Saturday, March 28, 2020

BWorld 423, Estimating electricity and growth slowdown Q1 2020

* My article in BusinessWorld on March 26, 2020.

The Independent Electricity Market Operator Philippines (IEMOP) sent a media advisory about electricity supply-demand in weeks two and three of this month and the numbers are not good. There was a huge decline in average demand of 2.03 gigawatt (GW) from March 15, the start of Metro Manila quarantine or lockdown from the rest of Luzon. Consequently, prices at the Wholesale Electricity Spot Market (WESM) also declined.

I checked their website to get data until March 24 and the decline in demand has continued — peak demand now below 11 GW, power plants are ramping supply down, while prices remain below P2/kWh (see Table 1).

Last week the President extended the quarantine to the entire Luzon. Many businesses have shut down, public transportation from buses to jeepneys, taxis, Grab, tricycles, almost all domestic flights, and boat trips are grounded.

The effects are felt in the stock market and the Philippines has the second worst-performing markets in the Asia Pacific Region, both year to date (Ytd, Jan. 1 to March 25) and the past 52 weeks. The PSE is down from its peak of 8,400+ to 5,000+ this week (see Table 2).

I attempt to estimate potential GDP growth or contraction (“negative growth”) in the first quarter (Q1) of 2020. Electricity demand is a good proxy for GDP growth. I took the average demand for weeks two and three to represent full March 2020 power demand. The percentage decline is about -1.4%, far from the projected full year 2020 growth of around 5-6%.

Using the same percent changes in electricity demand, I estimated both nominal and real (deflated) GDP values for Q1 2020 (see Table 3).

That is nearly P90 billion worth of unrealized production in goods and services in Q1 alone, an economic loss which translates to jobs losses. A continued and prolonged lockdown nationwide will produce even higher contraction in Q2, a -3% change may be possible. Assuming modest growth in Q3 and Q4, that will leave the full year 2020 growth to be in the vicinity of 0-2% growth.

We are facing and confronting three wars or conflicts here. First the China or Wuhan virus itself. It is actually easier to deal with because global science never ceases to find treatments.

Second is economic hysteria, the business and economic shutdown and job losses, slumping stock markets that are happening.

Third is political dictatorship, from local to national governments. I heard stories at the barangay and rural levels for instance that LGUs and PNP can impound and confiscate tricycles or jeeps for moving during quarantine. Our moves are restricted without a quarantine pass, there is an Emergency law. And if a vaccine will be found, we will soon be required to have Vaccine pass before we can go out, etc.

We should have more test kits and laboratories, test as many people as possible, end the lockdowns, and quarantine only the sick, not the healthy. The healthy should keep working while minding social distance and avoiding the crowds, keeping proper hygiene. This is a better scenario than continued economic hysteria and looming political dictatorship.

On another note, my lawyer friend, Kristine Alcantara and her business partners at TheIncubatorAtAIM have developed the WeTrace app, a good initiative to help public and private health authorities trace and contact quickly the virus infected and the people near them. I hope this initiative will get traction.

See also:

Drug Price Control 45, News stories in early 2020 on DPC

I surveyed some news reports in Philippine media on drug price control this year via EO 104. I was also searching for that "study" showing that PH drug prices are much higher than in other Asian countries say as of 2018 or 2019... zero, nada, zilch. Perhaps that "study" is fictional and not real, invented to justify drug price dictatorship. I saw one paper published 2007 or 2009 comparing some medicine prices PH vs India and Pakistan. 
Anyway, below are the materials I saw.

Duterte issues EO imposing price caps on 133 drug formulas; PHAP appeals
By Claudeth Mocon-Ciriaco -February 18, 2020

Executive Order (EO) No. 104 mandated the implementation for a Maximum Retail Price (MRP) and/or Maximum Wholesale Price (MWP) 86 drug molecules or 133 drug formulas upon the recommendation of the Department of Health (DOH). 

Initially, the DOH recommendation covered 122 drug molecules or 205 drug formulas in line with Republic Act (RA) 9502 or the Cheaper Medicines Act.

However, several of the drugs have yet to be given MRP and MWP by the technical working group (TWG) of the Department of Trade and Industry (DTI) and DOH.  

Pharma firms might slash labor force due to drug price cap
Published February 18, 2020 3:29pm

“PHAP has been consistent in its opposition to price control since global experience had shown that artificial measures result in market inefficiencies and lack of supply,” the pharmaceutical firms’ group said.

“If reasonable profits are not realized, pharmaceutical companies would review the sustainability of its operations in the Philippines, including the possible downsizing in the number of employees,” it said….

PHAP also stressed that innovative drugs, or new medicines and vaccines produced from years of expensive research to address current or emerging health threats, would likely not be introduced in the Philippines.

‘Medicine price cap benefits cancer patients the most’
Delon Porcalla (The Philippine Star ) - February 23, 2020 - 12:00am

Quezon City Rep. Alfred Vargas commended the EO that set maximum drug retail prices on basic medicine and selected anti-cancer drugs since the lower cost will have a profound effect on cancer patients and their families….

The Philippine Alliance of Patient Organizations (PAPO) yesterday opposed the proposal to create a Drug Price Regulatory Board (DPRB), saying the this is not the answer to the high cost of medicines.

In a position paper, PAPO welcomed the government’s efforts to reduce the cost of medicines that account for 85 percent of the expenses of Filipino patients.

The unappreciated pharmaceutical business
Published February 25, 2020, 10:00 PM

Dr. BEAVER R. TAMESIS is on his fifth year as head of the Pharmaceutical and Healthcare Association of the Philippines (PHAP), a group of innovators and research-based MNC drug companies in the country. The industry is at the crossroads as the government implements the second phase of the maximum retail price (MRP) program or price control on essential medicines….

Tamesis cautioned the government that such price control mechanism is a bad idea that would only make pharma companies deprioritize the Philippines and end up depriving Filipinos of access to innovator drugs for critical illnesses at affordable prices while scaring investors away. Tamesis even stressed that with an approval rating of more than 80 percent, the President does not need another populist measure….

“I can swear on a stack of Bibles that our prices are very comparable with the rest of Asia and even with the developing world, we have studies to prove that. I don’t know what are they exactly comparing. I don’t know where in the world they got those numbers,” rebuts Tamesis.

Industry group warns: medicine price caps unsustainable, may lead to product withdrawals
By Melissa Luz Lopez, CNN Philippines
Published Feb 28, 2020 7:06:12 PM

Teodoro Padilla, executive director of the Pharmaceutical and Healthcare Association of the Philippines, said the recently-signed Executive Order 104 could do more harm than good for Filipinos needing a constant supply of medicines for their ailments.

"Right now, most of the medicines are patented. If there is going to be a price cap... we're not sure if we can sustain continued availability because there are costs in terms of developing these medicines which have yet been fully recovered worldwide," Padilla told CNN Philippines' Business Roundup. "A company might decide to either scale down operations or withdraw a product altogether."

Duterte prescribes ceiling for rising drug prices
March 4, 2020 | 12:30 am
By Gillian M. Cortez   Reporter

“The price distortion stems from the DoH formula that sets very low prices at the manufacturers’ level and yet mandates retailers to impose as much as 45% mark-up which, at present, generally does not reach that level, particularly with most outlets,” PHAP said in a statement.

The proposed scheme would, therefore, lead to either a price freeze or even higher drug prices at the patient level.

“This is like squeezing rice farmers but mandating retail prices to go up. The result is the farmers will not plant, and there will be a shortage. It will be the same with us,” PHAP Executive Director Teodoro B. Padilla said.

Imee calls for more cheap medicines
March 16, 2020
ByMarlon Purificacion   People's Journal

More medicines for those who are “immunocompromised” or have weaker immune systems due to illnesses such as diabetes, hypertension, and lung disorders should be included in the list of 72 more drugs that the government is considering this week for price regulation, Marcos said.

“Habang wala pang vaccine o lunas sa Covid-19, ang pag-asa na lamang ng mga mahihina ang immune system dahil sa kanilang mga kapansanan ay mas murang gamot,” Marcos said.

Lives at risk
By: Peter Wallace - @inquirerdotnetPhilippine Daily Inquirer / 05:04 AM March 26, 2020

…potential vaccines, medicines, and diagnostics for this coronavirus. But will we get it here in the Philippines? The answer may well be no. Drug companies are now reluctant to introduce innovative products into the Philippines because the government has forced massive discounts (reductions) on the prices of drugs.

The possibility, nay, probability that the DOH would control the price of a COVID-19 cure means the Philippines will be the last market to be supplied.

This is a risk now for any innovative drugs. Who will risk bringing in a product when you may have your margins slashed, even eliminated? You’ll concentrate on open markets where the market determines the price.

I have also written two articles in BusinessWorld on this subject.

Drug price control and the nanny state
March 2, 2020 | 7:55 pm
My Cup of Liberty
By Bienvenido S. Oplas, Jr.

Evolving viruses and innovator drugs
March 16, 2020 | 9:53 pm
My Cup of Liberty
By Bienvenido S. Oplas, Jr.

See also:

Friday, March 27, 2020

Climate Tricks 92, Using the virus to push climate alarmism

Dr. Spencer wrote a good article in his blog and data so far show that the global hysteria and lockdowns have no effect in global CO2 emission.

Is the COVID-19 Economic Downturn Affecting Atmospheric CO2? Mauna Loa Data Say, Not Yet
March 22nd, 2020 by Roy W. Spencer, Ph. D.

On ENSO (El Nino Southern Oscillation), good news is that we are transitioning to a deep La Nina around July, and rains may start pouring around May. Projections by US NOAA as of March 24.

Now see these opportunist articles from the climate alarmism movement -- linking the Wuhan or China virus to climate change, wow.

Secretary-General's opening remarks at virtual press encounter on COVID-19 Crisis
Ant├│nio Guterres 

Delay is deadly: what Covid-19 tells us about tackling the climate crisis
Jonathan Watts

The Analogy Between Covid-19 and Climate Change Is Eerily Precise

Sens. Bernie Sanders, Liz Warren’s Former Advisers Helped Author A $2 Trillion Green Energy Stimulus Deal 

And finally, this idiotic tweet from Extinction Rebellion in UK -- "Corona is the cure, Humans are the disease." How low can people get, especially the climate alarmists?

They realized the stupidity of their tweet, they took it down, not in their twitter feeds anymore. But WUWT and other groups got a screen shot of their angst.

British Climate Activists: “Corona is the cure. Humans are the disease”
Eric Worrall / March 26, 2020

See also:

BWorld 422, International tax cuts in virus time

* My column in BusinessWorld, March 24, 2020.

During global health pandemics aided by hysteria, there is global economic slowdown, deep slowdown bordering on contraction (“negative growth”). Millions of jobs are lost as companies and shops either scale down operations or shut down. Some governments around the world adjusted to help the ailing and dying businesses and job creators via various forms of tax cut (see Table 1).

Aside from tax and fees cut, there are various regulatory forbearance made. Examples are:

Canada: Extend tax filing from April 30 to June 1, and income tax payment until Aug. 31.

Germany: Easier for companies to claim subsidies to support workers on reduced working hours.

Spain: SMEs and self-employed persons defer tax obligations (VAT, CIT, PIT) for six months without interest.

Taiwan: Delay payment of taxes for one year or pay their taxes in installments over 36 months or three years.

The Philippines: Delay payment of income tax from April 15 to May 15.

The Philippine government should consider any of the tax cuts above, or one tax cut — in VAT or CIT or PIT — even for 1-2 months after the first full month of recovery. Business losses are everywhere, job losses possibly in millions, they need a respite.

Recently big business groups and federations and some professional organizations in the Philippines issued a joint statement urging the government for big expenditure push of P281 billion on top of the P4.1 trillion approved budget this year.

It is a weird call, businesses and professionals calling for more spending, more borrowings, which will require more taxes, instead of calling for tax cut. As businesses are shut down, many government agencies also shut down.

The President can order mandatory cut and savings in all executive offices for certain expenditures especially the maintenance and other operating expenses (MOOE) which includes office rentals and supplies, electricity, many meetings, travels domestic and international, conferences, intelligence funds, etc. The forced savings can be used for whatever fiscal stimulus is decided on, without need for additional spending, borrowings, and higher taxes. Higher public debt should also be avoided because our interest payment alone is approaching half trillion pesos already, principal amortization not included yet (see Table 2).

The Office of the President (OP) has huge MOOE, P5.18 billion and P6.70 billion in 2019 and 2020, respectively.

A sensitive and responsible government would cut spending and taxes this time and allow the businesses and people to recover from at least two months of economic dislocation and revenue losses. An insensitive and irresponsible government would do otherwise.

See also:

Thursday, March 26, 2020

Covid Reflections 3, Economic hysteria getting worse

The hysteria from China virus is getting worse. This afternoon, I went to this public market in Makati, convenient because there is no or little queuing, unlike in Shopwise, Landmark, SM Hypermart, etc. Close. And all sari sari stores, 7-11 near it are also close.

It will open tomorrow said some locals there, until 1pm only. Three days ago, March 23, first time the LGU barangay implemented social distancing and limited the number of buyers inside.

In nearby sari-sari stores, this notice was posted -- The store should not sell to people without quarantine pass.

Nopera virus, no work no income virus, the real killer by the thousands if this hysteria and lockdowns continue for weeks and months.

If the LGUs real purpose is to further observe social distance, then market hours should be longer, not shorter. Now more panicked people, vendors and buyers, will converge in the same area for few hours. More hysteria will produce unintented, opposite consequences.

Today, Calixto "Toti" Chikiamco of FEF posted this in the walls of his economist friends, me included. He wrote and asked for comments,

The Currency Competitiveness Forum has suggested devaluing the peso to PHP 55 to USD 1 as an economic relief and stimulus package:  it will put money in the pockets of OFWs, boost exports and BPOs, and protect import-substituting local industries.With oil prices at historic lows and demand down, the inflationary aspect is muted. Furthermore, instead of outright devaluation because we have a market-oriented exchange rate,  I guess CCF means that BSP will buy the dollars in the open market, flooding the domestic economy with much needed liquidity. 

I commented: Remember Newton's 3rd law of motion, action and reaction? Applied in Econ: for every govt intervention, there is an equal opposite distortion.

This proposal that BSP will flood the market with pesos means BSP will print more money, on top of money printing P300 B to buy DOF treasury. Now we suffer deflation as many people have no work, no income. Next we suffer high inflation with all these money printing by BSP and new tax tax tax to be created to fund new overspending. In short, it's a lousy idea. They better not push that.

That P300B BSP loan to DOF/BTr Treasury note will require new money printing by the BSP and new taxes to pay back, assuming DOF can pay. Note that interest payment in 2020 alone, principal amortization not included yet, no virus scenario, is already P451B. This is still "small"? People want it P500B this yr or next year?

This "little risk of inflation these times" argument by the hawks of more government spending -- it is true these weeks and months, we actually have deflation as many people have no work, no income, no money, not spending beyond basic needs. When things normalize, that's where high inflation will kick in. DOF must pay back the BSP loan, tax tax tax is the most likely solution. And all taxes are passed on to customer prices.

Meanwhile, some relevant reports here:

NEDA and Sec Pernia think that Q1 2020 growth will be 5%,
Me thinks this figure is from thin air, not from an Excel file.

LGU dictatorship, here's one example,
Barangay captain faces raps for locking curfew violators in dog cage

MSMEs running out of working capital during lockdown | BusinessWorld

SMEs are a ticking time bomb
It is written by a friend and fellow BWorld columnist, Andrew Masigan. He also writes a weekly column in PhilStar.

Lock Downs And Shutdowns Will Lead To Meltdowns

A Virus Worse Than the One from Wuhan | Lawrence W. Reed

12 Experts Question The COVID-19 Panic

COVID-19: Updated data implies that UK modelling hugely overestimates the expected death rates from infection.

See also: 
Covid-19, Some reflections, February 29, 2020 
Covid reflections, Part 2, March 11, 2020.

Saturday, March 21, 2020

BWorld 421, More water and investments, less virus

* My article in BusinessWorld, March 19, 2020.

When President Rodrigo Duterte lashed out at Maynilad and Manila Water that hold concession agreements (CA) with the government via the MWSS on Dec. 3, 2019, the stock prices of both companies and their allied firms suffered significant declines starting Dec. 4, which continued until mid-December. I continued the series to last Monday, the last trading day of the Philippine Stock Exchange (PSE). The percentage decline of stock values until this week remains big, 49% and 32% for Manila Water Co. Inc. (MWC) and Metro Pacific Investment Corp. (MPI) respectively (see Table 1).

MWC has lost some P18 billion while MPI lost around P40 billion in stock value from the harassment by the President. Very irresponsible.

Consider also that the PSE is a lightweight in terms of market capitalization in Asia Pacific, only $241 billion as of February 2020 and our per capita capitalization was only $2,222, just a third of Thailand, a fifth of Malaysia and 1/50 of Singapore. Soon Vietnam and Indonesia might overtake us (see Table 2).

India has a market capitalization of $4.08 trillion and a higher per capita of $3,015 than us.

Now consider this COVID-19 or Wuhan virus, water demand is high this March as the hot season has started and people wash hands very often. I computed the decline in Angat Dam water in the first half of this month — it is 0.15 meters per day. At this rate, Angat water will reach the minimum operating level of 180 meters by around mid-May and water rationing will happen again after that (see Table 3).

It is important that the two concessionaires develop new short-term water sources and they will need even short-term loans to fund the immediate capex (capital expenditure) but banks remain hesitant to lend to them because of the Presidential harassment that hangs over them until today.

Despite these financial limitations, the Ayala and MPI groups have bent over backwards and extended billions of pesos to their employees, contractors, suppliers, lessors and customers during this virus situation. The Ayalas, for instance, extended a total of P2.4 billion for this. Payment of water bills, rentals, electricity bills have been postponed by at least one month with no penalties or disconnection notices by the two concessionaires.

The President’s political harassment should end and the original concession extension to 2037 should be honored. The Clean Water Act plus Supreme Court Mandamus have jointly raised the requirement from 50% to 100% sewerage coverage and it is estimated that this will require an investment of P458 billion until 2037.

When the political uncertainties are removed, the two concessionaires should be able to mobilize new loans to finance the huge investments needed for the remaining 17 years.

This virus scare has shown us many things, like the need for sustained hygiene and cleanliness, that requires lots of clean water flowing from our faucets to help remove the virus. May this lesson sink into the minds of the President and his officials regulating the water sector.

See also:

Friday, March 20, 2020

PH businesses become more statists or state worshippers

Today, almost all big business organizations, many professional organizations in the Philippines issued a collective statement that more government, more spending, more borrowings, more taxes are the solution to the economic dislocations when government itself issued lockdowns in Metro Manila, Luzon, and practically nationwide. After many of these businesses have shown they can dig deep in their pockets and forego many revenues while government has foregone not a single peso in tax cut.

Like climate alarmism of more government, more UN to "save the planet", this Wuhan virus alarmism has greatly succeeded what other statist measures have failed. And save the planet from whom, from Al Gore and UN? Save from what, from more rain and less rain, more flood and less flood? From more cold and less cold, more dogs and less dogs? From whatever weather and climate?

For now, I am thankful that UPSEAA is not among the signatories. Nag sacrifice na sila Robinson's 100M of rents not to be collected etc, Ayalas sacrificed 2.4B of same, SM 1B, Jollibee also about 1B, SMC, MPIC, etc. Si Gobment, ano sacrifice nya? What tax cut will it give? Nada, zero, zilch. Close roads and flights and stop businesses lang, bahala na employers and people how to take care of themselves. Shame.

All of those who dug deep in their pockets and donated to the various donation drives have also suffered big sales decline, even business losses, yet they bent further and gave away from their savings. Si Big Gobment, what sacrifices did it do aside from postponing tax collections by one month? Now Gobment will be rewarded with more taxes and borrowings and people should clap and cheer? Lousy.

Thursday, March 19, 2020

BWorld 420, Evolving viruses and innovator drugs

* My column in BusinessWorld, March 17,2020.

The bad news is that the Wuhan virus — a.k.a. severe acute respiratory syndrome coronavirus 2 or SARS-CoV-2 which causes coronavirus disease 2019 or Covid-19 — continues to expand worldwide. The good news is that humanity is a survivor of many deadly viruses in the past and modern and innovator medicines and vaccines keep coming.

It is also not “racist” to call it the Wuhan virus because for most viruses, they are named for the places where they first appeared or were discovered. Below shows some major viruses that humanity has overcome and their estimated case fatality rate or CFR (see Table 1).

Other known deadly viruses are rabies, dengue, and HIV, with the latter having estimated to have killed 32 million people, mostly in Africa.

The US Centers for Disease Control and Prevention (CDC) estimated that global fatality from ordinary flu is up to 646,000 deaths per year, excluding pandemics. If we keep this in mind, fatalities of 5,000+ from the Wuhan virus worldwide does not appear to be so alarming. Its CFR of up to 6% also pales in comparison to the CFR of viruses like SARS and Ebola.

But hysteria has prevailed worldwide. The Philippines has policies like the Metro Manila quarantine, sometimes called “lockdown,” from other provinces, a curfew from 8 p.m. to 5 a.m., sending fully armed police and soldiers to man checkpoints. These policies have expanded the hysteria instead of reducing or calming it.

For now there is no existing vaccine or medicine against the Wuhan virus. Humanity has survived past evolving viruses via evolving medicines and vaccines. Viruses are living microorganisms that mutate and evolve through time as there are many potential carriers like pigs, chickens, bats, and other wild animals. It is important that humanity should recognize the importance of evolving medicines that need to be invented.

So President Rodrigo Duterte’s recent Executive Order (EO) 104, issued last February, imposing drug price control via maximum wholesale price (MWP) and maximum retail price (MRP) that targeted mostly innovator, newly invented, and still patented drugs is unwise and irresponsible.

The Cheaper and Quality Medicines Act of 2008 or RA 9502 and its implementing rules and regulations (IRR) specified only MRP, no mention or reference to MWP, and yet the EO targeted MWP or penalizing the manufacturers of innovator medicines. The average retailers’ assured margin is about 40% for the 122 molecules covering 205 medical preparations.

I asked a friend who works for a drugstore chain in Manila to give me the existing market prices of certain medicines and I compared those with the MWP and MRP which are contained in EO 104. The result is ugly: for some medicines that I chose, the retailers’ margin is high, up to 62%, but projected patients’ benefits are either low/zero, or even negative, meaning the proposed MRP is even higher than existing retail prices (see Table 2).

Going back to the Wuhan virus or COVID-19 — we need effective and safe medicines against this dreaded disease to reduce the hysteria and save lives, and these medicines are done only by innovator pharma and biotech companies and laboratories, not generic companies.

EO 104 has sent wrong signal to innovator firms, so if some of them finally invent a good treatment vs COVID-19, they may hesitate to bring it in the Philippines. This situation can be remedied if the Department of Health and Office of the President silently pull out that EO, and tell innovator firms that they will not be penalized here. They can help save lives and calm the hysteria in the Philippines.

See also:

Drug Price Control 44, News stories in 2019 on DPC

Some news reports about drug price control (DPC) in Philippine media in 2019 that I saw. My regular readers know of course my position -- price control (medicines, chicken, rice, coffee,...) is price dictatorship. It is very distortionary and will only worsen a situation, fictional or real, not solve a problem.

(This photo from European pharma review.)

Magic potions and medicine men
CTALK - Cito Beltran (The Philippine Star ) - October 2, 2019 - 12:00am

The Department of Health (DOH) recently announced a radical price cut of 50% or more on 124 kinds of medicines, as well as certain procedures related to renal disease and cancer treatments. Normally, people would be saying WOW! But that did not happen; in fact the media gave it a mere one-day mention in the news….

The DOH and government should first focus on the need for early consultation, bringing down the high cost of procedures and laboratory examinations etc. I heard about a hospital administrator who explained how he brought a major hospital from bankruptcy to profit “by making it a policy that patients undergo a barrage of examinations during the first 24 or 48 hours of admission. That is when the hospital makes the biggest profit margin, after that the hospital is nothing more than an inexpensive hotel”.

Pharma industry pledges lower medicine prices
By: Tina G. Santos - Reporter / @santostinaINQPhilippine Daily Inquirer / 03:58 AM October 14, 2019

“We share the same objective with the Department of Health (DOH) to lower medicine prices. We are exploring partnerships and we want to work hand in hand with the DOH in making quality medicines and health care services more accessible,” said Teodoro Padilla, executive director of the Pharmaceutical and Healthcare Association of the Philippines (PHAP).

Padilla said the industry would ask for a meeting with Health Secretary Francisco Duque III to harmonize their effort not just in lowering medicine prices by up to 84 percent for various disease categories but also in ensuring that patients were supported throughout their journey.

Pharma wants bigger budget for UHC
Mayen Jaymalin (The Philippine Star ) - October 14, 2019 - 12:00am

“We hope to discuss existing high-impact patient assistance programs by individual PHAP members that give free screening and diagnostic tests, education and counseling and special medicine pricing for patients to lower total treatment cost,” Padilla said in a statement.

Citing a study on the impact of the first round of the maximum retail price (MRP) in 2009, Padilla said the poor did not fully benefit from it.
Padilla said strong health insurance systems are needed to cover for the medicine and health care expenses that would have been taken from the family’s savings.

Pharma companies offer to cut drug prices
Janella Paris
Published 3:05 PM, October 25, 2019

MANILA, Philippines – At least 18 multinational pharmaceutical companies are in talks with the Department of Health (DOH) to reduce prices of drugs for “major non-communicable diseases, infectious diseases, and rare disorders” like diabetes and high blood pressure.

In a statement Thursday, October 24, Pharmaceutical and Healthcare Association of the Philippines (PHAP) said some members met with DOH Secretary Francisco Duque III and patient organizations earlier this week to discuss lowering medicine prices…

PHAP also said its members would offer medical assistance programs for more “holistic and comprehensive assistance” to patients. These programs would assist patients from diagnosis, to treatment, to monitoring. PHAP members include multinational companies like GSK, Pfizer, Sanofi, and Zuellig Pharma.

PHAP: Price control on medicine detrimental to patients
Sheila Crisostomo (The Philippine Star ) - December 5, 2019 - 12:00am

MANILA, Philippines — Imposing price controls on medicines will be detrimental to patients, pharmacists and drug stores, the Pharmaceutical and Healthcare Association of the Philippines (PHAP) said yesterday.

PHAP executive director Teodoro Padilla said having price ceilings on medicines would “kill small retailers and force manufacturers to reconsider plans to launch new medicine in the country.”

“Drug companies may even withdraw existing products, hurting patients instead of helping them,” Padilla said.

I also wrote four articles last year on DPC:

Universal healthcare via lower medicine taxes and tariffs
September 18, 2019 | 6:50 pm
My Cup Of Liberty
By Bienvenido S. Oplas, Jr.

The DoH budget and drug price control
October 2, 2019 | 11:52 pm
My Cup Of Liberty
By Bienvenido S. Oplas, Jr.

Bureaucracy control and drug price control
November 4, 2019 | 8:48 pm
My Cup Of Liberty
By Bienvenido S. Oplas, Jr.

Price control, fare control and tax decontrol
December 18, 2019 | 10:40 pm
My Cup Of Liberty
By Bienvenido S. Oplas, Jr.

See also:

Sunday, March 15, 2020

BWorld 419, Cheap oil, gas, and power stability

* My column in BusinessWorld last Thursday, March 12, 2020.

One of the consequences of the COVID-19 scare is the huge decline in global oil demand and low oil prices because oil supply remains high, thanks to Trump’s policy of “energy dominance”: from only 5 million barrels per day (mbpd) at the end of Bush, Jr.’s term in 2008, to 8.8 mbpd at the end of Obama’s in 2016 (a 3.3 mbpd increase after eight years), and 13.1 mbpd by February 2020 (a 4.4 mbpd increase in just three years and two months).

The OPEC + Russia conspiracy to prop up oil prices via joint a production cut for about three years ended last week when OPEC pressured Russia to have a joint output of 1.5 mbpd by the 2nd quarter 2020 and Russia said “no.” Since then, the already low price of $45/barrel in end-February went down further to $31, with an intra-day low of $27 last Monday.

Natural gas prices also showed significant decline, only $1.78 per million British Thermal Units (BTU) last Monday. The implied percent decline though is not as big as oil price decline (see Table 1).

The Philippines is not a big consumer of natural gas and we are using only indigenous natgas from the Malampaya field in offshore Palawan, no imported liquefied natural gas (LNG). China, Japan, South Korea, and Thailand, on the other hand, have big and rising consumption of natgas (see Table 2).

Certain sectors are pushing to develop facilities for imported LNG, preferably with fiscal sweeteners like some Department of Energy/Philippine National Oil Co. support in building the facilities, and the usual take-or-pay provisions or guaranteed income.

Aside from these expectations, natgas is favored because it was exempted from tax hike under the TRAIN (Tax Reform for Acceleration and Inclusion Act) law of 2017. So, if imported LNG is brought here, it will be exempted from excise tax but imported oil and imported coal are still slapped with high excise tax.

The reason for natgas favoritism is the belief that natgas is a “clean” fossil fuel. If people are really allergic to fossil fuels for causing “man-made” global warming/climate change (CC), then they should demonize all three — coal, oil and gas — and not just the first two.

AGHAM Party list, headed by Congressman Angelo Palmones, is among the groups that reject the “natgas is clean” hypothesis.

Last month, the Gas Policy Development Project (GPDP) at the UP School of Statistics submitted its report, “Market Profiling with Emphasis on the Use of Liquefied Natural Gas (LNG) to Power Economic Zones,” to the energy department and project donor, the US State Department. It was jointly authored by Drs. Majah-Leah Ravago, Raul Fabella, and Karl Robert Jandoc.

Among the conclusions of their paper are:

a.) LNG as alternate energy source would allow for more competitive electricity costs owing to the current oversupply of natural gas in the world market; and,

b.) Natgas can lower the Philippines’ carbon emissions since it emits 60% less carbon dioxide than coal, and transition to more renewable future as it can ease the intermittency problem of solar and wind. I agree with a. but not b.. More competitive and lower electricity prices, yes, natgas can do that. But demonizing CO2 is wrong. CO2 is the gas that we humans and our animals exhale, the gas that our crops, flowers, and trees use to produce their own food via photosynthesis. CO2 is a useful gas, not an evil-pollutant gas that must be demonized and over-taxed. And climate change is largely natural (“nature-made” not “man-made”) and cyclical (warming-cooling) for the past 4.6 billion years since planet Earth was born.

And now the hot months of March to June are here. There are no new peaking plants to provide extra power during peak hours of weekdays so the move now is to help reduce demand via an interruptible load program (ILP) by the energy department and peak/off-peak (POP) program by Meralco. ILP is good because it will mobilize hundreds of gensets of big companies, sort of “backyard peaking plants” in voluntary scheme. But the Department of Energy’s plan to make it mandatory with fines and penalties is not good.

The POP program is good because it is largely voluntary, with 6,000+ private participants observing time of use electricity consumption. Private sector initiatives are cool and useful, not mandates and coercion.

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Saturday, March 14, 2020

Weekend Fun 68, The virus test kit, by Duterte

This is exact quote from President Duterte's press con last Monday, March 9, 2020.
It's like coming from a person with a case of dementia, hahaha.
Then other people made a meme, poetry style:

That same day, the President also said these things:

'Ligo tayo': Amid coronavirus, Duterte jokes he'll swim in Boracay with Puyat
President Rodrigo Duterte also brushes aside a 'no-touch' policy between him and the public
Sofia Tomacruz
Published 9:58 AM, March 10, 2020  Updated 8:17 PM, March 11, 2020

"Si Berna eh, (sabi niya) wala naman punta. Sabi ko, sige punta ako, pero maligo tayo," Duterte said in a late night press conference on Monday, March 9...
“Sabi ko, alam mo na 'yung ligo tayo na (I said, you know the kind of swim where) I also have something to look at. If you look at the open sea it's endless. Mabubulag ka (You’ll go blind). But (if) Berna would sit beside me on a sunset, I will stay,” he said.

Other memes and photos.

Happy weekend.

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BWorld 418, Thank you, Metro Manila water concessionaires

* My article in BusinessWorld, May 10, 2020.

In a speech before new appointees in Malaca├▒ang on Feb. 6, President Rodrigo Duterte blasted again the two Metro Manila water concessionaires. He said, “Where is the money of the average Filipino who are poor who pays his water bill and he has to pay because if (not) it will be cut off? Where is the money of that son of a b****? Give us back the money. Give it back to the people and maybe we can talk about solving your problem.”

Last December, this column has actually provided some answers to those question (see Dec. 23, 2019). The table there is expanded here, and the quick answers to “where did the money go” are: the money went to improve service delivery to some 8.5 million additional consumers of both concessionaires, it added 1.66 million new water connections, it expanded 24 hours water service by 70%, and it reduced water leaks and theft by 43% (see Table 1). 

Thank you, Maynilad and Manila Water. The public already got the services for the money they paid for. It cannot be “given back” to them or the government via the Metropolitan Waterworks and Sewerage System (MWSS).

In previous attacks by the President, he said that the contracts with the two concessionaires are “onerous” and not beneficial to the public and government. Let us check the numbers again.

One cubic meter (cu.m.) is 1,000 liters. One drum of water is 208 liters so one cu.m. is nearly five drums. Currently, lifeline customers or those consuming 10 cu.m. or less per month pay only P6.13/cu.m. and P9.63/cu.m. basic charges in Manila Water and Maynilad areas respectively. That is very cheap, thank you concessionaires.

If residents consume 11 to 20 cu.m. in a month which is a lot, they will pay only P11.13/cu.m. and P16.42/cu.m. for Manila and Maynilad areas, respectively (see Table 2).

  The 11 cu.m. is equivalent to 54 drums of water in a month — that’s a lot and residents will pay only P121 and P170 in basic charges in Manila and Maynilad Water, respectively. That is not “onerous” or “abusive.”

Now, the continuing political harassment of these two water companies has affected them, banks have limited if not stopped lending to them, they will not have enough funds to develop even short-term solutions to the rising water demand.

Data from the Food and Agriculture Organization (FAO) showed that in 2017, the Philippines has natural water production of some 479 billion cubic meters (bcm), higher than those in Vietnam, Thailand, Japan, and South Korea and yet we do not hear of these countries experiencing “water crisis.” Our internal water production of 4,565 cu.m. per person per year is also higher than these four neighbors (see Table 3).

So natural water is there, lots of rain water during the wet months resulting in frequent flash flooding that kill many people and destroy properties. MWSS has failed to build dams to “harvest” and store this huge surplus water which just go straight to the sea. So the two concessionaires have to develop short-term sources of water but their funding is limited.

The President and his supporters should be grateful, not vengeful, to these two water companies. The concession agreement until 2022 should proceed without further harassment, and if possible, the concession extension until 2037 should be honored, not discontinued.

We need more risk-taking concessionaires developing more immediate water supply and charging cheap water rates, not more politics. We need more facts-based discussion of the issue, not more emotional and mindless outbursts.

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