Generic Drugs 4: DOH Generics Summit 2013

The Generics Act of 1988, RA 6675, turned 25 years old last month. The Department of Health organized the "Generic Medicines Summit 2013" at the DOH Convention Hall, DOH Compound, Manila last Monday, September 30, 2013. It was a whole day activity, I was not able to attend the morning session, I went to the afternoon sessions.

Panel Session No. I, 1-2:30pm, the theme was “The Impact of Generics Policies in Improving Access to Medicines and Health Outcomes”. The speakers were:

Presentation No. 1: Global Achievements in Implementing Generic Policies Presentation No. 2:Local Market Trends Presentation No. 3: Analysis of the Prescribing and Dispensing of Generic Medicines as Prescribed by Generics Act of 1988 Panelists: PCPI, PHAP, PPhA

Dr. Brian Godman Mr. Romeo Castro, GM, IMS Health Phils., Inc. Dr. John Q. Wong, Consultant, PIDS

Panel Session No. II, 2:30-5pm, the theme was “Progress of Pharmaceutical Reforms and  Continuing Efforts of Government in  Assuring Availability and Affordability of  Quality Generic Medicines”. The speakers were:

Presentation No. 4: Impact Evaluation and Monitoring of the Cheaper Medicines Act of 2008 Presentation No. 5: The Impact of the Cheaper Medicines Act on Households in Metro Manila:  A Quarterly Study” Presentation No. 6: Philhealth’s Initiatives in Promoting and Using Generic Medicines Presentation No.7: FDA Efforts to Assure the Quality of Generics in the Market

Dr. Jesus N. Sarol, Jr. Consultant, PCHARD Dr. Eleanor De Guzman Research Consultant, PIDS Dr. Poch Soria Vice President, PHIC Dr. Kenneth Hartigan Go Director General, FDA

The panel of reactors were Dr. Delen de la Paz of HAIN and UP College of Medicine, Dr. Isidro Sia of the National Formula Board, also of UPCM, and Atty. Pau Tanguieng of AGAP. Pau was not around, Before panel 1 ended, Dr. Melissa Guerrero of NCPAM asked me if I can be a reactor, speak as representative from civil society. It’s not a difficult task, I quickly said Yes.

So I was seated in the front table beside Docs Dela Paz and Sia, have a good view of the speakers and their presentations. Nice.

Dr. Sarol and Dr. de Guzman spoke about their respective assessment reports about drug price regulation of the Cheaper Medicines Act (CMA) of 2008, FDA Director KHGo spoke about the reforms that FDA is doing, and Doc Soria spoke about new thrusts of PhilHealth.

My comments to the four presentations:

1. Dr. Jesus Sarol presentation...

Their study covering 2009-2011 simply confirms what we already know, that medicine prices are just following the law of gravity, they are coming down. In fact even before CMA became a law, ave medicine prices have been declining slowly, thanks to that good old reliable law of competition.

I added that CMA is more than drug price regulation or control. The law is mainly revising the Intellectual Property Code (IPC) of the country to accommodate compulsory licensing (CL) and other IPR concerns.

2. Dr. Elanora de Guzman paper:

Good findings in their study, confirms that the main beneficiaries of the drug price control policy were the upper middle class and the rich, class AB and C, not the poor, class DE. Before price control was imposed, many cheaper generic drugs were available, so when Pfizer's Norvasc (anti-hypertension) price was forced down from P44 to P22 a tablet, there were several generics already selling at P7.50 or lower. The poor will find the P22 still expensive and won't buy it, they'll go for the P7 or P5 other branded generics.

3. FDA Director, Doc KHGo:

Happy that FDA is promoting the rule of law in ensuring the safety of food, medicines, drinks, other consumer (chemical, biological) products, law based on science. Congratulations.

But it is simply impossible for FDA to monitor all such products, from anti-cancer medicines to barbeque sauce or new energy drinks or skin whitening soap, etc. Commiserations. The number of products to be monitored and approved is directly proportional to their misery.

One option is to partner with private or civil society accreditation bodies, also industry associations, that will police their own ranks and disallow unsafe products from being manufactured and sold. This way, FDA can focus its resources and manpower on firms and products that are not covered by those private or civil society accreditation bodies and industry associations. Spot checks by FDA to these bodies, so that repeated cases of unsafe food and drugs being allowed will mean revocation or blacklisting of such bodies, and firms will have to go through the usual, stringent FDA approval process.

4.  Dr. Poch Soria:

PhilHealth is somehow a victim of its huge and monster existence, there is also monster expectations, monster disappointment by the public. The more they promise to do something or correct past inadequacies, the more expectations and even more loopholes that will be introduced.

Their data that of the 315 govt hospitals they surveyed (42 DOH hospitals + PGH, and 273 LGU hospitals), only 7% complied with the no balance billing (NBB) for indigent patients. 93% of them required out of pocket (OOP) spending by the poor. This shows that often, government is a big violator of its own rules.

PhilHealth then should learn to step back on certain promises, reduce the expectations. One area is on NCDs (non communicable diseases) patients. Someone with communicable disease like dengue is easy to treat, after the disease is killed, a patient won't go back to the hospital for several/many years. Compare that to a hypertension or other adult NCD patient, who will be patient for the next 10, 20 years or more. Can drain the reserves.

Drug Price Control 27: Letter to Sen. Pia Cayetano

Last Thursday, May 10, after attending the meeting of the Congressional Oversight Committee on RA 9502, I went to the office of Sen. Pia Cayetano and gave this letter.
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10 May 2012

SEN. PIA S. CAYETANO
Chairperson
Committee on Health and Demography
Senate of the Philippines
Pasay City

Dear Sen. Cayetano,

We would like to submit our position paper on SB 5 of Sen. Loren Legarda and SB 2960 of Sen. Manny Villar, creating the Drug Price Regulatory Board, Amending RA 9502.

The current drug price regulation and control policy (EO 82 mandating MDRP, and DOH Advisory Council Resolution No.2009-001 on GMAP) will turn three years old this coming mid-August. There are many indicators showing that the policy is a failure in its stated goal of making certain drugs affordable to the poor.

Here are the reasons why:

1. The policy contradicted, if not defeated, the goals of RA 6675, the “Generics Act of 1988”. That law was successful in promoting cheaper generics, off-patent drugs to the public. The drug price control policy however, encouraged people to shift back to the branded and innovator drugs made by multinational pharmaceutical companies as they have been coerced by the government to slash prices by 50 percent.

2. The policy benefited the rich and upper middle class who would be buying those drugs whether their price remained at prevailing or discounted levels. Many if not all of the 22 drug molecules that were covered by the policy have cheaper, off-patent competing drugs already available. The poor were patronizing the off-patent drugs, which are still cheaper than branded drugs even if their prices were slashed by half.

3. The policy has adversely affected many local generic manufacturers. If they were selling their drug at P8 per tablet vs. the multinationals’ P15, the locals would make enough profit as the poor will patronize their products because of the big price differential. After the price control, the P15 becomes P7.50 and the local generic manufacturers now have the “more expensive” drugs. If they have enough leeway to further bring down their price to only P4 or lower without sacrificing the quality and safety of their drugs, fine.

But if they do not have enough leeway, then they will be forced to pull out their drugs rather than sell at a loss. Or worse, simply close down if the affected drugs are the main products of that generic manufacturer.

Generic Drugs Philippines 3: Dr. Alran Bengzon on Medicines

Dr. Alfredo "Alran" Bengzon at "3/4 of a century old" remains very sharp intellectually. He actually looks like late 60s, he has no white hair, unlike me, maybe he simply dyed it. Wisdom and humility is very obvious in the way he speaks: mild, clear and emphatic at times.

I attended a forum yesterday on Access to Medicines: Reminiscing the Past to Pave the Way for Universal Health Care sponsored by the Ayos na Gamot sa Abot-kayang Presyo (AGAP) Coalition held at Sulo Riviera Hotel, Quezon City. The event was co-sponsored by many other groups like the member-NGOs and POs of AGAP, and RiteMed/United Laboratories (Unilab).

The speakers before Doc Alran were:
1. Maria Mendoza, Executive Director of the Fair Trade Alliance (FTA), another coalition that is composed also of similar NGOs that belong to AGAP. She gave the Welcome Address.
2. Former MOH UnderSecretary Rhais Gamboa, now VP of Unilab
3. Olive Parilla of Homenet Philippines/PATAMABA, a member-NGO of AGAP (leftmost in this photo)
4. Elpidio Peria of BITS Policy Center, General Santos City, and
5. Susan Roces, Ambassadress of RiteMed, a famous actress many years ago (2nd from right). She repeatedly announced "Mag RiteMed na tayo." It was a big advertising for RiteMed/UL in the forum.
AGAP Convenor and former Senator Bobby Tanada rightmost.

The last three speakers gave testimonials on "How generics helped improved their living conditions/access to health".

Generic Drugs Philippines 2: 24 Years of Generics Act

Generic drugs are those medicines not covered by the patent protection and which are labelled solely by their international non-proprietary or generic name. That's the official definition in The Generics Act of 1988. Wiki also defines it as "a drug product that is comparable to brand/reference listed drug product in dosage form, strength, route of administration, quality and performance characteristics, and intended use... A generic drug must contain the same active ingredients as the original formulation."

The Generics Act will turn 24 years old this coming mid-September. And the drug price control policy will also turn 3 years and 1 month old that time.

A local health coalition, the Ayos na Gamot sa Abot Kayang Presyo (AGAP), or Good Medicines at Good Price, http://ayosnagamot.wordpress.com/, in partnership with several organizations, will sponsor a talk by the DOH Secretary when the law was enacted, Dr. Alfredo "Alran" Bengzon next week. I was among those invited through our bigger health association, the Coalition for Health Advocacy and Transparency (CHAT), I will come.

The law has five goals why it was enacted:

To promote, encourage and require the use of generic terminology in the importation, manufacture, distribution, marketing, advertising and promotion, prescription and dispensing of drugs;

To ensure the adequate supply of drugs with generic names at the lowest possible cost and endeavour to make them available free for indigent patients;

To encourage the extensive use of drugs with generic names through a national system of procurement and distribution;

To emphasize the scientific basis for the use of drugs, in order that health professionals may become more aware and cognisant of the therapeutic effectiveness; and

To promote drug safety by minimizing duplication in medications and/or use of drugs with potentially adverse drug interactions.

I think these are good and clear objectives. It is clear that the law would not be looking at branded generics as purely "generics" because the latter emphasizes the scientific name of the drug molecule, not its commercial brand identify, even if the latter is manufactured by a pharmaceutical company, domestic or multinational, that produces 100 percent generic drugs.

As explained to me by Lyle Morrell of Watsons and Joey Ochave of Unilab on two separate occasions, the "generics" as contained in the Generics Act of 1988 refer only to "generic-generics". There are two other type of generics in the local market: (a) product-branded generics (Examples: Tempra, Alaxan FR, Biogesic, Solmux, Tuseran, etc.) and (b) company-branded generics (Ritemed, Unilab ba yan, Pharex, etc.).

Thus, the latter two would not be considered as "generic-generics" which again, is the main advocacy of that law. This may sound like discussion on semantics but it maybe important to clarify these things as certain sectors and players in the local health sector are confused and may not be aware of this distinction and their implications when it comes to strictly implementing that law.

Doc Alran has a wide experience in health policy, both public and private healthcare. He was DOH Secretary from March 1986 to January 1992, see the DOH's brief description of his term here. After his term as DOH Secretary in the late 80s, and a short stint as a Peace Negotiator, I think he never went back to the public sector. He is now the Dean of the Ateneo School of Medicine and President/CEO of Medical City. He has lots of insights as a private health practitioner and manager.

I wrote here one time, that he talked at one of the meetings of the DOH Advisory Council on Price Regulation more than two years ago, saying that drug price control policy is wrong. In their case at Medical City, he said that they are in the business of healthcare, to make sick people get well and go home, they are not in the business of drug retailing. By forcing prices of certain drugs to go down at a level that does not reflect the cost of dispensation, monitoring, replacing, monitoring, etc., their bottomline as a healthcare provider is adversely affected. He called the drug price control policy as a short-sighted, quick-fix solution that creates more problems than it solves and thus, requested that the policy be withrawn, or at least the policy should not apply in hospital pharmacies.

It seems that then DOH Sec. Francisco Duque ("DOH-K" was the slogan of the DOH in his term) was more of a politician than a healthcare professional. Advice like that, as well as the voices and representatives of the different sectors who are members of the Advisory Council -- local pharma, multinational pharma, drugstores, hospitals, physicians, pharmacists, consumer groups (like us) -- did not get into his ear. Then DOH USec Alex Padilla and NCPAM Director, Doc Robert So were there in that meeting. USec Padilla I think was not convinced of drug price control policy, but his boss, Sec. Duque, and their higher boss, then President Gloria Arroyo, wanted that policy for additional populism, he has no option but obey his bosses.

It would be interesting to hear what former Sec. Bengzon would say about the Generics Act, 24 years after it was passed. The event is free but it is by invitation only. For those interested, you may call and write AGAP.
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See also:
Generic Drugs Philippines 1: Generics Summit, September 2011, February 09, 2012
IPR and Medicines 18: Generic Drugs and the Consumers, November 18, 2011

Drug price control 13: Two years of price control policy

(This is my article yesterday in thelobbyist.biz with original title, Two years of drug price control)

On August 15 this year, the government’s drug price control policy will turn two years old. The policy was a political project in mid-2009 by they key political actors at that time preparing for the May 2010 elections. Improving public health via forced drug price reduction was only a smoke screen to their political positioning.

The drug price control policy is officially called Maximum Retail Price (MRP) both in the law (RA 9502) and its implementing rules and regulations (IRR). When it was implemented, MRP was thrown out and two illegal terms were used: Government-Mediated Access Price (actually Gloria Macapagal Arroyo Price or GMAP) and Maximum Drug Price Control (MDRP). MRP sounded like Mar Roxas for President, so the Gloria boys at the DTI and DOH introduced and used MDRP.

The price control policy’s design was wrong and faulty in the first place. Here are four reasons why.

One, there was already a healthy, even stiff competition on certain drug molecules, among many drug producers in the country, both innovators and generic manufacturers, resulting in price reduction in more and more molecules and generic categories.

Two, the Generics Act of 1988 was generally successful in promoting cheaper generics, off-patent drugs to the public. The drug price control policy defeated the purpose of the Generics Law by encouraging people to shift back to the branded and patented drugs by multinational pharmaceutical companies as the price of the latter have been coerced by the government to become 50 percent cheaper.

Three, the targeted beneficiaries of drug price control policy were the poor, not the rich and upper middle class. Many if not all of the 22 drug molecules that were covered by the policy have cheaper, off-patent competing drugs already available. The rich were patronizing the multinationals’ manufactured drugs while the poor were patronizing the off-patent drugs. The forced price discount therefore, would benefit – and it did benefit – the rich and upper middle class who would be buying those drugs whether they remained at their high price or would have the mandatory 50 percent price discount.

Four, the law makes a long list of requirements before the government can impose drug price control or MRP. By forcing the policy, the government was inviting criticism if the long list – like labeling of each bottle, blister pack and tablet packages showing that “the MRP of this medicine should not be higher than P_____ -- were indeed followed or not.

Price control simply means price dictatorship. The government is dictating to the affected industry players that regardless of the cost of production and marketing, the cost of taxes and fees they must pay, those companies must sell their products at a level that was set and dictated by the government. Otherwise, these players can be declared as violators of the law and are subject to certain fines and penalties.

Price control also means politicized pricing. It is the politicians and the political class, like the appointed government officials, people who are detached from the nitty gritty aspects of innovation, product development, going through regulatory approval processes, then marketing and selling, of various goods and services. By supplanting the subjective opinions and biases of the political class over the actual players, price distortion and ultimately, business and economic distortion happens.

Thus, one negative result of the policy is business uncertainty. Someone with a really innovative, creative and revolutionary product (a more disease-killer drug, a more cutting-edge laptop or cell phone model, a more powerful energy drink, etc.) will hesitate bringing that product to the country knowing that the politics of envy or the plain itch to intervene by the political class will pounce on them anytime.

These things and lessons have not been considered yet until now by the current political administration as there is little or zero signal that the policy will be withdrawn and discontinued.

This case therefore, further nullifies and contradicts the liberal philosophy by leaders of the Liberal Party themselves. Because liberalism highly respects individual freedom and shuns whenever possible the “freedom to intervene and distort” by the political class and leaders of the state.
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On August 19, 2010, I wrote this for The Manila Times.

Drug Price Control A Year After

The drug price control or price regulation policy will turn exactly 1-year-old on August 15, 2010. A year after its implementation began, has the policy achieved its goal of making essential, popular and branded drugs become more accessible to the poor? To help us answer this question, let us see some sales data from two drugstore chains, MedExpress/Manson drugstores and Watsons, which, starting this year, has become the second biggest drugstore chain in the country. The officials of these stores gave me permission to use their data for this article.

MedExpress’ sales data for the price-controlled drugs showed the following: From August to December 2009 vs. same months in 2008, sales volume fell by 3.4 percent and sales value tumbled 34.3 percent.
From January to May 2010 vs. same months in 2009, sales volume has managed a 7.3-percent increase but the value plummeted by 65.4 percent, whacking the retailers’ margins.

The sales value decline is now bigger than the mandatory 50-percent price reduction because there are additional government-imposed discounts, such as the mandatory 20-percent off for senior citizens and people with disabilities (PWDs).

Data from Watsons show that from mid-August to December 2009 compared to same months of 2008, sales volume of all price-controlled drugs increased by 35.9 percent although sales value declined by 13.2 percent. And from January to April 2010 vs. January to April 2009, sales volume has increased even higher to 57.2 percent while the peso revenue was flat at 0.2-percent growth.

What are the implications of these numbers?

At first glance, one may conclude that price control was a success in making more popular, previously expensive drugs by multinational pharma companies become more affordable to the poor. Wrong.

Watsons drugstores are located mainly in the malls, especially in SM malls, which the richer ABC income class of people frequent. A 50-percent forced reduction in prices by some of the most popular, branded drugs by multinationals prompted the ABC class to patronize these products and abandoned some of the generics drugs that they used to patronize.

This result is a clear setback to the government’s 22-years old campaign to promote generics through the Generics Law of 1988.

Did the government, the DOH officials in particular, foresee this huge and glaring contradiction between its old policy of generics promotion and its new branded drugs promotion?

What about the poorer consumers and patients, those who are in the rural areas and do not frequent the malls, did they also join the bandwagon shift to the branded drugs?

Judging from MedExpress’ sales data, the answer seem to be No. The 7.3-percent modest growth in sales volume in the first five months of 2010 can be attributed to the shift by some of MedExpress’ wealthier consumers in the provinces to the branded drugs. If the poor also joined the bandwagon, then the increase in sales volume would have been larger than 7.3 percent.

Prior to the imposition of price control policy last year, there was already a healthy competition among many pharma companies, especially between the innovators and generics manufacturers. One clear example is amlodipine molecule used to treat hypertension. The cheapest generic available on the market prior to price control was selling for only P8. The most popular brand name version was Pfizer’s Norvasc, selling for P44 a 5mg tablet. After the mandatory 50-percent discount, it became P22.

For the poor who used to patronize the P8 generics, the P22 Norvasc was still expensive and thus, a shift to the branded drugs is still not viable.

Meanwhile, a number of small and independent drugstores, those which do not belong to any drugstore chains, have been forced to drastically shrink their operating costs including laying off some staff. Some also have had to stop selling some of the price-controlled drugs altogether as they encountered problems in getting rebates from the manufacturers, and they could no longer make useful profits. The situation of “cheap but not available” drugs in some rural areas has become more pronounced.

If the policy is a failure, then the DOH should consider advising the new President to recall or abrogate Executive Order 821 issued by the past President imposing price control on certain drugs.

It is time to move on, abandon politicized pricing of certain drugs, and focus our energy on the bigger issue of healthcare coverage for many Filipinos.
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See also:
Part 11, Costs, ads and taxes, June 25, 2011, and
Part 9, More comments on single pricing per drug, June 02, 2011.

Drug price control 1: IPR and taxes on medicines

(Note: the original title of this paper was 'IPR, drug price control and taxes". I retitled it to reflect a discussion series on the subject starting in January 2011)

It is drug price control and taxes, not piracy and intellectual property rights (IPR) violation so far, that hound the Philippine pharmaceutical market. Not only innovator companies but also local generic manufacturers were adversely affected by the continuing government drug price regulation policy.

In a headline news story in BusinessWorld last January 4, 2010, RP anti-piracy ‘strides’ cited, it said,

A WASHINGTON-based group of drug firms has retracted its earlier petition to the United States government that the Philippines be placed on the priority watch list of countries notorious for intellectual property (IP) violations.

The Pharmaceutical Research and Manufacturers of America (PhRMA) has instead recommended that the Philippines be merely retained in the regular watch list, after observing "notable strides" in the government’s willingness to hear out the private sector...

While challenges remain, the Philippine Government has made notable strides in engaging with the research-based pharmaceutical industry on critical intellectual property and market access issues," PhRMA said in a document dated Dec. 10…

PhRMA also took issue with the Maximum Drug Retail Price Mechanism which was authorized by the law, saying the scheme "has recently impacted [sic] a number of PhRMA member companies’ access to the Philippine market.

The Philippine government, through the Cheaper Medicines Law or RA 9502, wanted to bring down medicine prices by tinkering with IPR laws like drug patents which the government issued in the first place, and by drug price control. Issuance of compulsory license (CL) via local manufacturing by non-innovator companies of still patented drugs, or via parallel importation, are the most prominent provisions of the law.

The more than 20 years of generics promotion by the Department of Health (DOH) through the Generics Act of 1988 has improved competition among innovator multinationals and generic local manufacturers. There were already cheaper generic alternatives even for the most popular and patented drugs by the multinational pharma companies.

The most prominent example is amlodipine (anti-hypertension). When the DOH implemented the 50 percent mandatory price cut policy in 2009, the poor found the new price of P22.85 Norvasc 5mg tablet still expensive. So the poor continued patronizing the P8.50 generic alternative. Picture here are prices by one branch of The Generics Pharmacy sometime last year. Click on the picture to see a larger image.

The policy’s goal of making popular drugs more affordable to the poor was not attained.

The rich and middle class who used to patronize Norvasc at close to P46 a tablet greatly benefited as they shelled out only half that value after the price control policy. Local generic manufacturers who were selling their drugs at P18 to P25 were forced to further bring down their already lower prices as the price of the leading drug was forcibly brought down by the government to only P22.85.

I saw this in one generic drugstore in one Uniwide mall, prices as of end-December 2010. Amlodipine 5mg was selling as low as P5.50 with equivalent ("katumbas ng") curative capacity of Norvasc. Atorvastatine (anti-cholesterol) 10 mg tablet, a generic was selling at only P20.50 while the innovator drug, lipitor, also made by Pfizer, is sold at P34.45, from its original price of almost P69 10mg tablet.

If competition among different drugs is working, what does the government care if one multinational company will sell its drug at P100 or P200 per tablet when the public has access to local generic drugs selling at only P10 or P5? Let the former overprice its product, lose its buyers, and commit business suicide.

The bigger challenge for government remains undone until now. Government should drastically cut, if not abolish, its taxes on drugs and vaccines, to make them cheaper and more affordable to the poor. The 5 percent import tax and 12 VAT on drugs contribute to at least 17 percent “more expensive” medicines. For instance, an imported medicine with a landed price of P20 per tablet, after the import tax and VAT have been applied, will immediately have a pre-retail price of P23.52 per tablet. Government is responsible for P3.52 price increase via taxes alone.

The lessons for all these are simple: One, competition is kicking hard among many drug products and drug producers, and government price control policy is distorting this dynamic competition. And two, government should instead look inward and drastically cut or abolish its taxes on medicines, to contribute to its avowed goal of “cheaper medicines for the poor.”