year when the result is more
damaging than being helpful.
Finally, we keep hearing from some sectors and
individuals that we should emulate India’s pricing as they have among the
lowest medicine prices in the world and hence, by implication, people there
have better health outcome. Is this so? Check this simple table to separate illusion
from facts.
Table 7. Some Basic
Health Indicators for Thailand, Philippines and India
Thailand
|
Philippines
|
India
|
|
Life expectancy at birth Male/Female (years)
|
71 / 77
|
66 / 73
|
64 / 67
|
Probability of dying under five (per 1 000 live births)
|
12
|
26
|
61
|
Probability of dying between 15 and 60 years M/F (per 1
000 population)
|
207 / 102
|
256 / 137
|
247 / 159
|
Source: WHO, http://www.who.int/countries/en/
Even if medicines are ultra cheap in India, one’s chance
of dying young and early is higher there than in the Philippines or in
Thailand. There are many factors for better health outcome other than cheaper
medicines. But some sectors have taken the ideological position that
multinational pharma companies and global capitalism are evil, so the solution
is more government intervention, and move to healthcare socialism.
The kind of more government price intervention in
medicines is three-pronged One is by expanding the existing drug price control (or maximum retail price, MRP) policy
by covering more drug molecules. Two, by
expanding the mandatory price discounts for senior citizens and persons with
disabilities (PWDs) to other sectors like solo parents. And three, raising the
forcible price discounts to 50 or 75 percent for centenarians.. Again, guys, dahan-dahan lang. If you get what you
wish for, you will simply regret it because socialism is a lousy, inefficient
and dictatorial system that only dictators and highly insecure people would
love to become leaders of that society.
Back to James Auste of CWF. Yesterday, he emailed to various
yahoogroups including CHAT’s, then to all DOH Advisory Council members. He
recalled that during the 16th meeting of the Council (February 14,
2013), there was a proposal by some (not all) innovator pharma companies to
raise the price of their medicines, at least those not covered by EO 79 issued
by former President Gloria Arroyo. He opposed this during the 17th
AC meeting (June 14, 2013). Instead, he asked that all multinational pharma
companies should submit to the AC their audited financial statements submitted
to SEC, to see if they are indeed losing money to justify raising the price of
their medicines that were affected by the price control policy.
He actually left early during the 17th meeting,
so when DOH UnderSec. Madz Valera later called that issue in the agenda, it was
not taken up because the proponent has left. Yesterday in his email blast, he
argued the following:
ANALYSIS--WALANG
DAHILAN! NO REASON! HINDI MAKATARUNGAN! HINDI KATANGGAP TANGGAP! ANG REQUEST
FOR INCREASE SA PRICE NG GAMOT NG PILIPINO PATIENT BASED ON THEIR TAX
DATA.... BINAYAD NA TAX
1-MERCURY
DRUG 717,963,633.61
2-MEAD
JOHNSON 584,867,044.57
3-WYETH
446,164,642
4-ZUELLIG
PHARMA 286,241,875.50
5-GLAXO
SMITHKLINE 252,669,751.78
6-PFIZER
241,760,750.40
7-BOEHRINGER
INGELHIEM 199,050,089.15
8-MERCURY
GROUP 177,072,565.66
9-METRO
DRUG
149,146,130.70
10-BAYER
140,397,676.50
11-EURO
MED
107,077,860
12-ROCHE
91,123,065.30
13-NOVARTIS
80,135,169.90
14-BAYER
79,107,661.80
15-MERCK
74,467,667.70
16-ELI
LILLY
66,909,611.70
17-ABBOT
48,599,623.20
18-WATSONS
47,790,257
***LIST GALING
SA BIR.GOV.PH! please
reply kung di kayo kasama sa nag re request ng price increase!
CONCLUSION--MALAKI
ANG KANILANG KITA! IN MILLIONS OF PESOS INDIVIDUALLY! COMBINED IT IS A
MULTI BILLION INDUSTRY!
ITO ANG DAHILAN BAKIT ANG PINAS ANG HAS THE HIGHEST PRICE OF DRUGS IN ASIA! AND INCREASING MORTALITY SA DISEASES! KAYA ITO ANG DAHILAN WHY WE DENY TO THE HIGHEST DEGREE ANG REQUEST FOR PRICE INCREASE!
CALL-- PANGKALAHATANG PRESYO PARA SA PILIPINO!
ITO ANG DAHILAN BAKIT ANG PINAS ANG HAS THE HIGHEST PRICE OF DRUGS IN ASIA! AND INCREASING MORTALITY SA DISEASES! KAYA ITO ANG DAHILAN WHY WE DENY TO THE HIGHEST DEGREE ANG REQUEST FOR PRICE INCREASE!
CALL-- PANGKALAHATANG PRESYO PARA SA PILIPINO!
BAKIT
MAHAL
BAKIT HINDI MAGBABA
BAKIT HINDI MAGAMIT ANG MGA GAMOT NG PILIPINO PATIENT
LOWER PRICES OF MED==MORE SAVINGS=MORE BUDGET FOR OTHER MEDICAL FAMILY NEEDS!
--finalizing prices of the essential drugs! ITO ANG UNA
LOWER PRICES OF MED==MORE SAVINGS=MORE BUDGET FOR OTHER MEDICAL FAMILY NEEDS!
--finalizing prices of the essential drugs! ITO ANG UNA
1--MERCAPTURINE
TABLETS USED DAILY NG ALL KID FOR 2-3YEARS! BEFORE MDRP MRP 80 PESOS!
SA INDIA 6 PESOS
LANG!!
2-METOTREXATE
TABLETS USED 2-YEARS NG ALL KIDS! NASA 19-30PESOS
SA INDIA 3PESOS LANG! I
ITO ANG PROCURMENT PRICE NUNG 2009 NG SINIMULAN ANG PROGRAMA!
-----------
At the CHAT yahoogroups, I replied to him and pointed out
that Unilab is the biggest pharma company in the Philippines. It corners about
25 percent or 1/4 of the total Philippine pharma market. The 2nd, 3rd, 4th --
GSK, Pfizer, MSD I think -- have combined share of around 21 percent or lower than
the market share of Unilab.
Note also that in his data above, #s 1, 8, 9 and 18 are
drugstores, local drug retailers and not multinational pharma companies which
are the object of his criticism as having very high revenues.
For public interest groups, NGOs and other CSOs that
advocate certain policy measures, it would help if they do more serious
research before they open their mouth. There are alternative sources of data,
like (a) company websites, they normally publish their financial statements;
(b) BusinessWorld’s Top 1,000 Corporations, available in bookstores or in some university
libraries, (c) SEC, maybe write a formal letter of request, (d) DOH or MeTA
Philippines presentation papers, (e) Center or Institute of Public Health in
some universities (UP, Ateneo, La Salle, UST, etc.), others.
For patients and other people who keep asking for more
subsidies, more welfare from the state, they should be happy and thankful for
those big corporate taxpayers, instead of demonizing them. Government is a
penniless institution that becomes rich and powerful only from the taxes that
it collects from the people, individuals and corporate taxpayers alike.
Government price control is wrong. Whether we are talking
about cellphones, computers, clothes, mangos or medicines, price dictatorship
is wrong. What the consumers should demand from government, is to further
liberalize the economy, so that more producers and suppliers, more
manufacturers and retailers, will come in and do business in the country. Then
consumers will have more choices, more options. If they complain of high prices
by one seller, no need to rally in the streets or make political noise and call
for government price dictatorship. Simply walk away and go to the next supplier
who can sell at a lower price, easy.
See also:
Drug Price Control 31: Cancer Drugs and CWF, December 01, 2012
Drug Price Control 32: Policeman of Pharma Companies, June 04, 2013
Drug Price Control 33: Debate with a Cat, June 15, 2013
Drug Price Control 32: Policeman of Pharma Companies, June 04, 2013
Drug Price Control 33: Debate with a Cat, June 15, 2013
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