Drug Price Control 42: New Round of India Price Caps

 Another round of drug price control in India.

Lessons for the Philippines?

Discussion below, after the news report.

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India caps prices of 36 more drugs to improve access - government official

BY ADITYA KALRA AND ZEBA SIDDIQUI

NEW DELHI/MUMBAI Fri Sep 19, 2014 7:34pm IST

(Reuters) - India has capped the prices of 36 drugs, including those used to treat infections and diabetes, in its latest move to make essential medicines more affordable, a senior official of the country's drug pricing authority told Reuters on Friday.

The medicines join a list of 348 drugs deemed essential and that are therefore subject to price caps, covering up to 30 percent of the total medication sold in a country where less than 20 percent of people are covered by health insurance.

"This is a straight-forward, most predictable, overdue action which has been done by us," the official at the National Pharmaceutical Pricing Authority (NPPA) said, declining to be named because of the sensitivity of the matter.

Global and Indian drugmakers have been hit in India by wide-ranging government-imposed price reductions over the last year. Industry officials say prices in the country are already among the lowest in the world, but the cost of drugs is overwhelmingly covered by patients themselves.

India in July capped the prices of more than 100 drugs that are not part of the essential medicines list. The pharmaceutical industry has challenged the move in court.

Indian drugmakers, including Cipla Ltd, Ranbaxy Laboratories Ltd, and Cadila Healthcare Ltd, are among the companies that will be affected by the latest decision, research firm AIOCD Pharmasofttech AWACS said….

MORE TO COME

More big selling drugs for treatment of diseases including cancer, HIV/AIDS and cardiovascular could be brought under price cap to make them affordable in the country, said Rahul Sharma, an analyst with Mumbai-based brokerage Karvy Stock Broking.

The senior official at the pricing authority said the NPPA was drawing up a list of mass-consumed, essential life-saving drugs which it thinks should be added to the essential medicines list, but did not confirm treatments affected….

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What are some lesson for the Philippines from this report?

These are my impressions and observations:

1. Government intervention like price control, once started, is never or hardly reversed and recalled. It only invites more intervention. In this case in India: original 348 drugs in the essential medicines list + more than 100 drugs outside of the essential medicines list last July + 36 drugs this month + “more to come”.

Thus, people should not be enamored or hoodwinked with more government interventions  like price control and their beautiful, bleeding heart promises and justifications. Once started, they acquire their own life and create their own momentum. And such interventions will soon victimize those who asked for it in the first place, either directly or indirectly, like the proverbial "Law of unintended consequences."

2. India’s NPPA could be the “model” of former Cong. Ferjenel Biron, Sen. Manny Villar and other legislators in the last Congress when they were adamantly pushing for the creation of a permanent bureaucracy to be called Drug Price Regulation Board (DPRB). One consolation of PH drug price control experience is that we do not have a permanent bureaucracy with permanent and full time bureaucrats whose main purpose in this planet is to justify endlessly, and expand endlessly, the list of medicines to be put under price dictatorship.

A permanent price control board is very dangerous. The most extortionists, the most corrupt in  government will salivate to head it and use it for harassment and extortion of some players. Like threatening "pay us or we will put your most saleable, most popular drugs under price control". It is happening in India. The NPPA officials have gone outside the essential medicines list.

The DOH Advisory Council on the Implementation of RA 9502 (previously called the Advisory Council for Drug Price Regulation) is a non-permanent agency, just an ad-hoc body that does not even meet regularly.

3. While the original target of price control were the products of west-based innovator multinationals (US, Canada, Europe), continued expansion of price control is now victimizing local companies, generic multinationals:  Ranbaxy Laboratories (5th largest specialty generic pharma in the world),  Cadila Healthcare (5th largest pharma company in India), Cipla  Ltd. (42nd largest publicly traded company by market value in India). Data I got from wiki.

Ranbaxy (or Dr. Reddy’s?) is the India version of Unilab, they are both the biggest pharma in their respective countries.

This is one reason why we do not see or hear any local generic pharma in the Philippines supporting drug price control, in 2009 or now.

A physician friend from PhilHealth, the government-owned social health insurance (SHI) corporation, asked me,

What if the social health insurance provides the cap?One, the cap is meant to protect those that are insured.Two, the covered population provides predictable demandThree, it opens a group of consumers who previously are not buying.. Example,  the poor.. Or not compliant with their medication.. Example, those who have NCDs .What if those who are selling pharma products covered by SHI receives rebate?

Good questions. If the SHI like PhilHealth will provide a price cap to certain medicines that patients will pay, and the selling pharma companies receive a rebate from the SHI, then I think it  is fine. It is not a price control but a price subsidy. It is no different from a rice subsidy (NFA pays high to rice producers and consumers pay low) or MRT/LRT train subsidy (DOTC pays huge money to MRT operators and passengers pay low).

If government should impose a mandatory, forcible price cut (ie, price control), then government should pay the firms that are affected -- through DOH budget or DOF-BIR tax rebate. Government must share burden for some of its bleeding heart programs.

In the current practice of price control, neither the DOH nor the DOF share any burden. And not only for the 19 or so molecules covered by price control of August 2009, but also for the mandatory, forcible price discount of 32 percent (20% forced discount + 12% VAT waiver) for senior citizens and persons with disabilities (PWDs). Not all senior citizens and PWDs are poor that they deserve a forced discount. And not all drugstores, restaurants, bus lines, etc. are rich to shoulder the forced revenue cut. Henry Sy, Gokongwei, Lucio Tan, George Ty, Manny Villar, Sonny Belmonte, Franklin Drilon, FV Ramos, ettc. are no poor yet in the law, they deserve a forced discount and private enterprises are forced to  give them a 32 percent discount. This is a continuing headache for many players in the health sector -- pharma (local and multinational), drugstores, hospitals. Nagtuturuan who should shoulder the biggest burden and the burden inventor, the government, has zero share in the burden sharing.

Some people may ask, "You have criticized a lot of policies, what do you propose?"

Simple. Government should step back, zero  involvement, in pricing by private enterprises. Government should encourage more players and competitors to come in. Competition will drive prices, not only of medicines and vaccines but also lab tests, hospital fees, professional fees. Unless patients will deliberately go to expensive hospitals and physicians, expensive drugstores and  choose expensive  medicines. 

When someone sells fake or counterfeit medicines, anesthesia, vaccines, etc.  and public health is affected, government should come in. Hard and harsh. Why? Because there is clear violation of contract, that sellers and producers should only supply good quality meds, food. It is in the promulgation of the rule of law that I believe in  BIG government. Government should over-spy, over-bureaucratize, over-penalize, criminals,, thieves and  murderers, sellers of fake medicines and adulterated food, etc.

Government should also reduce if not abolish, various taxes and fees on medicines and  vaccines. In many instances, government is a major contributor to  expensive medicines, expensive rice, expensive electricity and so on, via various taxes, charges, fees and royalties on those products and services. Yet government portrays itself as the "champion of the masses" and indirectly demonize the major players via more regulations and prohibitions, like price control policies.

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See also: 

Drug Price Control 38: Presentation at USC, Cebu, March 2010, March 01, 2014 

Drug Price Control 39: Presentation at USC, Cebu, March 2014, March 25, 2014

Drug Price Control 40: CWF Wants Price Dictatorship for Lipitor, September 12, 2014

Drug Price Control 41: Exchanges with Joey Ochave at MeTA PH, September 17, 2014

Drug Price Control 40: CWF Wants Price Dictatorship for Lipitor

Last Wednesday, an email from James Auste (below), founder and Executive Director of Cancer Warriors Foundation (CWF) was forwarded by email by the Secretary General MeTA Philippines, Ms. Cecile Sison, to members of the Medicines Transparency Alliance (MeTA) PH, Coalition for Health Advocacy and Transparency (CHAT), ETHIKOS and Alternative Budget Initiative (ABI) Health cluster. I am a member of MeTA PH and CHAT so I saw it.

The email therefore was widely circulated to many stakeholders in the PH health sector – government, industry players, NGOs, academe. James is asking for  another round  of drug price dictatorship aka price control. Price dictatorship is the  subject  of my book in 2011, Health Choices and Responsibilities, and it is a policy that I will  always oppose.

James addressed his letter to the President/CEO of Pfizer, but it was distributed to various network in the  health sector, so  it is implicit that he also addressed it to us, hoping that other stakeholders in the health sector will support his call for a new round of drug price control, but targeted to only one medicine, Lipitor.

I posted these comments by email to members of CHAT and MeTA PH early today. Reposting it here.

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James  wrote,

(1) “SABI NG MGA BATA,HINDI KAMI HUMIHINGI NG AMING GAMOT PERO PARA SA AMING MGA LOLO AT LOLANA GUMAGAMIT NG LIPITOR!”

O, this  is new. The children cancer patients are now lobbying part time not to get cheaper cancer medicines for themselves,, but to get cheaper Lipitor for their grandparents. And soon maybe, they will also lobby for cheaper Norvasc for their parents, cheaper Augmentin for their older siblings and relatives?

(2) ANG ANNUAL SALES NG LI[PITOR AY 750MILLION PESOS! NUMBER 1 IN THE MARKET! AT NUMBER 1 PA ATA SA BUONG MUNDO!

Good data, but Pfizer themselves gave this data to James? Or IMS did, or someone who dislikes Pfizer and has access to industry data did?

(3) “PARA general health and well-being of every Filipino ( NA CORE VALUE RIN NG PFIZER) IBABA NATIN SA 14 PESOS ANG 10MG AT 17 PESOS ANG 2OMG!”

O, part 2 of price control. Part 1 was made in August 2009 under the administration of former President Arroyo.  Price control  is price dictatorship. Government regulators – the DOH and DTI in particular, backed up by the Office of the President, Congress, LGUs, etc. – would act as the price dictators. Those who will not obey the dictated price will be harassed and penalized.

Btway, it was former DOH Secretary Duque and DTI Secretary Favila who coined the Gloria Macapagal Arroyo Price (GMAP), aka Government-Mediated Access Price, an illegal term (not in RA 9502, not in the IRR) which until now  is being used, four years after GMA’s term has ended.

I am not exactly a great fan of Pfizer. I am more a fan of “boycott medicines”, innovator or generic, whenever possible and have healthy lifestyle instead. But I will  always be an enemy of government  dictatorship including price control, wage control, fare  control, rent  control, income control (via high income taxes).

The call for another round of drug price control or price dictatorship  is lousy James. Better focus your energy on lobbying for cheaper childhood cancer medicines. You are more effective there.

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DEAR SIR/MAM PRESIDENT/CEO OF PFIZER!

HI AT MABUHAY! I AM JAMES AUSTE A BRAIN CANCER WARRIOR! PATIENT ADVOCATE! FOUNDER! EXECUTIVE DIRECTOR OF THE CANCER WARRIORS FOUNDATION! SINCE JUNE 2000 WE HAVE SUPPORTED AT LEAST 1000 KIDS WITH  CANCER AND THEIR FAMILIES IN THEIR BATTLE FOR LIFE! RIGHT NOW WE HAVE 400 SCHOLARS UNDER OUR CARE FROM PAMPANGA TO DAVAO!

SABI NG MGA BATA,HINDI KAMI HUMIHINGI NG AMING GAMOT PERO PARA SA AMING MGA LOLO AT LOLANA GUMAGAMIT NG LIPITOR!

SABI RAW NI LOLA AT LOLA NIYA 34 PESOS ATA SA MERCURY! ANG 10MG! 39PESOS ANG 20MG! DAHIL SA MDRP(MAXIMUM DRUG RETAIL PROGRAM) NUNG 2009! ANG DATA NATIN  NA NAHANAP NAKITA AT NABASA NG ATING SENIOR WARRIORS

 ANG ANNUAL SALES NG LI[PITOR AY 750MILLION PESOS! NUMBER 1 IN THE MARKET! AT NUMBER 1 PA ATA SA BUONG MUNDO!

MAM SIR BAKA PASOK NA SA ATING CORE VALUE NA MAXIMIZE REVENUES AND MANAGE COSTS! ANG REVENUE NA ITO

PARA general health and well-being of every Filipino ( NA CORE VALUE RIN NG PFIZER) IBABA NATIN SA 14 PESOS ANG 10MG AT 17 PESOS ANG 2OMG!

BAKIT GANUN KABABA DAHIL SA MASIGASIG NA PANANALIKSIK NG ATING SENIOR WARRIORS MAY BAGO RAW TAYONG GAMOT NA TAWAG AY Rhea GALING DAW SA AMERIKA!

PERO SAME DRUGSTORE MAGBEBENTA--MERCURY DRUG STORE-NUMBER 1 SA PINAS

SAME MANUFACTURER--PFIZER

SAME ADDRESS--KM 1.9 ROAD 689, VEGA BAJA, PUERTO RICO USA

SAME PACKER-PFIZER MANUFACTURING DEUTSCHLAND GMBH, BETRIEBSSATTE, FREIBURG MOOSWALDALLEE1, FREIBURG, GERMANY

SAME IMPORTER-PFIZER,INC- 23RD FL, AYALA LIFE-FGU CENTER, 6811 AYALA AVENUE, MAKATI CITY

SAME SA SUKAT, KULAY, AT PAREHO PA ANG MARKING NA PO156

PAREHO LAHAT PERO ANG PANG PINAG KAIBA AY 20 PESOS SA 10MG! 60% CHEAPER NG LIPITOR! ANG 20MG 55% CHEAPER!

MALIIT SA INYO PERO MALAKI SA MGA MAY SAKIT NG PUSO NA ARAW ARAW ANG GAMIT NG GAMOT NA ITO

MALIIT SA INYO PERO MARAMING MATUTULONG SA ATING SENIORS AT MAY PANG JEEP PEDICAB, O MRT PAPUNTA SA MERCURY!

MALIIT SA INYO PERO MARAMING MABUBUHAY SA BENTE PESOS

SABI NG ATING SENIOR WARRIORS LIPITOR ANG GUSTO NAMIN KESA RHEA KASI BAKA

IBA ANG TAMA SA AMING MGA PUSO

IBA ANG  TAMA SA AMING MGA KATAWAN

IBA ANG AMING PATUTUTUNGUHAN

KAYA ANG AMING PANAWAGAN  SA PAMAHALAAN SIR MAM SANA I SUPPORT NIYO AY PAG ARALAN ANG SECTION 5 EO821 ".... MEDICINES,,, SHALL BE REVIEWED AFTER 3 -6 MONTHS BY THE DOH"KASI 5 YEARS NA PALA ANG MDRP! AT WALANG PANG NAG RE REQUEST NG REVIEW!

PANAHON NA PARA BIGYAN NG PANSIN ANG  ISA PANG HINAING(BUKOD SA CHILDHOOD CANCER) SA ATING LIPUNAN NA WALA PANG PUMAPANSIN ANG HINAING NG ATING MGA LOLO AT LOLA! NA KAILANGAN NG LIPITORFOR LIFE!

                                           KONTING SAKRIPISYO MARAMING MAGBEBENIPISYO!

THANK YOU FOR YOUR TIME!  WILL BE HOPING AND PRAYING FOR A POSITIVE RESPONSE!

INGAT GODBLESS!

JAMES AUSTE

BRAIN CANCER WARRIOR

PATIENT ADVOCATE

FOUNDER ONLY MEMBER OF CANCER WARRIORS SENIORS TEAM!SAMA NA!

**THIS WILL BE THE FIRST PROJECT OF THE CWF SENIORS TEAM!

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See also: 

Drug Price Control 36: Advisory Council, James Auste and China, July 12, 2013 

Drug Price Control 37: Four Years of the Policy, August 16, 2013 

Drug Price Control 38: Presentation at USC, Cebu, March 2010, March 01, 2014 

Drug Price Control 39: Presentation at USC, Cebu, March 2014, March 25, 2014

ETHIKOS 2: Pharma Companies and Patients, April 01, 2014

UHC 24: Corruption in Government Purchase of Medicines, April 02, 2014

Drug Price Control 39: Presentation at USC, Cebu, March 2014

Two weekends ago, I gave a talk at the University of San Carlos (USC) in Cebu City, some 100 Pharmacy Economics students of a friend, Prof. Frank Largo. Frank is a fellow UP School of Economics (UPSE) alumni, also a fellow International Academy for Leadership (IAF) alumni at Gummersbach, Germany.

Four years ago, I also gave a talk at his Economics graduate class also at USC. I was one of four speakers then. See  Drug Price Control 38: Presentation at USC, Cebu, March 2010.

The other speaker that day was Prof. Eric Salenga, Chairman of the Pharmacy Department, UP Manila, also President of the Young Pharmacists Association of the Philippines (YPAP). He's a very articulate speaker.

My outline was simple. I.  Dreaming a single national price, II. Drug price control of RA 9502,

III. Senior citizens discount of RA 9994, IV. Conclusions.

I. Dreaming a single national price

Many of those who advocate government price control and/or mandatory discounts of certain commodities in society make this faulty assumption. That same product with same dosage or quality made by the same manufacturer in the same country should have only one price nationwide. Thus, medicine price by the same manufacturer should be the same regardless of outlets.

Any difference in pricing is explained by corporate greed; the wider the price difference, the bigger the greed, so government should control or limit that greed in the name of public health and welfare. This can be an emotionally powerful argument.

When this logic is applied internationally, it would imply that same product with same dosage or quality by same manufacturer made in different but similarly developing countries should have little price differentials. But why this did not happen?

This line of thinking is illogical because there can never be a single national price.

To make meaningful price comparison of a commodity country by country, one must show:

a.       same or comparable retail outlet, say only from Watsons (not a hospital pharmacy in country A vs. small drugstore in country B)

b.       same reference period for price, say December 30, 2012 (not end-January in A vs end-December in B of same year)

c.       Same reference period for exchange rate in converting different currencies into a common currency, PhP or US$, say as of end-June 2013

d.       taxes and fees, national and local, applied on each commodity

e.       subsidies or mandatory discount or price control, if any, applied on each commodity;

f.         other factors.

I asked some individuals who were involved in the lobbying and crafting of the Cheaper Medicines bill into a law, RA 9502, the raw data for such price comparison in the above table, they could not present one. Those numbers in the Senate Committee Report therefore, were suspicious, but they have become strong basis for enactment into a law of the bill.

RA 9502's main concerns were as follows:

* Amending the Intellectual Property Code (IPC) to allow TRIPS flexibilities in the intellectual property rights (IPR) like patents of innovator drugs and allow compulsory licensing (CL), special CL, “early working” and parallel importation.

*  Drugs and medicines price regulation through the issuance of maximum retail price (MRP, not MDRP or GMAP).

* Non-discriminatory clause, amending the pharmacy law and generics law and strengthening BFAD, now FDA.

* Only one goal: cheaper and safe medicines be more accessible to the poor.

But even before RA 9502, average medicine prices were already declining. Not because of political coercion and harassment, but because of competition among drug manufacturers themselves.

Drug Price Control 38: Presentation at USC, Cebu, March 2010

* Note: This is an expanded version compared to the one I originally posted last Thursday. The discussion on game theory below is explained as many readers may not be familiar with this applied math theory used in Economics and other social sciences.

Upon the invitation of a friend, Prof. Frank Largo, who was the Chairman of Economics Department then, University of San Carlos (USC), Cebu City, I spoke at his university in March 2010. I forgot to blog about it here, posting now.

My title was a play of words on right and left. Private property rights can be subverted by leftist pricing policy.

I was one of four speakers then. The three other speakers were (from left) Dr. Sophia Mancao of DOH Region 7, Mr. Juanito Luna of Prosel Pharmaceuticals Inc. in Cebu, and Prof. Yolanda Deliman, Dean of College of Pharmacy, USC.

My presentation, below.

Drug Price Control 37: Four Years of the Policy

* This is my article yesterday in thelobbyist.biz.

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This week, the drug price control or maximum retail price (MRP) policy has turned four years old. The policy was laid out in late July 2009, with the issuance of Executive Order 821 on the day former President Global Arroyo delivered her 9^th and last State of the Nation Address (SONA). With a two-weeks additional preparation period, price control became effective in August 16, 2009.

The main and unstated purpose of imposing the policy was electioneering. The May 2010 election was just nine months away and the former President and her arch critic that time, former Senator Mar Roxas who was aspiring to run for President under the LP, they both needed to appear “pro-poor, pro-patients” to get more voters support.

The stated purpose was to make popular but expensive medicines become cheaper, even if alternative generic, cheaper medicines were available at that time.

So, after four years of forcible 50 percent price discount on certain popular brands, have the poor patronized the innovator (or originator or multinationals’) brands?

In a “Policy Dialogue on UHC and Access to Medicines” last July 25-26, 2013, sponsored by the DOH, Zuellig Center for Asian Business Transformation (ZCABT), and MeTA Philippines, held at the Asian Institute of Management (AIM),  Deejay Sanqui of IMS Health made a presentation, “Pharmaceutical Market Perspective.”

For a start, here’s a situationer. The total Philippine pharmaceutical market as of end-2012 was valued at P131 billion. Minus the nutritionals, it was worth P124.5 billion.

The most popular molecule that was put under price control was amlodipine, an anti-hypertension drug. And the most popular brand was Norvasc, made by Pfizer. Since it was a highly popular, highly saleable brand but considered “high-priced”, forcing its price to be slashed by half would result in the poor and middle class shifting to it away from the cheaper generic brands of amlodipine. Did this happen?

No. From the IMS data, even before the MRP policy was imposed in mid-August 2009, the vertical line in the chart below, there were plenty of generic brands of amlodipine already available, and many people were buying them. When Norvasc 5mg tablet’s price was slashed from P44 to P22, the poor did not shift to it because there were already amlodipine 5mg generic brands that were selling for only P10, even P7.50, so the P22 was still high. The main beneficiaries of the drug price control policy were the rich and upper middle class who were patronizing Norvasc, whether its price was P50 or P30 or P20 a tablet.

For simvastatin, an anti-cardiovascular (heart) diseases drug molecule, the same trend was developing – many cheaper generic drugs were already available for the poor even before price control was imposed, again marked by the vertical line in the chart below. In fact, the share of the innovator brands that time was already small, perhaps below 15 percent of the total market value for simvastatin. There was really NO need to impose price control for this molecule.

But then again, “helping the poor” was just an alibi for the two political camps then. Their goal was simply to look “pro-masa, pro-mahirap” even if the poor would not directly benefit from such coercive and arm-twisting in forced price discount.

Another popular drug molecule against breast cancer and related diseases, Tamoxifen, was also put under price control.  What was ironic was that the share of the innovator or originator brand was almost nil. Prescription for generic variants was already very high, before, during and after MRP policy.

One may wonder, if the policy did not benefit the poor but only the rich and upper middle class, why is the policy not withdrawn?

That is one ugly aspect of heavy government intervention. Once a policy or regulation was imposed, it almost always becomes permanent and long-term, never temporary or short-term. The two main protagonists, now Congresswoman Gloria Arroyo and DILG Secretary Mar Roxas, plus former DOH Secretary who became Civil Service Commission (CSC) Commissioner Francisco Duque, have been out of medicines policy after the 2010 elections, yet the damage done by their policy remains until today.

What is that damage? The politics of envy, that if a company is able to produce useful, popular and revolutionary products, the politics of envy and government coercion will penalize that company by forcing it to give mandatory, forcible and coercive price discount. And since all the affected companies were multinationals, the message across other foreign investors and suppliers was negative.

There are no government moves or attempts to withdraw this policy. All the innovator/originator and generic manufacturers, the drugstores and hospitals, have already adjusted to that ugly reality.

What the policy can teach us is to avoid, to refrain, inviting government to come and impose price regulation and price control. In whatever sector or sub-sector of the economy.

Government can do better if it will encourage and allow more players and competitors, local and foreign, to come in. More competition almost always results in price reduction or stability, benefitting the consumers, patients especially.

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See also: 

Fat-Free Econ 22: Three Years of Drug Price Control Policy, August 30, 2012 

Drug Price Control 33: Debate with a Cat, June 15, 2013 

Drug Price Control 34: No Single National Price, And a Wailing Cat, June 17, 2013 

Drug Price Control 35: DOH Procurement Price and Lobbying for Another Price Coercion, June 29, 2013 

Drug Price Control 36: Advisory Council, James Auste and China, July 12, 2013

Drug Price Control 35: DOH Procurement Price and Lobbying for Another Price Coercion

Government price control is price dictatorship. It is wrong, messy and ugly.

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". 

Drug Price Control 34: No Single National Price, And a Wailing Cat

Among the reasons often cited why some groups propose government price control of certain commodities is that the local price of the same product by the same manufacturer is higher compared to other countries in the developing world. The assumption is that since it is (a) same product (b) made by the same manufacturer, then the price should be generally the same.

This assumption is intrinsically wrong because it assumes that there is only one price in one country or city for each product that satisfies (a) and (b) conditions above.  For instance, the price of a can of coca cola 350 ml should be the same for the entire country.

This is terribly wrong. The price of that (a) same Coke 350 ml in can (b) made by the same manufacturer is different when bought in different retail outlets: a sari-sari store, carinderia, average resto, 7-11, Mini-Stop, SM, Rustans, Robinsons, Shangrila, Manila Hotel, Mandarin Hotel, and so on. There is no single price to represent the “national price” of that can of soda, or any other commodity. This can be said in another country with generally higher or lower price levels as the Philippines. This point can be represented by these graphs.

Each equilibrium price or intersection between supply and demand represents the prevailing price in each outlet. There are sellers and buyers in each equilibrium point. There is no single price, but different prices by different sellers for different consumers, for each country.

When the Senate in the 14^th Congress (2007-2010) reported out Committee Report No. 6 made by three Committees -- Trade and Commerce, Health and Demography, Finance – dated October 01, 2007, before the Cheaper Medicines bill became a law (RA 9502 in June 2008), among the reasons cited is this table showing how expensive the prices of (a) same medicines (b) made by the same manufacturers in the Philippines were compared to those in India and Pakistan.

As in the example of coke above, there can never be one price of particular medicine in one country. If one will buy say, Ponstan 500 mg by Pfizer in different drugstores and pharmacies – Mercury, Watsons, Rose, The Generics, Generika, Manson, Dr.  Pharmacy, Botika ng Bayan, Makati Med, St. Lukes, Asian Hospital, Capitol Medical, etc. – one will get different prices. So  what is the “national price” that can represent the price of that drug in the Philippines? None. And yet the Committee Report has assumed there is such a thing for each country. 

If one will highlight the idea that Philippine drug prices are “among the highest, if not the highest” in SouthEast and East Asia, one will pick up the highest price, say from Makati Medical Center’s pharmacy or St. Lukes Hospital pharmacy as the “national price.” If one will highlight the idea that local drug prices are “comparable if not lower than those in SE and East Asia”, one will pick up the price of The Generics or smaller, non-chain drugstores.

Besides, if one will make a meaningful price comparison of a particular commodity by country, then one must show:

(a) same or comparable retail outlet, say only from Watsons;

(b) same reference period, say December 30, 2012;

(c) exchange rate used for converting different currencies into a common currency, say PhP or US$, on a particular day, say as of end-December 30, 2012

(d) taxes and fees, national and local, applied on each commodity;

(e) subsidies or mandatory discount, if any, applied on each commodity;

(f) other factors.

These data and numbers should be shown for verification by third-party players or the public in general.  It is possible that the list of drugs mentioned in the Committee Report were those that are price-controlled (hence, priced very low) in India. Otherwise, anyone can produce a table of comparative prices, make agitating title and spread it around to achieve a particular political and business agenda.Take this second table for instance. 

What are the difference/s and similarity/ies of the two tables above?

The difference is that the price gap between those in the Philippines and those in India and Pakistan are not that big.

The similarities are  that both tables  (a) assume there is one “national price” for each drug molecule by the same manufacturer, and (b) they do not show how the figures were arrived at. 

The second table of course is hypothetical -- readers should not use it. I posted it simply to illustrate the point that unless the supporting data are shown and verified to be true as basis for comparison, people, policy makers and legislators especially, should be wary of accepting those numbers as basis for making public policies.

Meanwhile, the cat in my previous posting, Drug Price Control 33: Debate with a Cat has gone ballistic and really emotional, fuming with personal attacks. Well, low minds can stoop low and do ad hominems as replacement for producing hard data. Among the cat’s words are

It would seem that the THINK TANKER has crossed the LINE... You're into "name-calling", now just so you can DIVERT the discussions from REAL ISSUES and go into the realm of PERSONALITY ATTACKS...? Alright, I'll play this game...

My profile picture is a CAT, yes.. A beautiful cat from Siam whilst your FACE looks like that of a WORN OUT "INTELLECTUAL WANNABE..." After all these years trying to make your own mark in the Policy Circles, you have not ACHIEVED anything SUBSTANTIAL you can call your OWN... 

Awww! Well, for someone who supports drug price control or other statist proposals, the simple path would have been to show numbers and data – Prices of drugs (or other commodities) have not gone down, say from the time the law was enacted in 2008, to 2012. Show the charts, show the tables. Like this,

Then the debate is on the issue and not on ad hominem stupidity.

Pointless to debate with low level minds who cannot focus on substance, who cannot produce verifiable numbers, only  kilometric brickbats.

She made this warning,

“Mind you, I'm an expert when it comes to NAME-CALLING and PERSONALITY ATTACKS, you might cry if you ENGAGE ME...”

Ouch. Mark Twain's advice is worth noting.

Visit this blog from time to time, Kinse. I might revisit some of your other comments.

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See also:
Drug Price Control 30: Reversing the Policy on AC Resolution in 2009, September 14, 2012 
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 33: Debate with a Cat

When some people’s ego  is bruised, they tend to take revenge. And if that requires abandoning a previous advocacy, say from anti-statist interventionism and move to the opposite, statist and socialist, they will do it.

My blog post,  Drug Price Control 32: Policeman of Pharma Companies, about my reply to a demand for another round of price control by the head of the Cancer Warriors Foundation (CWF) here in Manila, was posted yesterday in the facebook group,  Imperium et Populi (Philippines), to be countered and debated by the fb group owner, Kensi Blye-Two.

Until last week, this person – don’t know if a he or she, I think a she – took an anti-statist interventionism (trying hard free marketer?) position. In my previous long debate with her (or him),  Business Bureaucracy 8: Exchanges at Imperium et Populi (Philippines), she wrote,

This would BOIL DOWN again to "EASE of DOING BUSINESS..." The SMALL PEOPLE are HEAVILY TAXED but the BIG COMPANIES can get away with almost anything...
Imagine this:

( 1 ) Corporate Tax 30%
( 2 ) VAT 12%
( 3 ) Withholding Tax
( 4 ) Business Permit from the LGU
( 5 ) BOC - Duties and Taxes for Imported Goods
( 6 ) Other Taxes from other Agencies...
What's left of the MICRO and SMALL Enterprises...?

That’s an anti-statist, anti-bureaucratism position, right? Cool.

Then in attacking my paper on drug price control, she wrote,

If you have read RA 9502 which I'm sure you have... There's a certain provision that says:  

SEC. 17. Drugs and Medicines Price Regulation Authority of the President of the Philippines…. 

These said PROVISIONS have already given the LEGAL FRAMEWORK to NO LESS than the President the POWER to IMPOST MRP to ANY and ALL "DRUGS" and "MEDICINES..." This itself would mean one thing- DRUG PRICE CONTROL...

Now she is pro-state intervention, justifying government price control and politicized price-setting.

That’s a 180 degrees turn around. Mental inconsistency, intellectual dishonesty, plain brickbats to have a revenge, any of these can possibly explain the behavior.

I checked the fb profile of this person…  

A cat! I was debating with a half human, half feline entity J Kidding aside, this person has no real name, no photo, no affiliation, no school, nothing. This is a perfect formula for people who appear “brave” and utter almost anything, but are cowards that their words and ideas will be associated with their faces and names.

Anyway, below are Kensi’s rapid-fire-revenge attempts, my brief rejoinder to her comments and questions, then another round of insecure brickbats.   Copy-pasting everything so readers can see the kind of mentality this cat or person has. Seven pages long, almost 3,000 words including this intro, get your fave drinks and enjoy the ride.

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Kensi Blye-Two   "That "MDRP" by the way is an illegal term coined by former DOH Secretary Francisco Duque and Malacanang under former President Gloria Arroyo. The original provision in RA 9502 is MRP but Malacanang did not like it to mean "Mar Roxas for President" then so they invented MDRP." (Noynoy Oplas) 

http://funwithgovernment.blogspot.com/2013/06/drug-price-control-32-policeman-of.html

( 1 ) Has the term "MDRP" been DECLARED "ILLEGAL" by any competent Court...? Has EO 821 (Executive 821) been REVOKED...? Has AO 2011-0012 (Administrative Order 2011-0012) been AMENDED or REVOKED...?

( 2 ) And where did you get this RUMOR or GOSSIP that the ONLY REASON the MRP was changed into MDRP by the former Administration was mainly due to the fact that it could be used by Mar Roxas (which eventually RAN for Vice President)...? Can you show some PROOF or EVIDENCE to support your claim...?

"Besides, it is preposterous for someone to claim that he or she can speak "in behalf of the millions of Filipinos who are sick and dying". Have the sick and dying organized themselves into a national organization and they elected a leader to speak in behalf of them? There is no such thing or organization or leader."

( 1 ) Did you CLARIFY whether he wanted all the DETAILS and INFO for ALL MEDICINES or perhaps for certain Medicines that their GROUP are eyeing...?

( 2 ) I think that you KNOW or UNDERSTAND the REALITIES that beset a lot of Filipinos when it comes to ACCESSIBILITY to MEDICINES... Are you "DENYING" that FACT that a lot of Filipinos who are SICK and DYING just because they can't buy MEDICINE...? Do clarify...

( 3 ) Whether the INTENTIONS or Mr. Auste is GOOD or BAD, he has introduced REALITIES that needs to be ADDRESSED immediately and these are LEGITIMATE ISSUES... Now, would you HELP the Filipino SICK and DYING or you would stick to your "brand of bureaucratic maneuverings...?"

Drug Price Control 32: Policeman of Pharma Companies

This coming June 18 afternoon, the DOH Advisory Council (AC) for the Implementation of RA 9502 (Cheaper Medicines Law of 2008) will hold its 17^th meeting. The Council has been meeting since 2009 and has conducted 16 meetings so. I am one of the AC members and have joined the meetings since its 4^th or 5^th meeting in June 2009. Below, a photo during the 16th meeting last February14, 2013.

The DOH’ National Center for Pharmaceutical Access and Management (NCPAM) is providing technical and secretariat support to the AC, headed by DOH UnderSecretary Madeleine “Madz” Valera. The DOH has its own set of agenda for discussion and consultation with AC members, but it is also soliciting items for discussion from AC members, any issue they wish to be discussed and clarified at the meeting. This is a good and healthy process.

One AC member, James Auste, the Executive Director of the Cancer Warriors Foundation (CWF) and brain cancer survivor, is suggesting that the drug price control, officially called Maximum Retail Price (MRP) in the law, be expanded to cover more medicines.

In an email to all AC members, he wrote,

“IN BEHALF OF THE MILLION FILIPINOS WHO ARE SICK AND DYING DAHIL MATAAS ANG PRESYO NG GAMOT AT DI NILA MA AFFORD"

"M-ajor                             M-ajor (wala pa rin patient org rep bukod sa CWF)

D-ecision that will              D-ecisions that needs a

R-ock the                          R-eport to the

P-ilipino Patient                 P-ilipino Population”

That MDRP should increase not the price but the list of medicines  He also requested that pharmaceutical companies should submit (to him or the AC?) a “detailed SEC-approved financial report for the past five years, so that they can study if those pharma companies’ income has declined or not because of the MRP policy, as he sees that in the Top 500 companies, almost all respected companies are included.

They also want to see (a) shipment cost if imported, (b) customs duties if paid, (c) storage cost if under Zuellig, (d) delivery cost from Zuellic to pharmacies and drugstores, and (e) administrative cost.

Wow. The CWF wants to be sort of a policeman of pharma companies. And it is not clear if they wish to be that copper even for local and generic pharma companies. That "MDRP" by the way is an illegal term coined by former DOH Secretary Francisco Duque and Malacanang under former President Gloria Arroyo. The original provision in RA 9502 is MRP but Malacanang did not like it to mean "Mar Roxas for President" then so they invented MDRP.

Besides, it is preposterous for someone to claim that he or she can speak "in behalf of the millions of Filipinos who are sick and dying". Have the sick and dying organized themselves into a national organization and they elected a leader to speak in behalf of them? There is no such thing or organization or leader.

I replied to him in the AC email loop, ie cc’d all other members, that what he is suggesting is to go back to the old debate where no one in the AC except him supports a lousy drug price control aka MRP policy. So many AC meetings in the past have been held where  the subject was discussed, where people from the national and generic pharma companies, the Philippine Chamber of Pharmaceutical Industry or PCPI (Joey Ochave, Past Presidents Edward Isaac then Beau Agana), Philippine Pharmacists Association (PPhA, President Leonie Ocampo), Watsons (Lyle Morrel and Bell Pesayco), Pharmaceutical and Healthcare Association of the Philippines (PHAP, Exec. Director Reiner Gloor, Director Art Catli), Drug Stores Association of the Philippines (DSAP, Past Presidents Jo Inocencio, Celia Carlos) and other groups have spoken with only one message -- drug price control policy is wrong. That medicine prices were coming down even before the policy was imposed because of the rising competition among more players with more products introduced. 

I told him that by continuously insisting on this lousy policy, either he was absent or he was not listening and closing his ears in those meetings.  So I gave an unsolicited advice, the CWF should produce a study, even elementary study, comparing prices of certain anti-cancer drugs, say from 2005 to 2013, and show that their prices are indeed NOT falling. Show the numbers, show charts, so that their arguments will have more substance and not hollow.

The AC meeting on June 18 is their chance to show those numbers and charts. I am sure that NCPAM will grant them several minutes to present their paper and numbers, to convince the AC members that drug price control is not an idiotic policy  The AC is a place for dialogue and debate if necessary, not a place for sloganeering and flag waving.  

I will be there on June 18 meeting. I hope that James can produce and present even a basic study.

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See also:
Drug Price Control 29: MRP Attempt Over Anti-Leptospirosis Drug, August 16, 2012
Fat-Free Econ 22: Three Years of Drug Price Control Policy, August 30, 2012 
Drug Price Control 30: Reversing the Policy on AC Resolution in 2009, September 14, 2012 
Drug Price Control 31: Cancer Drugs and CWF, December 01, 2012

Drug Price Control 31: Cancer Drugs and CWF

Among the members of the DOH Advisory Council (AC) on the Implementation of RA 9502 (Cheaper Medicines Law of 2008), and in our civil society health network Coalition for Health Advocacy and Transparency (CHAT), there is only one NGO leader who persists on lobbying for continued drug price control, the leader and founder of the Cancer Warriors Foundation (CWF), James Auste.

I can understand James' main concern, to save the lives of more and more children with cancer, and it is a noble goal. I myself have two young kids, aged only 6+ and 2+ years old. If anyone of them will get sick, I immediately become troubled but I try to stay calm as their illness are often not serious -- not dengue or similar fatal diseases. So I share with his concern.

But the means that he often advocates -- using politics and more government coercion -- is something that I definitely do not share with. Just three days ago, he posted in the Advisory Council members' email loop and said,

AMING PROPOSAL--TO EXPAND THE MDRP O MRP TO INCLUDE MIRACLE DRUGS LIKE TEMODAL NA EXORBITANTLY UN ACCEPTABLE UNCONSIENCABLE PRICED SA PINAS! ( CAN PROVIDE DATA FOR OTHER DISEASES)

TO SUGGEST AN AMENDMENT SA  CHEAPER MEDS LAW TO INCLUDE BRAIN CANCER! KASI ANG SURVIVAL RATE AY NASA 10%! DAHIL LANG DI MA ACCES ANG GAMOT! 

I replied to the email loop and argued this way:

Lousy argument James.

First you said "miracle drugs" meaning you recognize that no other drugs before were miraculous enough to cure patients, so they die more quickly.

Then you demonize those miracle drugs as if wishing that they were not invented, or were not brought to the Philippines in the first place.

It is possible that there are other anti-cancer drugs more "miraculous" than Temodal that are available in other countries abroad but not available here, precisely because the politics of envy is strong here, of wanting but demonizing revolutionary drugs.

Even local generic manufacturers like Unilab or Pharex who have the capacity to mass manufacture generics of off-patent medicines may shy away from doing so. At P100 per tablet of innovator drugs, the local generics can produce and sell at P50 or P55 and both camps will have their own markets and buyers. With MRP and drug price control, the local generics would find that they are now the expensive seller, so they have to push their prices further down, assuming there is enough leeway, or abandon selling such, even temporarily.

MRP and price control is killing competition. Where there is little or no competition, an economy can easily degenerate to socialism. See if healthcare is fantastic in socialist North Korea, Vietnam or China. But one problem with wishing for health socialism is that even socialist Vietnam and China now allows more players, allows more capitalism and the profit system, even at a limited scale.

Do not demonize the guys that give patients more modern treatment that improve their chances of survival. Demonize instead the taxation of medicines, demonize the absence of competition, demonize socialism.

Another member of the AC, the President of the Philippine Pharmacists Association (PPhA), Ms. Leonila "Leonie" Ocampo also replied.

Dear All,

I hope we wont be like Canada that because of Price regulation, many Anti cancer drugs are no longer available that they have to import these from the U.S. and Europe; in effect cost became higher. This is one concern being tackled in the global organization of Pharmacists (FIP) ; the Pharmacists being one key player in making the medicines available to the public.

Other means to lower cost, subsidy or whatever may that be could be the option to be used.

Again, the primary beneficiaries in the current price-regulation initiative  are the people who have the money to buy, but those who do not have continue not being able to access the essential medicines they need.   

Let us all be realistic. Let us also all work . . . that  practices in the use of medicines will be corrected, from procurement down to patient monitoring. Optimum benefits are NOT experienced by the patients because they get not only non-quality medicines but also non-quality services. Let us work together that GAPS existing now between the potential effects(efficacy) of medicines versus the actual effects(effectiveness) experienced by the patients will be closed to allow OPTIMUM OUTCOMES to happen. Many factors are to be looked into, in this situation and I am asking your support to PPhA for its programs addressing this issue with the ultimate end in mind . . . OPTIMIZE HEALTH OUTCOMES OF PATIENTS USING MEDICINES.

We remain, not in favor with price regulation. There are many options for cost-effective medications. We only need the more relevant policies and their right enforcement.

It's good that Leonie shared her observation about the case of Canada. Goivernment price dictatorship via price control simply did not work and will not work, if their goal is to allow more poor people to have access to more life saving medicines.
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See also:
Drug Price Control 27: Letter to Sen. Pia Cayetano, May 15, 2012
Drug Price Control 28: On Cong. Biron and Sen. Villar Bills, July 14, 2012
Drug Price Control 29: MRP Attempt Over Anti-Leptospirosis Drug, August 16, 2012
Fat-Free Econ 22: Three Years of Drug Price Control Policy, August 30, 2012 
Drug Price Control 30: Reversing the Policy on AC Resolution in 2009, September 14, 2012