Saturday, December 26, 2020

Drug Price Control 52, Advisory Council vs Affirmation Council

The DOH Advisory Council (AC) was created in early 2009 presided by then DOH USec for Health Regulations Alex Padilla. DOH Secretariat was headed by NCPAM Director Dr. Robert So. Before 2009, I was writing and blogging about innovation and IPR, dangers of compulsory licensing (CL), price control, other threats to private property and market competition. The Medicines Transparency Alliance (META) was formed in 2008 with funding from UK DFID, and within META the civil society group was CHAT. The first and big META forum Jan. 2009 I wrote here,

USec Alex knew that my group or think tank, Minimal Government Thinkers, was small but he wanted to hear broad and wide perspectives on drug price regulation and related matters. After all, it’s the DOH that will make the final decision after listening to various viewpoints, and so I was a regular member of the AC. Prominent and active members then were Joey Ochave of Unilab, Edward Isaac of PCPI, Reiner Gloor of PHAP, Edsel Manuel of Mercury, Lyle Morrel and Bel Pesayco of Watsons, Leonie Ocampo of Mansons, Normita Leyesa of PPHA, Rusty Jimenez (RIP) of PrHAP, James Auste of CWP, Angel Mendoza (RIP) of AGAP, Gov Obet Pagdanganan of META, others. The current AC members, I think about 80% of the names here are new and not around in 2009.

The June 2009 meetings, the Council composition, I wrote here,

About Lolo Angel Mendoza and CHAT, I wrote here in 2012,

In 3rd and 4th quarter 2020 AC meetings, I was no longer invited. In Q1 and Q2 meetings, I was invited and I spoke against price control, that DOH is again creating new criteria that are 100% outside the criteria of RA 9502 and its IRR, meaning bordering on illegality and violation of the law. Perhaps this displeases the DOH, so no more wide and broad perspectives. Not Advisory Council with wide and contrary views, only Affirmation Council to justify what have been decided and pushed by the DOH.

Out of curiosity, I asked some members of the AC what happened in the Q4 meeting. Few feedback I got.

1. Ric Samaniego of PCCW said that (a) no product or company withdrawals or closures in previous price control 2009, and (b) price cuts are useless if products are not available, so  companies must make these available.

2. DSAP requested to defer round 2 of price control as it is adversely affecting small drugstores,  Ric argued that everyone was affected, they must ask for more discounts from suppliers to support their operations.

On (1a), If Joey O was in the meeting, perhaps he could have said that many small local pharma became bankrupt in the 2009 price control. He and Edward said this in some AC meetings in 2010 onwards. Also, based on the PH Stats Authority (PSA) data, there are less pharma manufacturers now, 124 in 2012, 117 in 2018. See the other numbers here,

There were company and product withrawals, so Ric's statement of no withrawal is just emotional speculation.

On (1b), here is a refresher about supply-demand changes after price changes, I made this graph. If there is market competition and no price dictatorship, the “equilibrium price” where supply meets demand is at point A. If there is govt price control, the supply curve moves to the left, companies or products that cannot adjust to forcible big price cut will exit the market. It is represented by the shift leftwards in quantity from Q market to Q control.

At this point, ideologues will feel happy because their political agenda has been fulfilled but patients and their families with less choices will be unhappy. So if there will be round 2, round 3 of price dictatorship, more happiness for the ideologues, less choices and options for the patients.

Another illustration, price control in fare-setting or fare control and its impact in the supply-demand of public transpo,

See also:
Drug Price Control 49, The FEF statement, July 24, 2020 
Drug Price Control 50, Wallace, Clarete and LKI, August 08, 2020 
Drug Price Control 51, Pharma efficiency and lower drug prices, December 08, 2020.

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